ABB Procures Contract in Brazil

Recently the Turbocharging business segment of ABB Ltd. procured an order to upgrade 30 turbochargers in a series of power plants in Brazil. The plants are currently being operated by Wärtsilä under operations and maintenance agreement. The company has been operating in association with Wärtsilä since last one year to build and manage this service wing. The current order is the first with two more to follow, which will help achieve considerable fuel saving for the power plants and thus has a very short payback period.

Management believes that an upgradation will be more beneficial than a product exchange. This is because an upgradation improves engine performance with a more fuel efficient engine that saves 1% to 3% fuel annually. The new and modified engine will also reduce the exhaust gas temperature of the engine by 20oC to 30oC. This will in turn improve the life of the turbochargers by reducing thermal load and minimizing the maintenance cost.

The new turbochargers are expected to run for about eight years. In general, given the right conditions and technical specifications, the cost of the upgrade pays back in a period of less than two years. But with the current order in Brazil, it is anticipated that the upgrades will pay back on the fuel savings alone in less than three years. Savings from reduced maintenance cost and others are additional benefits.

Odebrecht Wins $523 Million Brazil Water Deal

Consorcio Centro-Oeste, a group of Brazilian companies led by Odebrecht SA, has won a 1.07 billion-real ($522.5 million) contract to provide water and sewerage services in four municipalities, Business News Americas said, citing Robson Borges Salazar, financial director of the water utility that granted the concession.

Construtora Norberto Odebrecht SA, Foz do Brasil SA and Central do Brasil will build infrastructure and improve services in Aparecida de Goiania, Trindade, Rio Verde and Jatai for water utility Saneamento de Goias SA, Business News Americas said yesterday in the report.

The group will have to provide sewerage services for all clients that receive potable water within six years, according to the report. The contract hasn’t been signed yet.

Material Fact - Agreement to Acquire 60% Participating Interest in the Polvo Field

RIO DE JANEIRO, - HRT Participações em Petróleo S.A. (the "Company" or "HRT") (BM&FBOVESPA: HRTP3, TSX-V: HRP), together with its wholly-owned subsidiary HRT Oil & Gas Ltda ("HRTO&G"), has entered into a Purchase and Sale Agreement (PSA) with BP Energy do Brasil Ltda ("BP") to acquire a 60% stake in the Polvo Field for US$135 million having January 1st, 2013 as the effective date. HRT as well as HRT O&G have entered into a loan agreement with Credit Suisse to finance the majority of the acquisition price.

The Polvo Field is located in the southern portion of the Campos Basin, 100 km east of the city of Cabo Frio, State ofRio de Janeiro, and currently produces approximately 13,000 barrels per day of 20.3̊ API oil from three producing reservoirs: sandstones of Carapebus Formation, of Maastrichtian and Turonian ages, and carbonates of the Macaé Formation/ Quisamã Member, of Albian age. The license covers over 134 km of acreage with numerous attractive prospects for further exploration.

The PSA also encompasses the acquisition of 100% membership interest in BP Energy America LLC, the owner of the "Polvo A" fixed platform, and a 3,000 HP drilling rig, which is necessary to operate the field. The "Polvo A" platform is connected to the "FPSO Polvo" with facilities for hydrocarbon separation and water treatment, oil storage and offloading capabilities.

The completion of the purchase and sale transaction between HRTO&G and BP is subject to certain conditions, including the final approval by National Petroleum, Natural Gas and Biofuels Agency (ANP). After ANP approval, HRTO&G will become the operator of Polvo Field.

"The acquisition of 60% of Polvo and the recent confirmation of our status as a Class "A" Operator by ANP are key milestones in the implementation of our strategy to diversify our portfolio beyond exploration assets. Polvo is a great fit for HRT. Our team of upstream professionals includes geologists and engineers who discovered and operated Polvo prior to BP's acquisition of the asset from the previous operator. We know the field well and see untapped potential for further exploration and future production within the larger license area." highlighted Marcio Rocha Mello, Chief Executive Officer of HRT.

About HRT
HRT Participações holds one of the largest independent oil and gas exploration and production companies in Brazil. The HRT Group comprises eight main subsidiaries: IPEX (Integrated Petroleum Expertise Company Serviços em Petróleo Ltda.), HRT O&G Exploração e Produção de Petróleo Ltda., HRT Netherlands B.V., HRT África Petróleo S.A., HRT América Inc., Air Amazonia Serviços Aéreos Ltda. and HRT Canada Inc.. The Company retains a 55% interest in 21 exploratory blocks in the Solimões Basin. HRT also operates ten exploratory blocks off the Namibian coast: eight blocks in the Orange Sub-basin and two blocks in the Walvis Sub-basin. HRT's team includes PHDs and masters in geochemistry, geophysics, biology and engineering, most of them former employees of Petrobras and ANP (Brazil petroleum agency). 

TOYO’s Brazil Affiliate Awarded FPSO Topsides Units

Estaleiros do Brasil Ltda. (EBR), a jointly owned Brazilian company by Toyo Engineering Corporation (TOYO, President and CEO Katsumoto Ishibashi) and SOG - Óleo e Gás S.A. (SOG) , a leading engineering company in Brazil, has been awarded an EPCI*1 contract to install topsides units for a Floating Production, Storage and Offloading (FPSO) system. The contract has been awarded from Petrobras Netherlands B.V., a subsidiary of Petróleo Brasileiro S.A. (Petrobras), a Brazilian state oil company.

This FPSO, called P-74, is scheduled to be deployed in 2016 to an offshore oil field located in the pre-salt layer under deep water in the Franco 1 area off the coast of Rio de Janeiro in Brazil.
EBR is primarily engaged in EPCI related to offshore facilities and is constructing yard facilities in Estado de Rio Grande do Sul in the southernmost part of Brazil in line with the policy of "increasing the ratio of local content" promoted by the Brazilian Government and Petrobras. The yard facilities will be used to assemble the modules*2 of the topsides and to integrate them on the hull.
Over the past 15 years, TOYO has more than 30 project experiences in Brazil. Now, TOYO is constructing the utility facilities for a refinery, a gas processing plant, etc. Petrobras has a target to increase oil and gas production from 2.4 million boed today to 5.2 million boed by 2020 and intends to deploy a number of FPSO units to develop its offshore resources providing a steady market for EBR.
*1) EPCI: Engineering, Procurement, Construction and Installation
*2) Module: The entire FPSO system is split functionally into module units. A system is normally split into approximately 20 modules, which are then assembled onshore individually and integrated on the hull.

Project Outline

Client	Petrobras Netherland B.V., a subsidiary of Petroleo Brasileiro S.A. (Petrobras)
Contractor	Estaleiros do Brasil Ltda (EBR), a Brazilian corporation and 100% subsidiary of TS Participações e Investimentos S.A. which is TOYO's affiliate company accounted for by equity method (with a shareholding ratio of 50%). EBR is primarily engaged in EPCI for FPSO and other offshore facilities.
Field	Franco 1 area, Brazil (off Rio de Janeiro)
Facilities	Topsides of Floating Production Storage and Offloading (FPSO) Oil production facilities (150,000 barrels per day) and gas processing facilities (7 million cubic meters per day)
Scope	Turnkey contract for engineering, procurement of equipment and materials, and manufacturing and installation of FPSO topsides
Start up	Scheduled for 2016

Five get set to battle for Carioca prize

BRAZILIAN oil giant Petrobras has started preliminary talks with a number of contractors ahead of launching a much-anticipated tender to charter the first floating production, storage and offloading vessel to exploit pre-salt carbonate reservoirs in the Carioca accumulation in the Santos basin.

According to a source, Petrobras is due to publish Carioca FPSO bidding rules in early May and has so far been in touch with Schahin, Queiroz Galvao, Odebrecht, Camargo Correa, Modec International, SBM Offshore, OSX, BW Offshore and Teekay Offshore.

Contractors expect Petrobras to officially launch the tender and formal invitations in the coming days.

Brazilian engineering company Schahin will again team up with Japan’s Modec International, while local player Queiroz Galvao will maintain its partnership with European floater specialist SBM Offshore.

Those two consortia grabbed all the chartered FPSOs that Brazilian state-controlled company Petrobras has tendered in the past four years for the Santos basin pre-salt province

The plan is to receive commercial proposals in mid-June for one floater with capacity for 100,000 barrels per day of oil and 5 million cubic metres per day of natural gas.

Braskem expands its portfolio and launches a new line of green plastic

The company will produce 30 kton annually of renewable low-density polyethylene

 Braskem, the leading thermoplastic resin producer in the Americas and the world's largest biopolymer producer, announces the expansion of its portfolio of renewable products with the launch of its new line of green low-density polyethylene (LDPE), with this new product family complementing its already well known Green Plastics. Annual production of the new resin will amount to approximately 30 kton and the product will be made available in the market starting in January 2014.

To ensure the production feasibility of the new line, investments were made in interconnecting plants and certain pieces of equipment in order to make possible the production of green LDPE from renewable raw materials. Two technology options can be used to ensure the production of a portfolio of resins with varying characteristics that allows for meeting a wider range of applications. LDPE is used mainly in plastic packaging and films.
Braskem has been producing on an industrial scale high-density polyethylene (HDPE) and linear low-density polyethylene (LLDPE) made from renewable feedstock already since September 2010. The product is special because it is a thermoplastic resin made from sugarcane ethanol. It has properties identical to those of traditional polyethylene and, since it is derived from renewable materials, it helps reduce greenhouse gas emissions by sequestering carbon dioxide from the atmosphere as the sugarcane grows.
The expansion of the line of green products reinforces the company's commitment to creating value through the sustainable development of the industry's production chain, its clients and society, which are increasingly seeking to adopt practices that help reduce the effects of greenhouse gases.

"I'm greenTM" seal

To identify products that use Green Plastic and help consumers recognize them more easily, Braskem offers its clients the "I'm greenTM" seal, which is already stamped on over 50 products available in Brazil and guarantees the renewable origin of the plastic. Today, 19 companies and 23 brands have adopted the material made from sugarcane in their product lines, which include Danone, Embalixo, Faber Castell, Johnson & Johnson, Kimberly-Clark, Natura, Tetra Pak, Tigre and Walmart.

The seal's use is subject to compliance with certain rules. The criteria aim to create strong identification among end consumers and convey credibility and transparency.

Brazil gears up for new wave of offshore activity - 2

The Petrobras P-63 platform sits in the Rio Grande port of Rio Grande do Sul, having arrived from China in November. It is scheduled to begin operating in the Papa Terra field of the Campos basin in mid-July.

Alex Tischdorf, director of operations for Teekay in Brazil, who have 10 shuttle tankers and three FPSOs operated by Petrobras, says that the quality and quantity of trained Brazilians has been on the increase, however, and that there is plenty of time for that process to continue before production is stepped up.

"There is unlikely to be much development in the industry in the next 12 months," he said, "and Petrobras production will remain flat. Their five-year plan is more promising, though, and the vast majority of their increase will be offshore and dependent on shuttle tankers. Plus the amount of oil being exported will increase, all of which can only be good for the shipping industry."

With regards to the rest of Latin America, Tischdorf is happy to sit tight. "We will have to see what happens with the royalties as to how international oil companies and Petrobras react in the bid round. Our Latin American focus remains on Brazil, but we will keep an eye on what happens in Argentina too."

June will see the first of four Teekay tankers being delivered to BG under a long-term agreement signed in 2011. The Suezmax-size DP-2 shuttle tankers are being built in South Korea, with delivery throughout 2013 to commence 10-year time-charters. The agreement includes certain extension options and vessel purchase options.

Presalt bid round

The first presalt bid round remains slated for November. Brazil's Ministry of Mines and Energy has stated that, as a result of recent discoveries by Petrobras and its partners Galp, Barra Energia and Queiroz Galvão in the BM-S-8 block, estimates for the presalt reserves are now in excess of the previous 35 Bboe, with the Santos block alone potentially holding 1 Bboe.

Brazil gears up for new wave of offshore activity - 1

Brazil's National Petroleum Agency has finally outlined the process for the 11th round of bidding for 166 of the country's offshore oil blocks to be held in May 2013, five years after the previous round went under the hammer. Beset by delays and uncertainty, chief amongst which being the ongoing debate surrounding the destination of royalties from the oil production, the auction will provide a timely boost for the industry just ahead of the presalt blocks, set for a first auction in November pending governmental approval.

Of the total 289 blocks comprising the 11th round, 166 are offshore and 81 lie in deepwater locations. The agency's seismic data suggests there are up to 7.5 Bbbl of oil to be tapped in the round, and 71 companies from 18 countries had registered to take part by the ANP's deadline at the start of April.

Difficult times

The latest figures for Brazilian oil and gas production underline what has been a difficult 12 months for the industry, with Petrobras announcing a 36% drop in profits in 2012 compared with the year before and production down 2%. Company President Maria de Graças Foster told investors that 2013 would "also be a difficult year for oil production" and that "it will only begin to increase in the second semester of 2013 with the six new platforms which will begin working through the year."

The company continues to be responsible for 94% of all oil produced in Brazil, of which 91% comes from its offshore wells. Foster announced a 2013-2017 investment plan that maintains spending levels rather than offering any sign of industry-boosting increases, promising $237 billion over the next five years, two-thirds of which will be dedicated to exploration and production.

Meeting high production targets remains one of her biggest challenges, and getting the state oil giant's 11 new units onstream by 2015 is the priority, from which point the company is confident it will start generating more cash than spending. The plans prompted an optimistic appraisal of the presalt prospects from Foster, who predicted that production levels in the Santos and Campos basins would reach 1 MMboe/d by as early as 2017.

Presalt potential

Petrobras broke the 300,000 boe/d mark in the presalt layers of the Santos and Campos basins on Feb. 20, seven years after the huge reserves were first discovered. While average daily production remains nearer the 281,000 boe/d mark, the achievement underlines the potential over the coming years. Drawn from just 17 wells, production will receive another boost when FPSO Cidade de Paraty, with a capacaity of 120,000 boe/d and currently undergoing a refit in Angra dos Reis, is installed in the Lula field of the Santos basin later this month. The FPSOs Cidade de Ilhabela and Cidade da Mangaritba are undergoing conversion in China and are expected to hit production of first oil in the last trimester of 2014, the former in Sapinhoá field, the latter in Iracema Sul.

Upcoming campaigns

The Dutch company SBM Offshore reached agreement with Petrobras for the 20-year charter and operation of two further FPSOs in a contract worth around $3.5 billion. The Lula field, where they are destined to go into production in 2015, is 186 mi (300 km) offshore Rio de Janeiro, and has some of the largest reserves of oil in the world.

Following the signing of a $700-million deal with Ocean Rig for the Mylos drillship at the end of 2012, Repsol are expecting delivery in the second half of the year as its construction nears completion in South Korea. Mylos's destination is the Pão de Açucar field, part of the BM-C-33 block Repsol operates on behalf of Statoil (35%) and Petrobras (30%), drilled in 2,800 m (9,186 ft) of water, 195 km (121 mi) off the Brazil coast with estimated resources of 700 MMbbl of light crude.

BP has completed flow tests at the Itaipu-1A well in the Campos basin, 125 km (77.6 mi) off the coast of Rio de Janeiro. The resulting flow of up to 5,600 boe/d was, according to BP Brazil's Vice President for Exploration Neil Piggot, "a good result…indicating that commercially viable flow rates can be achieved." BP is the operator of the block with 40%, while Anadarko Petroleum holds a 33.3% stake and Maersk Energia has a 26.7% share. A new appraisal well, Itaipu-3, has been agreed with the ANP and BP will begin operations there later this year.

Following the ANP announcement on March 12 to hold the bid round on May 14-15, the president of BG Brazil, Nelson Silva, confirmed the company will be looking at operating in new blocks, rather than acting as partners. The company was buoyed by positive results from the company's BMS-9 and BMS-11 blocks in the Santos basin that were, Silva noted, "better than had been anticipated."

OGX Joins Exxon to Win Brazil Offshore Blocks

Exxon Mobil Corp. (XOM), the world’s most valuable oil producer, teamed up with billionaire Eike Batista to search in Brazilian waters as the country raised a record amount in its first oil bidding round in five years.

A partnership between the Irving, Texas-based company, which failed to make major discoveries in previous exploration efforts in Brazil, and Batista’s OGX Petroleo & Gas Participacoes SA won rights for one offshore block in the Potiguar basin and another in Ceara. The so-called Round 11 auction staged by regulator ANP yesterday also saw BP Plc (BP/) and Total SA, Europe’s biggest producers after Royal Dutch Shell Plc (RDSA), win licenses off Amapa state in the largest single bid.

Brazil, home to the biggest crude discovery in the Americas in more than 30 years, raised a record 2.8 billion reais ($1.4 billion) by selling licenses at 142 of the 289 blocks for sale. Exxon returns to the country while Total expands into the Foz do Amazonas basin bordering French Guiana and BG Group Plc becomes an operator for the first time.

“The competition was stronger than I expected,” Joao Carlos de Luca, the head of the Brazilian Oil Institute, told reporters in Rio de Janeiro. “We have great new operators in the country. The return of Exxon is an important factor.”

Brazil’s first sale of oil permits since 2008 will give Exxon a chance to resume exploration in the country after it drilled dry holes and returned a license last year in the so-called pre-salt region.

Investment Plan

Exxon, which also explored Foz de Amazonas in 2001 and 2002, will have a 50 percent interest in the two new blocks it won with OGX and will operate both, spokesman Patrick McGinn said by telephone, declining to comment further.

The 30 winning companies will invest a minimum of 6.9 billion reais to develop the areas that span 11 sedimentary basins on land and off the coast of north and northeastern Brazil.

A partnership between Total, BP and state-run Petroleo Brasileiro SA made the largest single bid of 346 million reais for the FZA-M-57 block in deep waters of Foz do Amazonas.

“The super consortium that took shape for the equatorial margin is Total, BP and Petrobras,” de Luca said, noting that Total will operate the block. “Petrobras teaming up with other companies is very good for the sector.”

‘Acted Aggressively’

Batista’s OGX, the Rio de Janeiro-based company that has lost 84 percent of its market value in the past year, also won licenses for 10 blocks in five basins bidding without partners and an additional 30 percent stake in a block together with Total and QGEP Participacoes SA. (QGEP3)

OGX is taking on new exploration projects even as the company sells stakes in fields, reduces staff and cuts costs after losing investor confidence amid missed production targets. Brazil’s worst-performing stock last year has plunged an additional 57 percent this year after lower-than-expected output rates.

OGX agreed to pay 377 million reais for the exploration licenses, including its share in blocks won with partners, according to ANP data. The company missed out on rights in four other blocks where offers were presented in conjunction with Exxon. OGX committed 16 percent of its cash to the new licenses, according to Banco Santander SA analysts Christian Audi and Vicente Falanga Neto. The Rio-based company would be better served focusing on development of its existing assets, they wrote in a note to clients dated today.

China Absence

“Once again the company acted aggressively, which is a characteristic of OGX and of Eike Batista,” Adriano Pires, the head of the Brazilian Center for Infrastructure, a consulting firm in Rio de Janeiro, said in a telephone interview. “Nobody expected that given the complicated situation the company is having lately. They took onshore and offshore blocks.”

OGX Chief Executive Officer Luiz Carneiro said in an e-mailed statement today the acquired offshore blocks are located in a “highly promising area.” “This is clearly an exciting time for Brazil’s oil and gas industry,” he said.

OGX rose 6.8 percent to 1.88 reais in Sao Paulo today, the highest close since May 7.

Winners of the auction, held at a Rio hotel, also included Brazilian startup Ouro Preto Oleo & Gas SA and Colombia’s Ecopetrol SA. (ECOPETL) Chief oil regulator Magda Chambriard told reporters she was surprised by a lack of bids from Chinese companies.

Amazon Basin

BP and Total agreed to pay 621.5 million reais for the offshore Amazon basin concessions. BHP Billiton Ltd. won bidding for two blocks in the same basin, the Melbourne-based mining company’s first oil assets in Brazil.

Most of the areas auctioned yesterday are in virgin waters off the coast of northeastern Brazil where discoveries in similar geology across the Atlantic in Ghana and Ivory Coast yielded major discoveries. Tullow Oil Plc in 2011 sparked interest in the region with the Zaedyus find off the coast of French Guiana.

“The bidding has been aggressive,” Thore Kristiansen, head of Statoil ASA in Brazil, told reporters after the Stavanger-based company won blocks in ventures with Petrobras and Total. “The bidding has shown it’s been five years since the last auction. There’s an industry willing to take risks.”

Saipem has won offshore engineering and construction contracts in South America with a total value of about $500 million.

Cardon IV, a 50/50 joint venture between Eni and Repsol, has commissioned a work program for the Perla EP project in the Gulf of Venezuela.

This involves transportation and installation of a hub platform and two satellite platforms; a 67-km (41.6-mi), 30-in. offshore export pipeline; two 14-in. clad infield flowlines and other infield cables; and related tie-in operations.

Most of the work will be performed by the Saipem 3000 and Castoro 7 vessels between 3Q 2013 and 2Q 2014.

Offshore Brazil, Petrobras has awarded Saipem a contract for the Sapinhoa Norte and Iracema Sul project in the Santos basin presalt region, 300 km (186 mi) offshore Rio de Janeiro and São Paulo states.

Work scope includes engineering, procurement, fabrication, and installation of two offshore pipelines, with related terminations (PLETs), to be installed in the Sapinhoa Norte and Iracema Sul fields in water depths of up to 2,200 m (7,218 ft).

The Saipem FDS 2 will perform marine activities during 4Q 2014. Saipem’s yard in Guarujá, currently under development, will be used for pipe logistics and storage.

Brazil's Odebrecht plans $20 billion spend, targets Peru as key investment

Brazilian conglomerate Odebrecht ODBES.UL plans to invest $20 billion globally over the next three years, mostly in Latin America and much of it in Peru, the company's chief executive said on Wednesday.
Family-owned Odebrecht, one of Latin America's biggest companies, has businesses inconstruction, petrochemicals, transportation, oil and gas in 20 countries worldwide.
Chief Executive Marcelo Odebrecht said about 85 percent of overall investments would be made in Latin America.
"The organization is investing this year about $7 billion dollars," he told Reuters.
Odebrecht, which reported total revenues of $43 billion dollars last year, said that outside Brazil its largest investment destination will be fast-growing Peru, which "has many opportunities because there are lots of concessions and public-private partnerships," organized by the government.
Later this year, the company plans to bid in a Peruvian government tender to build a $1.8 billion, 620-mile natural gas pipeline in the south of the country.
Before the government announced the tender, Odebrecht had planned to build its own pipeline along a similar route but ran into financing delays, according to government sources.
"With this tender, which guarantees transparency, the government has resolved the issue of financing gaps," Odebrecht said.
PETROCHEMICALS
In addition to the pipeline, the government in Lima plans to develop a 2,000 megawatt gas-fired power plant on the Pacific coast and a 200 megawatt plant in Cuzco.
Both are crucial to meet growing energy demand in southern Peru, where international resources firms are planning to invest billions of dollars in new mines.
"We are looking at much more than a pipeline, we want a comprehensive project that considers all investments in gas, in petrochemicals, and thermoelectric. We are talking about a project worth more than $15 billion dollars," Odebrecht said.
Odebrecht, which owns a stake in petrochemicals giant Braskem, said construction of Peru's first petrochemical complex on the coast could be an asset for the region.
A petrochemical plant in southern Peru could produce 1.2 million tons of polyethylene a year, he said.
"When we started to look at this, we imagined the petrochemical market was in Asia, but if you look five years ahead then Colombia, Ecuador, Peru and Chile would be able to absorb the production," he said.
Peru currently has only one main gas pipeline, which runs for 430 miles from the Camisea fields in the southern jungle to the coastal capital Lima.
Analysts say a decade of swift economic growth at around 6 percent a year has stretched Peru's power grid and President Ollanta Humala has sought to ramp up gas output, though remnants of the Shining Path insurgency are active in areas near the Camisea fields.

Petrobras Aims to doubles in size in 7 years

RIO DE JANEIRO, May 15 (UPI) -- Ahead of this week's dramatic $11 billion bond sale that swelled its coffers, Brazil's state-controlled Petrobras predicts it will double in size in seven years.

Although a healthy yield, the bond issue covers only a small part of a $237 billion spending Petrobras hopes to implement through 2017 as it taps into extreme depths of the Atlantic to build deep-water oil fields and a vast network of production and delivery.

Brazil's rise as a major oil producer also reconfigures the global oil scene and its umbilical link to geopolitics with what some analysts see as a gradual eclipsing of Persian Gulf suppliers, including Iraq, Saudi Arabia and sanctions-bound Iran. Rising U.S. energy output is also seen to be playing a part in that likely shift toward the Western Hemisphere.

Petrobras production, recorded at 2.2 million barrels of oil equivalent last year, will reach 5.7 million in 2010, Chief Executive Officer Maria das Gracas Silva Foster told the Offshore Technology Conference in Houston.

That's destined to give Petrobras -- and Brazil -- unprecedented clout, when taken together with the country's rise as a major aviation, defense and security manufacturing hub in direct competition with U.S., European and Russian companies.

Brazil wants a permanent U.N. Security Council representing all of South America and the Caribbean.

This week's bond offering, the largest by a Latin American country, captivated investors concerned about slow growth or deepening recession in industrial economies that are members of the Organization for Economic Cooperation and Development. Brazil isn't an OECD member. Chile is, but its economy is struggling to catch up with Brazil's buoyancy.

Brazil's cleverly crafted debt sale gives Petrobras novel flexibility with the $11 billion split into six tranches of terms that are said to range from 3-30 years. Investor bidding response was more than four times the clinched amount, indicating the markets' hunger for emerging-market profit potential.

Petrobras will use the money this year on exploration and production. Investors expect the company will return to the financial markets next year for more, as will investors with growing appetites.

Not all is rosy in oil-linked Latin American financial markets, though. Venezuela's state-run Petroleos de Venezuela S.A. also excited investors in 2007, when the going was good for that country, but Venezuela is in a variously interpreted recession for the past three years, despite being a major oil exporter.

Brazil's growth, too, has slackened, and investors know that an oil price crash -- widely considered unlikely but never far from the horizon, defying the pundits as before -- will reflect both on Petrobras fortunes as well as on the future quality of the money it borrowed.

The bond issue preceded this week's government auction of oil and natural gas rights in Brazil, the first for five years.

Petrobras comments indicate the company is hedging on a continued rise of interest in its pre-salt energy development plans.

"We (Petrobras) have made 53 discoveries in Brazil during the last 14 months," Foster told conference delegates in Houston. "In the pre-salt alone there were 15 discoveries," she added.

"Petrobras' reserves have the potential to double in size and reach 31.5 billion barrels of oil equivalent in the coming years."

The company's investments increased at a rate of 21.5 percent a year since 2000 and reached $42.9 billion in 2012.

Investments in research and development during the period grew 18.3 percent a year and in 2012 reached $1.1 billion. Petrobras' investment plan for the 2013-17 period amounts to $236.7 billion, Foster said.

Petrobras presalt output to reach 2 million bo/d by 2020

HOUSTON, May 7

By Christopher E. Smith

Brazil’s Petroleo Brasileiro SA (Petrobras) plans to increase net production from its offshore presalt formation in the Campos and Santos basins to more than 2 million bo/d by 2020, from 311,000 b/d of oil as of Apr. 17, according to Carlos Tadeu de Costa Fraga, the company’s presalt executive manager. Fraga spoke May 7 to attendees of the Offshore Technology Conference in Houston.

The company estimates 1 million b/d of presalt oil production by 2017. Petrobras’ presalt production currently makes up 7% of its total output. This will increase to 42% in 2017 and 50% by 2020, according to Petrobras projections.

To reach these production levels, Petrobras will add 24 production units (floating production, storage, and offloading vessels) by 2020. Each will have 150,000 b/d processing capacity. The first will be deployed on the Lula field this month, with deployment of an FPSO to the Norte Parque de Baleias field to follow in November. Petrobras will deploy an FPSO to Iracema Sul in November 2014, producing 150,000 b/d from 8 wells, with a similarly scaled unit deployed to Iracema Norte in December 2015.

Additional development of the Lula field will begin in January 2016, according to Fraga, when and FPSO is stationed on Lula Alto. Lula Centro will receive a production vessel in March 2016, with the first of 8 units planned for deployment on Lula Sul arriving in June 2016. These 8 vessels, as well as 4 others to be deployed on Franco 1 beginning in July 2016, will be converted at Brazilian shipyards, said Fraga.

Up to this point, presalt production has been delivered through existing infrastructure, with 7 production platforms delivering from 19 wells.

Top 10 Mistakes Foreign Companies Make When Starting Businesses in Brazil

During most of my professional life I have worked with foreign companies who are doing, or trying to do, business in Brazil. I have advised them, consulted to them, made presentations and delivered seminars on how to do business in Brazil. In the current cyber-paced world where everyone lives quarter-to-quarter and square-jawed Houston-based sales managers have the same inflexible demands for the Rio de Janeiro and other foreign offices, the situation seems to be deteriorating. In the interest of helping reverse the situation, and give foreign companies some perspective on what it takes to be successful in Brazil, I list below the 10 most frequent mistakes I have seen made.

#1 – Being Arrogant

Arrogance is a problem often found in the behavior of foreign companies entering the Brazilian market. Although it can take many forms, it’s generally a mix of condescendence and a slight but clearly visible sense of superiority that often contaminates business relationships from the start. It might be a weird left-over from more imperialistic times, or the remains of a yet-to-be-entirely-replaced banana republic view of our region. But the fact is that most foreign companies don’t seem to consider it necessary to learn even the basic rudiments of our culture, language or geography. Many executives put in charge of Brazil have never been here. Very well paid marketing professionals do not conduct the most basic local market research and expect to be able to push their foreign products with no customization or adaptation to local tastes and habits (Wall Mart stocking their first store in Brazil with life jackets when boat ownership in Brazil is minuscule comes to mind). Sales VPs refuse to translate documents, manuals and even contracts to Portuguese “until a significant amount of sales is made”. Big shots who come down to “look into the eyes of the customers” reveal themselves as blabbermouths incapable of and uninterested in true communication – they come to Brazil to dictate and take orders. Arrogance prevents them from learning. Arrogance leads to making unbelievable mistakes. I can still remember the sales manager who flew to Brazil without a visa, absolutely sure they would let him in (he was sent back on the first flight). Or the company that lost a 100-million dollar contract due to their decision to appoint as leader of negotiations a gentleman from a Midle Eastern  origin who had never been to Brazil, did not speak a word of Portuguese and who was more interested in buying knick-knacks in Copacabana than engaging the customer in Brasilia.

#2 – Using the Home Country as a Reference

If I had a vote for every time I heard the sentence “here’s how we do this back home” I’d be President. There are many similarities, for instance, between Brazil and the US (after all we were fed the same diet of Coca-Cola, sitcoms and Disneyworld) but the differences are also many, at all levels, and can be difficult to detect at first sight. I’ve met newcomers who claimed to know everything about selling to the Brazilian government because they spent their careers selling to the US or French governments (key difference: Brazil has a single law – number 8.666 – that applies to all government procurement, be it federal, state or municipal). I have seen preposterous 100-page contracts in Englishthat companies tried to require their Brazilian clients to sign before they were given the honor of buying products (hint #1: they don’t have to buy your product. Hint #2: a contract in English is not enforceable in Brazil)

#3 – Miscommunicating

Some of Brazilians may speak English, but that means standard, school-type English. If you say “my product is a very good one” they will understand you. But if you say “we can do this from soup to nuts” or “we need to get hold of him” it is safe to say you will lose 90% of the audience. Idiomatic expressions and slang are a no-no when trying to get your message across. Also, speak up. Slowly. And always, always check for understanding. Brazilians will not tell you they have no idea what you are talking about. They will just smile and say yes. And you will lose the business. Also, don’t believe everything you hear and run to the office to plug optimistic forecasts into your salesforce.com. Brazilians never say “we don’t like your product and will never buy it”. They will gladly allow you to wine and dine them, and take them on trips to California or Paris, for years. Ah, and they hate – absolutely hate – conference calls.

#4 – Expecting Quick Results

You need at least two years if you are planning to build a business from scratch – and your local people need the resources to do it. This is a vibrant, complex economy, with sophisticated consumers, much competition and government regulation. It does not matter how good your product and idea are: you will not build a profitable and sustainable business instantly. The sales cycle to government clients is nine months or longer after they agree that your product is great. Large corporations are not much faster; many of them will require your product to go through some sort of testing (regardless of the impressive client list you already have in Europe and the US). There are no miracles; or maybe there are, but the magicians that perform them might compromise your ethics.

#5 – Falling in the Home Office Trap

Lately many foreign companies, new entrants to Brazil, have discovered that they can save a lot of money by not having an office and having their people work at home. But Brazilian lifestyle is not suited to this;  families are large and noisy, space is premium and wives are demanding. A home worker will never have the same productivity they would have in an office. In the end there will be no actual savings. Also, a great amount of paperwork is involved in running a business there (if you are doing it right).

#6 – Misunderstanding the Legal System

Foreigners are often scared to death of the Brazilian legal system and therefore reluctant to do any business here. Fear may also lead to the imposition of absurd contractual requirements. I heard about a CFO of one large defense contractor I worked for demanded that their prospect Brazilian clients paid the invoice 100% in advance before the company would even start providing services, and became very angry when this proved not be a successful marketing approach. Brazilian law is neither better nor worse than the law of other countries; it’s just different. The most significant issue is that courts move very slowly, so try to avoid any legal battle if at all possible. Opening a business there? Hire a good law firm and develop a trusting relationship with them. That simple. Do not, I repeat, do not make decisions based on articles on Brazilian law you found on the internet. This is a serious issue.

#7 – Hiring Too Fast

Labor law in Brazil is heavily biased against employers - It wise to wait until you need to hire, and make sure you are making sound choices. I know companies that get a new country manager every few years wasting a lot of their profits (and credibility) in the process.

#8 – Not Valuing Relationships

Brazilians do not do business with companies, they do it with people. Relationships are key. Your clients need to like you and your people. Really. If you have jerks in your team, send them back home or fire them. Brazilians won’t be bossed into buying your products. You must connect at the personal level. We have a saying: “to our friends, everything; to others, the law”. Think about it.

#9 – Underestimating the Size of the Country

We are a very big country. A plane ticket from Rio to Manaus is more expensive than one to Miami. Consider this when planning your trips here or when assigning sales territories.

#10 – Not Vetting Your Associates

It never ceases to surprise me how often large foreign companies associate with Brazilian businessmen or companies they know next to nothing about. Do your due diligence; otherwise you could easily find yourself in trouble.