Brazil

Petrobras Cleared to Proceed With Asset Sales

16 Mar 2017   Brazil

Brazil’s federal auditing court overturned a preliminary ruling Wednesday that had frozen asset sales by Petróleo Brasileiro SA since December, removing a major roadblock to the state-run oil company’s plan to reduce its massive debt load. The court, known as the TCU, said in a statement late Wednesday that Petrobras had presented documentation showing that “risks” in the company’s divestment program had been…

Brazilian crude threatens Oceania, Middle East suppliers’ Asian market share

8 Mar 2017   Brazil

China’s strong appetite for Brazilian crude has set off alarm bells among various producers in Oceania and the Middle East, prompting Australian and key Persian Gulf crude suppliers to slash their selling prices in an effort to remain competitive and protect their market share in Asia, market participants said Wednesday. Since late 2016, China saw a dramatic increase in Brazilian crude imports and the trend remained firmly intact with two Chinese state-run oil companies purchasing 5 million barrels or more of heavy sweet crude from the South American state for loading in March, according to a source with direct knowledge of the deals. March shipping fixtures seen by S&P Global Platts also showed that PetroChina has fixed the San Jacinto to move 130,000 mt of crude oil for March loading from Brazil to China, while trading company Vitol also booked Suez Hans and Fraternity to move a combined 260,000 […]

Total teams up with Brazil’s Petrobras

2 Mar 2017   Brazil

French energy company Total announced alongside its Brazilian counterpart, Petrobras, both sides were teaming up in a $2.25 billion joint venture agreement. “These new partnerships together with a reinforced technological cooperation should create significant synergies and values, mutualizing our operational excellence and further reducing costs on our joint projects for the benefit of both companies,” Total CEO Patrick Pouyanne and Petrbras CEO Pedro Parente said in a joint statement . Total’s payments to Petrobras include $1.6 billion in cash. The Brazilian company, known formally as Petroleo Brasileiro, handed over enough of a stake in some of its more lucrative fields so that Total is a minority partner. The Brazilian company said the joint venture agreement with Total aligns with a five-year plan to improve its financials […]

Lured by discounts, U.S. East Coast refiners snatch up Brazilian crude

1 Feb 2017   Brazil

The Philadelphia Energy Solutions oil refinery owned by The Carlyle Group is seen at sunset in Philadelphia March 26, 2014. Picture taken March 26, 2014. U.S. East Coast refiners are on a Brazilian crude buying spree, market sources say, displacing West African cargoes as producers such as Royal Dutch Shell and Norway’s Statoil sell rising output from fields off Brazil’s coast. The uptick in Brazilian imports into the region comes as the only Latin America producer to increase output in recent years seeks markets close to home for the oil it is pumping from the massive offshore subsalt oilfields under development. February deliveries of Brazilian crude into the U.S. East Coast are expected to hit 2.4 million barrels, or 86,000 barrels-per-day, the highest monthly volume since at least 2009, according to the U.S. Energy Information Administration and Reuters shipping data. The strong February numbers follow a surge in Brazilian […]

Exclusive: Brazil plans two subsalt auctions in 2017, another in 2018

20 Jan 2017   Brazil

A man works at the Cidade Angra dos Reis offshore platform at the Lula oil field, about 300 km (186.4 miles) from the coast of Rio de Janeiro, February 16, 2011. Brazil plans to hold two subsalt oil auctions in 2017, putting new exploration areas up for bidding in November for what should be the “most competitive” round of the year, Oil Secretary Marcio Felix said in an interview on Thursday. The auctions, an effort to lure foreign investment in a sector that for much of the past decade was the object of protectionist policies in Brazil, will be the first since 2013 for the offshore region known as the subsalt, where giant discoveries were made starting about a decade ago. The first auction, expected in the first half of this year, will offer areas next to existing discoveries already in development, Felix said. The November auction will be […]

Divestment streak for Petrobras continues

30 Dec 2016   Brazil

Brazil’s state-run oil company said it closed on the sale of a refinery on the Japanese island of Okinawa as its divestment streak continues. State-run Petroleo Brasileiro, known informally as Petrobras, said it closed on the 100 percent sale of its refinery to Japan’s Taiyo Oil Co. for $165 million. Taiyo gains a refinery with a processing capacity of 100,000 barrels per day and a storage capacity of 9.5 million barrels. “The operation was recorded in the partnerships and divestments program that reached $13.6 billion on the 2015-2016 period,” the Brazilian company said in a statement. “The sale is aligned with the Petrobras’ strategic plan, which aims to optimize the business portfolio.” The sale of its Japanese refinery comes one week after French supermajor Total gained access to two of Brazil’s largest oil fields in a $2.2 billion deal with Petrobras. The deal […]

Total nabs Brazilian pre-salt in Petrobras deal

23 Dec 2016   Brazil, France

French energy company Total said it was building up its prospects in South America in a partnership that gives it access to some of Brazil’s biggest oil fields. In a deal valued at $2.2 billion, the French supermajor gained access to two of Brazil’s largest oil fields in an acquisition of interests from state-supported Petroleo Brasileiro, known more commonly as Petrobras. Both sides already work together on assets in the U.S. waters of the Gulf of Mexico and in the giant Libra oil field off the coast of Brazil in the so-called Santos basin. Total gets a tighter hold over the prolific Santos basin, while Petrobas has the option to take on more interest in deepwater exploration off the coast of Mexico. “These agreements will reinforce Total’s position in Brazil through access to outstanding pre-salt resources,” Total Chairman and CEO Patrick Pouyanne said in […]

Petróleo Brasileiro Signs Financing Deal with China Development Bank

17 Dec 2016   Brazil, China

Brazil’s state-controlled oil company Petróleo Brasileiro SA said Friday it signed a $5 billion financing deal with the China Development Bank, the latest example of a troubled Latin American issuer reaching to deep-pocketed Chinese institutions for help. The 10-year financing arrangement coincided with the signing of a commercial contract whereby Petrobras, as the energy company is known, will supply 100,000 barrels of oil a day to three Chinese firms. The firms are China National United Oil Corporation, China Zhenhua Oil Co. Ltd. e Chemchina Petrochemical Co. Ltd. This comes as Petrobras, the most indebted oil major in the world with $123 billion of gross debt, looks increasingly unlikely to meet its target of selling $15.1 billion of assets by the end of the year following a number of legal challenges. Brazil’s federal […]

Crippled Latin Oil Giants Get No Miracle Cure in Post-OPEC Rally

For the three titans of Latin American oil — Pemex, PDVSA and Petrobras — last week’s OPEC-driven price rally won’t be enough to halt a slow descent from the ranks of international crude heavyweights. Even as news of the cartel’s 1.2 million-barrel-a-day output cut spurred the steepest three-day oil gain in 15 months, the biggest Latin American producers remain hobbled by financial, political, technical and structural problems. Mexico and Brazil have been turning to outside investors to help boost output, with Mexico on Monday offering up stakes for the first time to drill in its deep waters. Oil prices are an especially pressing issue for the behemoths responsible for large chunks of their local and national economies, all while supplying one of every 13 barrels of crude produced around the globe every day. Unlike North American explorers who were free to fire workers and abandon costly, high-risk projects as […]

Shell Plans to Invest $10 Billion in Brazil Over Next Five Years

11 Nov 2016   Brazil

Oil major Shell is planning to continue investing heavily in Brazil as part of a bid to double its global deep water production by the early 2020s. Shell plans to invest $10 billion in the South American nation over the next five years, Wael Sawan, the company’s executive vice president for deep water, said in an interview this week. That would come on top of the more than $30 billion in capital the company says it has deployed in Brazil, where it operates 5,500 energy stations and acquired a large number of oil-and-gas assets earlier this year via its takeover of BG Group PLC. “We are by far the largest foreign investor,” Mr. Sawan said. “Every single year we will be investing around $2 billion.” Foreign oil firms have been eyeing Brazil […]

Petrobras posts surprising loss amid massive asset impairments

11 Nov 2016   Brazil

Brazilian state-controlled oil company Petróleo Brasileiro SA posted an unexpected third-quarter loss on Thursday after drastically reducing the value of oil fields and other assets amid a severe downsizing and weak oil prices. Petrobras lost a net 16.458 billion reais ($4.9 billion) last quarter, five times more than a year earlier. Despite that, operational and cash flow trends improved and, without an impairment, profit could have totaled 600 million reais, Chief Financial Officer Ivan Monteiro told reporters. The numbers came as Chief Executive Officer Pedro Parente cleaned up a balance sheet with unrealistically priced investments, whose losses were magnified by a stronger currency and a rising cost of capital. The company shaved the value of assets by 15.292 billion reais and of investments by 417 million reais […]

Petrobras to Cut Gasoline and Diesel Prices

10 Nov 2016   Brazil

Brazilian state-run oil company Petróleo Brasileiro SA said Tuesday it has decided to reduce prices for gasoline and diesel, after more than a year of using its near-monopoly in the domestic fuel market to shore up its cash flows. Petrobras’ board decided to reduce the price of diesel and gasoline sold at its Brazilian refineries by 10.4% and 3.1%, respectively, the company said in a press release, adding that the price cuts reflect a drop in international oil prices in recent weeks. Petrobras burned billions of dollars in cash from 2011 to 2014 by subsidizing fuel prices in the domestic market. Now burdened with the global oil industry’s largest pile of debt, the company since last year has sold gasoline and diesel at a hefty markup. But Petrobras executives fear that doing […]

Brazil Oil And Gas Production Reach Record Highs In September

7 Nov 2016   Brazil

The Brazilian government on Friday reported that its oil and gas production rose to record levels in September with a total oil equivalent of 3.36 million barrels per day (bpd). According to data from the Agência Nacional de Petróleo, Gás Natural e Biocombustíveis (ANP) energy regulators, September oil output reached 2.67 million bpd, which represents a monthly jump of 2.4 percent and an annual increase of 11.5 percent. Production from the offshore Lula oil field located in the Santos basin grew to 639,700 million bpd in September; thus, beating the monthly record for a Brazilian oil field previously obtained by the Marlim site in 2002. While oil output rose for the fourth straight month, natural gas production in September climbed to 110.4 million cubic meters per day (cmd). This represents 1.5 percent more than the mount reached in August and a 13.4 percent spike compared to September […]

Brazil To Boost Oil Output, Regardless Of OPEC’s Deal

2 Nov 2016   Brazil

The chances of success for any concerted effort to curb global oil supply are getting slimmer by the day, it seems. OPEC members are arguing among themselves who will need to cut how much; Iran and Iraq both want to be excused from the party for reasons of market share necessity; and Russia – the world’s top non-OPEC producer – is turning vague remarks into an art form. Then there’s Brazil, whose Oil and Gas Secretary this weekend delivered yet another blow to the cartel that once held the reins to the global oil price trends. Over the week, Marcio Felix told media in Vienna that “Yes, the Brazilian production is increasing… I do not have the exact figures, but the production in Brazil will grow in the next few years, we have such plans.” Felix attended a meeting between OPEC and a number of non-OPEC producers, […]

Big Oil Prepares For Exploration Rush In Brazilian Pre-Salt

13 Oct 2016   Brazil

Around the world, governments continue to loosen their hold on oil and gas reserves. Just look at a slew of developments this week. Such as Russia finalizing a privatization plan for state producer Bashneft — which will see fellow Russian E&P Rosneft buy the government’s 50.8% stake for $5.3 billion. That plan is a little murky in terms of private-sector involvement. Given that Rosneft itself is majority owned by the Russian government. But another major spot in the oil and gas world is clearly opening for unprecedented private involvement. Offshore Brazil. Late last week, Brazil’s House of Representatives took a major step toward privatizing oil and gas development. By voting 292-to-101 to approve the removal of requirements that state firm Petrobras must participate in high-impact pre-salt oil projects. Up until now, Petrobras by law was required to be a participating partner in all pre-salt blocks. Guaranteeing that the Brazilian […]

Petrobras Says Deep-Water Opening Luring Big Oil to Brazil

11 Oct 2016   Brazil

International oil companies are reaching out to Brazil after it opened its most promising offshore region to increased competition, a move welcomed by Petrobras Chief Executive Officer Pedro Parente as he seeks partners to spread investment costs. Producers rushed to contact Houston-based Brazilian officials last week after Congress removed a requirement that Petrobras control operations at all new projects in an area known as the pre-salt, Parente said. It’s the most investor-friendly change in regulation since the 1997 oil law that ended the company’s monopoly in Brazil. “Our foreign ministry representation unit in Houston, in the very following day, received seven manifestations of interest of big companies,” Parente said at Bloomberg’s offices in New York City. The policy shift comes as the state-controlled producer is selling assets to […]

Brazil Opens Oil Fields to Foreign Firms in Key Policy Shift

7 Oct 2016   Brazil

Brazil’s Congress votes to open up its pre-salt oil fields to foreign investors by scrapping Petrobras’ obligation to be the area’s sole operator. (Bloomberg) — Brazil’s Congress voted on Wednesday night to open up its pre-salt oil fields to foreign investors by scrapping Petroleo Brasileiro SA’s obligation to be the area’s sole operator. The legislation was approved by a 292-to-101 vote, following a bad-tempered debate during which opponents, many dressed in the orange jumpsuits of the state-controlled oil company, repeatedly attempted to delay proceedings. Various amendments to the legislation will be debated next week before President Michel Temer signs it into law. In a significant change to Brazil’s offshore oil industry regulations, companies other than Petrobras can now operate blocks in the largest deep-water deposits discovered this century. Until now the heavily indebted state-controlled oil producer was legally obliged to operate all the pre-salt fields with a 30 percent […]

Brazil Opens Oil Fields to Foreign Firms in Major Policy Shift

6 Oct 2016   Brazil

Congress approves liberalization of huge pre-salt deposits State-run Petrobras no longer sole operator of offshore area Brazil’s Congress voted on Wednesday night to open up its pre-salt oil fields to foreign investors by scrapping Petroleo Brasileiro SA’s obligation to be the area’s sole operator. The legislation was approved by a 292-to-101 vote, following a bad-tempered debate during which opponents, many dressed in the orange jumpsuits of the state-controlled oil company, repeatedly attempted to delay proceedings. Various amendments to the legislation will be debated next week before President Michel Temer signs it into law. In a significant change to Brazil’s offshore oil industry regulations, companies other than Petrobras can now operate blocks in the largest deep-water deposits discovered this century. Until now the heavily indebted state-controlled oil producer was legally obliged to operate all the pre-salt fields with a 30 percent minimum stake. Legislation to open up the area to […]

China Inc. Pursues Power, Glory With Big Brazil Deal

10 Aug 2016   Brazil, China

China Inc. is looking to win a gold medal in deal making with a $13 billion takeover of a Brazilian electric company. State Grid Corp. of China, the world’s largest electricity provider by revenue, is wooing shareholders of CPFL Energia SA CPL 0.50 % and a listed subsidiary, according to people familiar with the situation. It expects to secure stakes from big holders this month before making a full offer to the rest, according to the people. The $13 billion takeover value includes the assumption of debt. The deal would be China’s biggest-ever investment in Brazil—and a fresh dose of foreign capital for a country slogging through one of its deepest recessions ever. Highly profitable, cash-flush State Grid has been deploying more funds overseas as China’s economic engine slows ; power demand in the first half of 2016 was up just 2.7% from a year earlier. In 2014, State […]

Petrobras Gets Permission To Halt Production At 16 Oil Platforms

16 Jul 2016   Brazil

The Brazilian government gave permission to Petrobras to suspend production at sixteen oil platforms as the troubled state-owned firm attempts to reduce costs. As reported in The Rio Times on Friday , federal regulators at the National Petroleum, Natural Gas and Biofuel Agency (ANFP) approved the twelve-months halt in oil production in the states of Ceara, Rio Grande do Norte, Sergipe, Bahia and Espirito Santo. The suspension will also hit another fourteen concessions for the firm that posted a US$340 million loss of the first quarter of 2016 and a total debt of US$126 billion. Despite posting record oil and gas output in June , Petrobras has been battered by the low cost of oil, a domestic economy mired in recession, and involvement in a major bribery scandal that has rocked Brazil’s political establishment. Petrobras CEO Pedro Parente on Thursday said the company would continue with a divestment plan […]

Why Did China Grossly Overpay For A Utility In Brazil?

11 Jul 2016   Brazil, China

China Utlilties Chinese state energy companies are huge by international standards. Their government wants them to ex-pand overseas and they seem indifferent to conventional standards of profitability. This makes them for-midable competitors. And the fact that they can borrow from government-owned banks at attractive in-terest rates lessen their competitive advantage. The State Grid of China, for instance, has $466 billion in assets (yes, we checked that number to make sure we had the decimal in the right place). By comparison one of the U.S.’s largest utilities, Southern Company, has “only” $78 billion of assets. China’s State Grid just made a bid to buy a controlling position in one of Brazil’s biggest electric companies, CPFL Energia, with the bulk of its assets in the industrial state of São Paulo. The offer itself is not the big news. This Chinese firm already owns transmission assets in Brazil. Nor should it be […]

Petrobras Puts Nine Small, Shallow-Water Oil Fields Up for Sale

5 Jul 2016   Brazil

Brazil’s state-run oil firm Petróleo Brasileiro SA said Monday that it is putting nine small, shallow-water oil fields up for sale, part of a previously announced divestment plan meant to help the company chip away at its massive debt burden . Petrobras said the nine fields, in the northeastern states of Ceará and Sergipe, produced an average of 13,000 barrels of oil and natural gas a day last year. The planned sale won’t bring the type of cash Petrobras needs — the nine fields account for less than 1% of the company’s total production — but they signal that the company is moving forward with efforts to shed noncore assets as part of its $15 billion divestment plan . And it won’t attract the same level of interest as Petrobras’ prized deep water, […]

Petrobras CEO Pledges a Revival

20 Jun 2016   Brazil

The new chief executive of Petróleo Brasileiro SA PBR 6.43 % has vowed to return Brazil’s troubled state oil company to “greatness,” by shedding assets—and outdated ideologies—that no longer serve the nation’s most important company. In a Friday interview with The Wall Street Journal, his first with the foreign press since taking the post last month, former agribusiness executive Pedro Parente pointed to a leaner, more profitable company free of political meddling as the way to restore the tarnished image of Petrobras, as the company is known. “This will be a serious company…with the best management that we can have in this country,” Mr. Parente said. “These are not small dreams that we have for this company. I would not have come here if it was not with a view to work to recover this company to its greatness.” He signaled that his strategy is mostly in line […]

Can Brazil’s Next President Rescue Petrobras?

13 May 2016   Brazil

Petrobras Office Brazil’s Senate voted to approve impeachment proceedings against President Dilma Rousseff, forcing her to step down in order to stand trial. Vice President Michel Temer will now succeed her as President through the duration of the trial, which could take several months, and will hold onto the post through the end of her term should she be convicted. The move comes as Brazil is facing a host of problems, including the worst recession in perhaps a century, the ongoing corruption probe of state-owned oil company Petrobras, inflation, the Zika virus, and public outrage. It should be noted that the case against President Rousseff is relatively weak , and many of the politicians leading the impeachment campaign are themselves accused or charged with corruption. Her successor, Vice President Michel Temer, does not have a spotless record either and most Brazilians want him impeached as well. Nevertheless, the political […]

Rousseff Impeachment May Breathe Life Into Petrobras

12 May 2016   Brazil

Petrobras’ stock has been a disaster for investors for years. Even when virtually every other oil company on the planet was seeing their stock move higher, PBR still somehow managed to sink further and further into the red as investors lamented the mismanagement of the firm and its poor business practices. All of that may be starting to change now though, with the government of Brazil in the midst of a significant reshuffle. Like socialist Brazil, Petrobras has been inefficient and ineffective for years as it has squandered its own natural advantages while suffering through a sea of poor leadership as thick as any oil sludge. The impeachment of Dilma Rousseff and her increasingly desperate and unlikely efforts to maintain her position as president Brazil, are changing the situation for Petrobras. Ironically, state giant Petrobras is where Rousseff’s fatal scandal began, and her downfall and the pressure on the […]

Pre-Salt Bonanza Begins In Brazil With First Oil Produced

22 Apr 2016   Brazil

The Brazilian pre-salt bonanza has now officially begun, with Norway’s Statoil and partners announcing production of the first oil and gas from the offshore Gavea field in Brazil—part of the largest-ever oil and gas discovery in the Campos Basin’s pre-salt layer. The project is controlled by state-run Petrobras, but Statoil holds a 35 percent interest and will assume the role of operator later this year, while other partners include Spain’s Repsol and Chinese Sinopec. Statoil said the test well drilled on the site was at a depth of 6,230 meters, and when tests were launched it produced 4,000 barrels of crude per day and 16 million standard cubic feet of natural gas. It’s quite a promising result in what is considered Brazil’s richest oil and gas area. Pre-salt oil and gas deposits are attractive because wells in this layer tend to yield more crude oil than other offshore wells. […]

Statoil And Partners Strike Oil Off Brazil

19 Apr 2016   Brazil

Energy company Statoil and partners Repsol Sinopec Brasil and Petrobras have struck oil off the coast of Brazil, in a deepwater offshore area called the Campos Basin, the Norwegian firm said on Monday. The appraisal well encountered a 175-meters hydrocarbon column and produced around 16 million standard cubic feet of gas and 4,000 barrels per day of oil, Statoil said. Repsol Sinopec Brasil is currently the operator with a stake of 35 percent, but Statoil will take over as operator in the third quarter. It has a stake of 35 percent, while Petrobras holds the remaining 30 percent. Repsol Sinopec Brasil is a joint venture of Spain’s Repsol and China’s Sinopec. (Reporting by Henrik Stolen, editing by Gwladys Fouche) Copyright 2016 Thomson Reuters. Click for Restrictions. […]

Brazil’s lower house of Congress votes to impeach President Dilma Rousseff

18 Apr 2016   Brazil

President Dilma Rousseff lost a crucial impeachment vote in Brazil’s lower house on Sunday evening, making her removal ever more likely and deepening the country’s political crisis less than four months before the opening ceremony of the Summer Olympics in Rio de Janeiro. Rousseff’s opponents easily obtained the two-thirds majority of votes in the 513-member Chamber of Deputies needed to pass the impeachment measure. Voting one by one in a rollicking marathon session broadcast live on television to a rapt Brazilian public, the pro-impeachment lawmakers celebrated wildly on the floor of parliament as they vaulted past the minimum threshold needed to repudiate her. “To rescue the hope that was stolen from the Brazilian people, I vote yes,” said Shéridan de Anchieta, one of the many anti-Rousseff lawmakers whose statements brought rowdy applause and jeers to the chamber. One lawmaker fired confetti into the air from a toy […]

Brazil’s Petrobras Aims to Cut Up to 12,000 Jobs

2 Apr 2016   Brazil

Brazil’s troubled state-run oil company Petróleo Brasileiro SA on Friday announced a beefed-up voluntary layoff program that could affect up to 12,000 jobs amid intense efforts to cut costs. Petrobras said the program, which is being offered to all employees regardless of age or level of seniority, is likely to cost 4.4 billion reais ($1.2 billion) and could save up to 33 billion reais through 2020. The program is wider in scope than a similar layoff program offered last year, and the cost and savings could fluctuate depending on how many employees take the offer, the company said. Petrobras has been making cuts across the board, reducing its once-ambitious investment plan and listing assets for sale as it tries to cope with low oil prices and a massive corruption scandal. Earlier this […]

Brazil’s Petrobras Hit by Lower Oil Prices

22 Mar 2016   Brazil

Brazil’s troubled state-run oil company, Petróleo Brasileiro SA, reported its biggest quarterly loss ever Monday after lower oil prices and higher borrowing costs forced it to write off 49.75 billion reais ($13.79 billion) in assets and investments for last year. Petrobras posted a fourth-quarter loss of BRL36.94 billion, 39% bigger than a year earlier, when its earnings were decimated by write-downs related to a vast…

Shell starts production offshore Brazil

15 Mar 2016   Brazil

Royal Dutch Shell said Monday it started production from the third and final phase of operations in the deep waters off the coast of oil-rich Brazil. “The safe, early delivery of this production is a testament to the efficiency of our deep-water project execution,” Wael Sawan, a vice president in charge of deepwater operations for Shell, said in a statement. Shell holds a 50 percent stake and serves as the operator at the deepwater Parque das Canchas development in the Campos Basin . At peak production, the third and final phase of the development should add another 20,000 barrels of oil equivalent per day to a portfolio that’s yielded more than 100 million […]

Exclusive: Petrobras to cut five-year investment plan one-fifth to $80 billion – sources

2 Mar 2016   Brazil

Brazil’s Petrobras will slash its five-year investment plan by about one-fifth next month as low oil prices, massive debt and fallout from a corruption scandal hobble its ability to fund offshore projects, two sources helping draft the plan told Reuters. The state-led oil company’s capital spending program will fall to about $80 billion in the 2016-20 period, an average of about $16 billion a year, said the sources, who requested anonymity because the plan is not final. If approved, it would be the smallest five-year investment program for the company, formally known as Petroleo Brasileiro SA, since 2006 and mark the latest in a rapid succession of downward revisions. It would be roughly 20 percent smaller than the $98.4 billion plan announced in January, which was the third downward revision of Petrobras’ […]

Bill to Open Brazil’s Offshore Oil Fields to Foreigners Still Faces Fierce Opposition

26 Feb 2016   Brazil

Legislation to open coveted offshore oil fields in Brazil to foreign players took a major step forward this week, but still faces fierce resistance from opponents who consider the measure an affront to the country’s control of a prized natural resource. Brazil’s Senate late Wednesday approved by a 40-to-26 vote a bill aimed at spurring global competition for massive oil reserves located in deep waters about 200 miles off Brazil’s southeastern coast. The bill still faces a potentially long battle in the…

Petrobras Said to Buy Cheniere’s First U.S. Shale Gas Export

24 Feb 2016   Brazil, LNG

Petroleo Brasileiro SA, Brazil’s state-owned energy company, is scheduled to receive the first cargo of shale gas to be shipped from the U.S., according to a person familiar with the deal. The shipment of liquefied natural gas was agreed to Monday, said the person, who asked not to be identified because the information isn’t public. Cheniere Energy Inc.began loading the first tanker at its Sabine Pass terminal in Louisiana, U.S. Coast Guard spokesman Dustin Williams said in an e-mail Tuesday. “The biggest buyer of LNG outside of the winter is Brazil first and Argentina second in the Atlantic Basin,” said Ted Michael, an analyst for energy data provider Genscape Inc.“They buy LNG for gas-powered, air-conditioned power.” Cheniere rose 1.5 percent to $30.77 at 3:24 p.m. in New York after earlier gaining as much as 6.5 percent. America’s first LNG export will hit the water just as global supplies begin […]

Petrobras cuts 5-year investment budget 25%

13 Jan 2016   Brazil

 

Petrobras’s finances have come under intense strain since a multibillion-dollar bribery scandal emerged at the company in 2014. With about $104bn in net debt — the highest for any company in the energy sector — Petrobras has sought to sell assets and reduce spending. The company has stopped paying dividends.  The company said on Tuesday that its planned cuts in capital spending would probably reduce its expected oil output in Brazil this year from 2.185m barrels a day to 2.145m. As well as lower spending on energy projects, Petrobras highlighted the negative impact of the sharp depreciation of the Brazilian real against the dollar, which it said was responsible for $10.7bn of the cuts.   With more than 80 per cent of its debt in foreign currencies, the weaker real has caused Petrobras’s debt to swell. During the past five years, its gross debt has grown fourfold and represents the biggest challenge ahead for Aldemir Bendine, the company’s new chief executive.

Petrobras CEO’s Challenges Aren’t Going Away

5 Jan 2016   Brazil

Aldemir Bendine has been the company’s chief for 11 months. In Portuguese that stands for Tuesday, Wednesday, Thursday—the three days a week that Mr. Bendine typically shows up at the troubled oil giant’s headquarters. The implication, according to people familiar with the matter, is that Mr. Bendine spends too much time in São Paulo, where he lives, and not enough at the energy giant’s nerve center in Rio. It also reflects mounting frustration among Petrobras executives, board members and investors, some of whom say the 52-year-old executive hasn’t done enough in his first year to tackle the company’s myriad problems. “The results have been below expectations in my opinion,” says Adriano Pires, a longtime oil consultant in Rio. “The initiatives that have been taken are very small considering the challenges that Petrobras faces.” President Dilma Rousseff chose Mr. Bendine for the top job last February to help clean up […]

Scandal-hit Petrobras faces new challenge

31 Dec 2015   Brazil

At a Christmas breakfast with journalists, Aldemir Bendine, the chief executive of Petrobras, said Brazil’s state-controlled oil company was aiming to become “smaller” thanks to an array of planned asset sales.  The comment was in marked contrast to the company’s ambitions a few years ago, when Petrobras was contracting a fleet of oil services vessels bigger than Britain’s Royal Navy in a race to exploit huge offshore discoveries near Rio de Janeiro, and thereby turn Brazil into an oil power.  But, for the most important company in Latin America’s biggest economy, simply surviving what has been an annus horribilis in 2015 ranks as an achievement for Petrobras, say analysts. Reeling from one of the world’s largest corruption scandals, the company in April published much-delayed results for 2014 in which it plunged to a net loss of R$21.6bn after a one-off hit of R$50.8bn (US$16.8bn) — of which R$6.2bn related to investigations into the company, with much of the remainder involving writedowns stemming from the oil price crash.  In November, Petrobras reported net income of R$2.1bn for the nine months to September 30, down 58 per cent compared to the same period last year. This partly reflected increased interest payments on the company’s towering borrowings — at $104bn, Petrobras has the largest net debt level in the energy sector. Petrobras’s preference shares have fallen almost 35 per cent over the past 12 months after the company stopped paying dividends.  2016 does not promise to be much easier for the company. Mr Bendine, who was appointed chief executive in February to clean up Petrobras, will need to fight investor lawsuits over losses incurred during the corruption scandal while increasing production and selling assets at a time when oil is trading at multiyear lows.

Brazil’s finances worsen in November

30 Dec 2015   Brazil

A key gauge of Brazil’s public finances, the primary fiscal deficit, ballooned in November to one of the worst levels since records began.  In a stark illustration of the challenges facing the country’s new finance minister, Nelson Barbosa, the government’s primary fiscal deficit — the budget balance before interest payments — during the month rose to R$19.6bn, the central bank said. This brought the 12-month primary fiscal deficit as of November to 0.89 percent of gross domestic product compared with 0.7 percent a month earlier. With the addition of interest payments, the level was 9.3 percent.  The November figure, which is contributing to a rise in gross public debt, was the third highest since records began, according to Reuters data, and comes as President Dilma Rousseff`s ruling Workers` Party, or PT, is lobbying to relax an austerity programme.  “Fiscal results continue to worsen because of falling revenues and rising mandatory expenditures, a trend that will likely continue next year,” said Itaú Unibanco in a research note.  Brazil is facing a growing fiscal crunch as the end of an economic boom fuelled by high commodity prices and credit growth leads to falls in investment and tax revenues.

Brazil Ratings Put Under Review for Cut to Junk by Moody’s

10 Dec 2015   Brazil

Brazil currently rated Baa3, lowest level of investment grade S&P had already cut the country’s rating to junk in September Brazil’s sovereign rating was put on review for a cut to junk by Moody’s Investors Service as the economy worsens and the government struggles to push through measures that would shore up the budget. A turnaround in Brazil’s economic and fiscal performance “now appears unlikely in 2016,” Moody’s said in a statement Wednesday. Because of internal rules, some institutional investors such as pension funds can’t invest in securities labeled junk by at least two of the major rating companies, so a reduction by Moody’s after Standard & Poor’s cut its classification to sub-investment-grade in September could lead to a selloff in Brazilian assets. Fitch Ratings has the country at the lowest level of investment grade. “Fiscal and economic activity indicators continue to sharply deteriorate with no clear sign of […]

Vantage Drilling Files for Bankruptcy Protection

4 Dec 2015   Brazil

Vantage Drilling Co. VTGDF -57.58 % , an offshore oil rig operator linked to the massive corruption scandal at Brazil’s state-run oil firm, filed for bankruptcy protection late Wednesday night after reaching a deal with its lenders and bondholders to swap $1.15 billion in debt for control of the business. Under the terms of a proposed plan filed in U.S. Bankruptcy Court in Wilmington. Del., on Thursday, Vantage Drilling said the debt-for-equity swap will slash more than $1.6 billion in debt off its books. The restructuring proposal would leave Vantage’s Offshore Group Investment Ltd. subsidiary intact while the Vantage parent company is wound down in the Cayman Islands. “Vantage and OGIL have been working on a path forward to deleverage its capital structure and take advantage of market opportunities with a strong balance sheet in light of market conditions,” said Paul Bragg, Vantage and OGIL’s chief executive officer. Although […]

Brazil’s economy shrinks by record 4.5%

2 Dec 2015   Brazil

Brazil’s gross domestic product fell by a record 4.5 per cent year-on-year in the third quarter, confirming fears that Latin America’s largest country is on track for its worst recession since the Great Depression.  Lower commodity prices, fiscal contraction and the fading of a consumer credit boom have battered what was once one of the world’s fastest-growing economies.   Brazil has also taken a hit from the sweeping “Car Wash” investigation into corruption at Petrobras, the state-owned oil company, which has paralysed congress and the corporate sector.  The scandal has also begun to spread to the financial services industry, with the arrest last week of billionaire banker André Esteves, chief executive of investment bank BTG Pactual.

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Petrobras Chairman Steps Down Following Brazil Dam Disaster

1 Dec 2015   Brazil

Mr. Ferreira had been on temporary leave from Petrobras since Sept. 14, Though he had only been at the company since an April shake-up, few had expected Mr. Ferreira to return after word of possible disagreements with Chief Executive Aldemir Bendine seeped out of Petrobras’s boardroom. For most of this month, Mr. Ferreira’s time has been consumed by the fallout from a catastrophic dam failure at Samarco Mineração SA, a joint venture between Vale and Australian miner BHP Billiton Ltd. BHP -1.11 % The Nov. 5 accident killed as many as 13 people, left another eight missing and polluted hundreds of miles of rivers in southeastern Brazil. Vale and BHP have sought to brush off legal responsibility for the disaster while contributing to recovery efforts. But Brazil’s attorney general’s office on Friday announced a 20 billion real ($5.2 billion) civil lawsuit against Samarco “and its controllers,” as the latter […]

Petrobras scandal: Brazil billionaire arrest widens probe

27 Nov 2015   Brazil

In his last interview before his arrest on Wednesday morning, Brazilian billionaire banker André Esteves gave no hint of any impending trouble.  “We are in a tough moment,” the relaxed “carioca”, as those born in Rio de Janeiro are known, told the FT in an interview in mid-November.  He was referring to Brazil’s sinking economy. But now the former systems analyst, who rose from a middle-class family to co-found BTG Pactual, Latin America’s biggest independent investment bank, is facing his own crisis, one that has the potential to unravel his empire and torpedo Brazil’s economy.  The charismatic entrepreneur, who was the bold face of Brazilian finance during the country’s boom years of the first decade of the century, is accused of trying to obstruct justice in a vast corruption investigation into Petrobras, the state-owned oil company.

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Brazilian Senator and Banker Are Arrested as Petrobras Scandal Widens

26 Nov 2015   Brazil

A broad investigation into corruption at Petrobras , Brazil ’s state-owned oil company, widened on Wednesday with the arrests of a sitting senator and a billionaire investment banker who is one of the country’s top finance executives. The federal prosecutor’s office said in a statement that Senator Delcídio do Amaral, a member of the governing Workers’ Party and an important ally of President Dilma Rousseff , had been arrested in Brasília on Wednesday morning. Ms. Rousseff’s popularity has already eroded since her re-election in October of last year because of a prolonged recession and the Petrobras scandal. There have been calls for her to resign, and the Amaral arrest is likely to complicate her efforts to govern and move economic proposals, including unpopular austerity measures, through Congress. It is also likely to deepen the political crisis here with many wondering if she will be forced […]

Perfect Storm at Petrobras, the World’s Most Indebted Oil Company

20 Nov 2015   Brazil

The company has yet to reach its lofty production targets. Instead, Petrobras attained a more dubious title: the world’s most-leveraged oil company, with $127.5 billion in debt as of Sept. 30. Now, the bill is coming due. Loans of nearly $24 billion mature in 2016 and 2017. Investors and analysts are fretting about what’s next: repayment, restructuring or default. “I’ve had calls from investors in every time zone around the world,” said Sarah Leshner Carvalho, an analyst at Barclays. “There is almost no geography not involved in Petrobras bonds.” The company’s strategy of loading up on dollar-denominated debt has backfired as both the local currency and the price of oil have plunged over the past year. Last week, Petrobras reported that its total debt at the end of the third quarter was up 44% from the end of 2014 in local-currency terms to 506.58 billion Brazilian reais. That is […]

Board Turmoil Hits Brazil’s Petrobras

6 Nov 2015   Brazil

Growing friction between the chief executive of Brazilian state oil company Petróleo Brasileiro SA PBR -1.34 % and its board is threatening to hamper the company’s efforts to shore up its finances, people familiar with the matter said. An oil-workers strike launched Sunday has shut down up to 13% of Petrobras’s daily crude production , crimping the company’s already weak cash flow. In addition, continued upheaval in the boardroom is raising fresh concerns about a leadership vacuum as the company struggles to pare a mountain of debt. On Tuesday, Clovis Torres, a board member standing in for Chairman Murilo Ferreira—who took an unexplained leave of absence in September—abruptly resigned for “personal reasons,” the company said. Another director, union leader Deyvid Bacelar, who was elected to represent Petrobras employees on the company’s board, was arrested during a small protest as part of the strike on Monday and briefly […]

Worst Petrobras strike in 20 years hurts Brazil oil output

5 Nov 2015   Brazil

A four-day strike at Petrobras gathered steam on Wednesday, cutting crude and natural gas output from the No. 2 South American oil producer and threatening to become the most disruptive walkout at the state-run oil company in 20 years. On Wednesday, Petroleo Brasileiro SA, as Petrobras is formally known, said in a securities filing late Wednesday that oil output in Brazil was about 140,000 barrels a day, or 6.5 percent below pre-strike levels of about 2.1 million barrels a day. Using contingency plans management restored production that was cut by as much as 273,000 barrels a day, or 13 percent below pre-strike levels on Monday, and by 178,000 barrels a day on Tuesday, or 8.5 percent below levels before the strike began Sunday, Petrobras said. The strike is having a “significant” […]

Worst Petrobras Strike In 20 Years Endangers Debt Plan

5 Nov 2015   Brazil

A four-day strike against Petrobras gathered steam on Wednesday, cutting crude and natural gas output from the No. 2 South American oil producer and threatening to become the most disruptive walkout at the state-run oil company in 20 years. Petroleo Brasileiro SA, as Petrobras is formally known, is expected to continue to report significant output cuts after new offshore units were affected by the strike, which began on Sunday. On Monday Petrobras said it had lost 273,000 barrels a day of crude output, or about 13 percent of its Brazilian output. It has made no formal estimate for output since then. The cuts have already caused the biggest strike-induced hit to Petrobras’ crude output […]

Petrobras Output Cut by Oil Workers Striking Against Austerity

4 Nov 2015   Brazil

Brazil’s daily oil production has fallen by about 500,000 barrels as oil workers strike for the third day to protest austerity measures by state-controlled Petroleo Brasileiro SA that are resulting in job losses, the country’s main oil union said Tuesday. Output from the Campos Basin is down about 400,000 barrels a day with 25 offshore platforms completely shut and another 8 units pumping at reduced levels, Francisco Jose de Oliveira, head of communications for the FUP oil union, said in a telephone interview from Rio de Janeiro. Production has declined at other regions, including Espirito Santo and Bahia, Oliveira said, adding that the union doesn’t have any immediate plans to meet with Petrobras management. Petrobras and the National Hydrocarbons Agency, the oil regulator known as ANP, declined to comment on the impact the strike has had when contacted by e-mail. The ANP said there is no risk of fuel […]

How A Lone Oil Rig Embodies the Brazil Boom That Never Was

29 Oct 2015   Brazil

Oil majors had big plans for Brazil, but you can’t tell by looking at the country’s offshore drilling these days. After crude was first struck in the pre-salt formation in the seas off Rio de Janeiro, producers including BP Plc and Total SA were ready to flock to Brazil with billions of dollars in investments. For the country, it appeared to augur an unprecedented era of oil bounty. Nine years later, the promise remains unrealized: Spain’s Repsol SA and China Petrochemical Corp. are the only foreigners operating an offshore drilling rig. So what happened? While the crude-price collapse and an ongoing graft probe are part of the story, Brazilian officials who failed to auction enough exploration licenses and slowed approvals with miles of red tape were also major contributors to the boom that never came to be, according to Joao Carlos de Luca, a member of the IBP lobby […]