China, Brazil close plane, finance, infrastructure deals

July 18, 2014

Anthony Boadle and Alonso Soto – Reuters, 7/17/2014

China and Brazil sealed their expanding commercial partnership on Thursday with a $5 billion credit line for Brazilian miner Vale and the purchase of 60 passenger jets from Brazilian planemaker Embraer.

In a raft of energy, finance and industry accords signed before presidents Xi Jinping and Dilma Rousseff, the two nations agreed to join forces to build railways to help Brazil cut its infrastructure deficit and feed China’s appetite for commodities.

Trade between China and Brazil soared to $83.3 billion last year from $3.2 billion in 2002, with iron ore, soy and oil making up the bulk of Brazilian exports, making China the South American nation’s biggest trade partner.

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Industrial accidents test Brazil fuel plan

January 7, 2014

Jeff Fick – The Wall Street Journal, 01/06/2014

Brazil’s state-owned energy giant has suffered a series of industrial accidents in recent weeks as it strives to meet the country’s growing fuel needs.

Petróleo Brasileiro’s most recent accident set a fuel refinery ablaze outside Rio de Janeiro on Saturday. No one was injured in that event, but workers have suffered burns and other injuries in incidents at the same refinery and others, union officials say.

Petrobras, as the company is known, has pushed its refineries to their limits, union officials and industry experts say, in an effort to reduce expensive fuel imports that have eroded the company’s profits and Brazil’s trade surplus in recent years.

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Brazil’s oil euphoria hits reality hard

January 7, 2014

Juan Forero – The Washington Post, 01/06/2014

When fields said to hold billions of barrels of oil were discovered off the coast here, exuberant government officials said the deep-sea prize would turn Brazil into a major energy player.

More than six years later, the outlook for Brazil’s oil industry, much like the Brazilian economy itself, is more sobering. Oil production is stagnant, the state-controlled oil company, Petrobras, is hobbled by debt, and foreign oil companies are wary of investing here.

“It’s funny, a few years ago, everybody loved Brazil,” said Roger Tissot, a longtime consultant on Latin American energy. “And now it seems the love is gone.”

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Record Petrobras oil find brings cost concerns: corporate Brazil

June 6, 2013

Peter Millard – Bloomberg Businessweek, 06/06/2013

Investors in Petroleo Brasileiro SA (PBR), the world’s most indebted oil company, aren’t celebrating Brazil’s biggest-ever crude discovery.

Since regulators doubled estimates for the Libra field to as much as 12 billion barrels on May 23, the state-run company’sshares (PBR) fell 5.3 percent in New York, the worst performance among 15 peers tracked by Bloomberg. The new estimates make the oil prospect Brazil’s largest as the country prepares to bring in partners to start production.

For Petrobras, more oil means more investments and debt for a company that already has the world’s second-biggest spending plan and is stretched for staff and equipment. The Rio de Janeiro-based producer will pay a multi-billion-dollar signing bonus for Libra at a time it sacrifices revenue from fuel sales as part of a government policy to curb inflation. Petrobras has sold imported gasoline and diesel at a loss since late 2010.

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Wasn’t a weaker currency supposed to help Brazil?

June 4, 2013

Kenneth Rapoza – Forbes, 06/03/2013

When the Brazilian real was strengthening like gangbusters against the dollar, all the way to R$1.55 back in July of 2008, the government both loved it and hated it.

They loved it because it meant the world loved Brazil and Brazil, with its nagging (and misplaced) inferiority complex, was mighty proud of its strong currency.  Fast forward to the Lehman Brothersand pending fall out in late 2008-09 and the strong currency became a curse. It became part of the “currency war”, a term made quite popular over the last two years by Brazilian Finance Minister Guido Mantega.

The Fed and European Central Bank were weakening their currencies.  Investors were looking for yield were finding it in places like Brazil. Money poured in. The real kept gaining on the dollar and euro.  Mantega and big businesses complained.  They couldn’t be competitive at R$1.70. They needed R$2.00 to $1, everyone was told.

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Brazil posts smallest May trade surplus in 11 years

June 3, 2013

Reuters, 06/03/2013

Brazil’s trade surplus shrank to $760 million in May, down 74 percent from a year ago and the smallest surplus for that month in 11 years, Trade Ministry data showed on Monday.

The result was far below market expectations of a $1.8 billion surplus, according to the median forecast of 16 analysts surveyed by Reuters.

A fall in the prices of key commodities such as soy and crude oil have hampered Brazilian exports while the country’s imports are booming.

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Brazil to auction rights to largest oil prospect

May 24, 2013

Jeff Fick – The Wall Street Journal, 05/23/2013

Brazil plans to auction off its largest-ever offshore oil discovery in October, selling exploration and production rights for a single prospect that is estimated to hold between eight billion and 12 billion barrels of recoverable crude oil at the country’s first presalt-bid round, regulators said Thursday.

The presalt region lies in deep Atlantic Ocean waters off Brazil’s southeast coast, with large deposits of oil trapped beneath a salt layer several miles below the surface.

Libra, as the prospect is known, is larger than the Lula field that started Brazil’s presalt craze when it was announced in 2007, said Magda Chambriard, director of Brazil’s National Petroleum Agency, or ANP. Lula is estimated to hold recoverable reserves of between five billion and eight billion barrels, Ms. Chambriard said.

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Total and BP outbid oil rivals for Brazil Amazon coast licenses

May 15, 2013

Rodrigo Orihuela, Juan Pablo Spinetto – Bloomberg, 05/14/2013

BP Plc (BP/) and Total SA (FP), Europe’s biggest oil companies after Royal Dutch Shell Plc (RDSA), won exploration rights in the Amazon basin as Brazil’s first oil auction in five years attracts a record level of bids.

Total, based in Paris, gained exploration access to operate five blocks at the Foz do Amazonas basin in northern Brazil together with partners BP and Petroleo Brasileiro SA, the oil regulator said today. London-based BP won an additional license to operate a block at the same basin in partnership with Petrobras, as the state-controlled oil company is known.

Brazil, home to the largest crude discovery in the Americas in more than 30 years, is holding its first oil exploration round since 2008, attracting more than 60 prospective bidders for a total of 289 blocks in 11 basins. The country is set to break the $1.1 billion record in auctioning licenses, according to Joao Carlos de Luca, the head of the Brazilian Oil Institute.

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Brazil: The creaking champions

April 22, 2013

Joe Leahy – Financial Times, 04/21/2013

In 2010, when 60 Minutes came to Brazil to do a piece on the “World’s Next Economic Superpower”, the US television programme chose Eike Batista as the ambassador for the country.

“You know, in the last 16 years, Brazil has put its act together. This is it. Hello, time for Americans to wake up,” Mr Batista said with trademark brashness.

In retrospect, the discovery by primetime TV of Brazil’s economy should itself have been a sell signal for investors that a long boom in Latin America’s biggest economy, fuelled by high commodity prices and credit, was peaking.

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Brazil’s oil production drops 8.5 pct in February

April 3, 2013

Global Post/Agencia EFE, 04/03/2013

Oil production in Brazil averaged 2.017 million barrels per day in February, down 8.5 percent from the same month of 2012, when output totaled 2.205 million bpd, the National Petroleum Agency, or ANP, said.

Compared with January’s 2.054 million bpd, oil production declined by 1.8 percent, the ANP said.

The regulator said the fall in production was due to maintenance work on existing oil platforms.

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