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.
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.
June 3, 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.
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.
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.
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.
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.
March 19, 2013
Jeff Fick – Fox Business/Dow Jones Newswires, 03/19/2013
Supreme Court Justice Carmen Lucia granted the injunction after Rio de Janeiro, Espirito Santo and Sao Paulo states filed lawsuits last week to block implementation of the new royalties regime. The states claim the new scheme is unconstitutional because it would break existing contracts, while also causing budget shortfalls that would severely crimp public services.
The ruling on the injunction will be reviewed by the full court at a later date, according to a court official.
In her decision, Ms. Lucia said that the case required urgent judicial attention from the court because royalties are paid on a monthly basis. The changes represented “unequaled risks” to the financial health of the states and cities involved, “impelling me to immediately grant the requested injunction,” Ms. Lucia said.
March 18, 2013
Thalita Carrico – The Financial Times, 03/15/2013
The credit ratings agencies have become the latest to weigh into the debate over Brazil’s oil royalties bill, with Fitch warning this week it could lead to a review of the ratings of Rio de Janeiro.
Rarely has a new law inspired so much bitter disagreement between Brazil’s states. The controversy potentially has implications over whether Rio de Janeiro will be able to successfully host the World Cup final next year and the Olympics the following year.
The argument is over how states and municipalities should split their share of revenue from Brazil’s burgeoning offshore oil wealth. The majority of states argue the present regime favours the so-called “producing states”, particularly those near the vast deepwater fields of South-eastern Brazil: Rio de Janeiro, Espírito Santo and São Paulo.
March 15, 2013
The Miami Herald/AP, 03/15/2013
A new oil law that gives a greater share of royalty revenues from Brazil’s vast oil fields to non-producing states went into effect on Friday and producing states say they will file appeals with the Supreme Court.
The law was published in the official gazette after President Dilma Rousseff signed it on Thursday.
The new law shares oil royalties, from existing and future drilling and production concessions, more evenly among all of Brazil’s 27 states instead of favoring top oil producers such as Rio de Janeiro, Espirito Santo and Sao Paulo states.