Total and BP outbid oil rivals for Brazil Amazon coast licenses

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

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

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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Brazil’s Supreme Court suspends new oil-royalties regime

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.

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Rio: loser in Brazil’s oil royalty row

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.

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Brazil’s new oil revenue law goes into effect

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.

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Brazil Congress overturns veto on oil royalty bill

Reuters, 03/07/2013

Brazil’s Congress has overturned a presidential veto of a controversial oil and natural gas royalty bill, stripping billions of dollars in revenue from producing states, which have threatened to contest the bill in the courts.

While originally aimed at giving non oil-producing states a fair share of Brazil’s future oil wealth, the new law cuts the share of oil royalties also received from existing production contracts by states and cities bordering maritime fields and redistributes the income among all 27 states and 5,500 municipalities.

By altering existing oil contracts, the new law risks poisoning future debates with states over tax reform and mining. The law could create fresh uncertainty for oil companies operating in Brazil as well, and delay the South American nation’s plans to tap huge subsalt fields and become a major world oil producer.

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Brazil Oil Giant Petrobras Blames Dollar For Collapse

Kenneth Rapoza – Forbes, 02/05/2013

Where’s is Glenn Beck‘s wacky George Soros/Petrobras conspiracy theory now? How about in the trash can, lit on fire, and burning to ashes. Brazil`s largest oil company has been an awful investment pick even for savvy Soros. And it’s not about to rise like a Phoenix from the ashes anytime soon.

Brazil’s Petrobras (PBR) is on its way to $16 a share and one of the reasons that the star of the economy has lost its shine is…the dollar. If you believe their corporate executives that is.

This has been the year that was for Petrobras’s relatively new CEO Maria Graça Foster. The market cap of Petrobras has shed billions since she took over from what many Petrobras watchers say is nothing more than a policy instrument for Brasilia to funnel money to pet projects, rather than an actual oil company drilling below sand and rock salt in the Atlantic Ocean.

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Rousseff expands Brazil oil auction to raise up to $4.9 billion

Mario Sergio Lima, Peter Millard – Bloomberg, 01/23/2013

President Dilma Rousseff expanded by 68 percent the amount of acreage offered in Brazil’s first oil exploration auction since 2008 in a move that will help relieve pent-up demand and increase the government’s auction revenue by raising as much as 10 billion reais ($4.9 billion).

Brazil will auction 289 licenses onshore and off the coast of northeastern Brazil on May 14 and May 15, Marco Antonio Almeida, the secretary of oil and natural gas at the Energy Ministry, told reporters in Brasilia today. Brazil also plans to auction areas in the so-called pre-salt region that holds the country’s largest deposits on Nov. 28 and Nov. 29 and shale onshore gas blocks on Dec. 11 and Dec. 12, he said.

Petroleo Brasileiro SA (PETR4), the world’s biggest producer in deep waters, has discovered high-quality oil in the Ceara and Sergipe basins, where new blocks will be available. The geology along Brazil’s equator also mirrors recent discoveries near the coast of Africa.

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Private equity hunts for Brazil’s next big oil start up

Peter Millard – Bloomberg, 01/22/2013

Brazil’s plan to sell offshore oil licenses for the first time in six years is sending private- equity investors on a search for startups to compete with global producers including Royal Dutch Shell Plc (RDSA) and BP Plc. (BP/)

Denham Capital Management LP, the Boston-based energy investor overseeing $7.3 billion, is among funds in talks with startups before a government auction, said Victor Munoz, Denham’s head for Latin America. Ouro Preto Oleo & Gas, a Brazilian explorer financed by Rio de Janeiro-based fund Turim, is seeking to attract investors, said Dirceu Abrahao, the startup’s ventures director. Agua Grande Petroleo, backed by Toronto-based Forbes & Manhattan, is also looking for additional private funding, Chief Executive Officer Peter Boot said.

“We’re exploring opportunities,” Munoz said in an interview from Sao Paulo. “The life of an exploration company is access to more concessions.”

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