December 2, 2013
Rodrigo Orihuela & Denyse Godoy – Bloomberg, 12/02/2013
Petroleo Brasileiro SA (PETR4) fell the most in 17 months after the government failed to meet a request by the state-run company to disclose a clear policy for phasing out fuel subsidies that have cut earnings and increased debt.
Shares in Petrobras, as the Rio de Janeiro-based crude producer is known, lost as much as 7.2 percent, the steepest intraday decline since June 25, 2012, and the most among members of the Dow Jones Oil & Gas Titans 30 Index.
While President Dilma Rousseff allowed Petrobras to raise prices for the first time since March, the Nov. 29 statement fell short of disclosing details of the methodology for future adjustments. Selling imported gasoline below cost drove down profit the most among major producers last quarter. The fuel losses, a controversial capital increase and record-high debt have made Petrobras, once the sixth most valuable company, the worst-performing major oil stock in the past five years.
November 4, 2013
Rogerio Jelmayer – The Wall Street Journal, 11/04/2013
The good news is that Brazil’s inflation rate is likely to show a dip when October figures are released; the bad news is that October’s dip is likely to be the last for several months to come.
Brazil’s 12-month inflation rate is likely to weigh in at 5.85% when October figures are released on Wednesday, according to the median estimate of 12 economists in a survey. That would represent a slight dip from 5.86% as of September and constitute the lowest 12-month rate since December of 2012.
But the victory could prove temporary. Brazil’s inflation rate is still far above the government’s 4.5% target and inflationary pressures are likely to rise, not diminish, in the next few months.
November 4, 2013
Joe Leahy – Financial Times, 11/04/2013
There must be moments in every politician’s career that make them cringe when recalling later on.
For Brazil’s President Dilma Rousseff one of these is probably the day in April last year when she helped failed entrepreneur Eike Batista commemorate the “first oil” from what are now his failed fields off the coast of Rio de Janeiro.
The Brazilian president said a number of things that day praising Mr Batista, who was then still the country’s richest man with a fortune estimated at more than $30bn invested in a network of oil, mining, energy and logistics companies, most of them start-ups.
November 1, 2013
The Economist, 11/02/2013
ON OCTOBER 30th OGX, the oil-and-gas firm at the heart of the business empire of Eike Batista, a flamboyant entrepreneur who was until recently Brazil’s richest man, filed for bankruptcy protection. One month earlier it had missed a $45m payment to bondholders, and attempts to negotiate a debt restructuring during a 30-day grace period failed. With $3.6 billion in bonds and another $500m owed to suppliers, it is Latin America’s largest corporate failure. OGX now has two months, extendable for a further three, to agree a recovery plan with investors. Without fresh funding it will run out of cash by the end of the year and risk losing its most valuable remaining assets, stakes in two offshore oilfields close to production. That would leave investors with little or nothing.
OGX was listed in 2008 on the basis of promising exploration prospects. Industry specialists understood that without fields in production OGX was a high-risk proposition, says Mark McHugh of OFSCap, an energy-investment firm. But they were impressed by the “dream team” put together by Mr Batista: a group of ex-employees of Petrobras, Brazil’s state-controlled oil giant, with unrivalled experience and geological nous. Together with a high oil price, big discoveries in Brazilian waters just months earlier and Mr Batista’s extraordinarily persuasive patter, that let it raise 6.7 billion reais ($3.7 billion) in what was Brazil’s biggest-ever IPO at the time. In late 2010 its market capitalisation hit 75 billion reais.
October 30, 2013
No date has been set yet for an eventual increase in Brazilian gasoline prices, Finance Minister Guido Mantega said on Wednesday.
Brazil’s state-run oil company Petrobras on Wednesday detailed components of a new pricing formula that would help close a large gap between local and international fuel prices that has hurt the company in recent years.
Newspaper Valor Economico said earlier on Wednesday Petrobras expected to raise gasoline and diesel prices on Nov. 22.
October 29, 2013
Brazil’s state-run oil company Petrobras has proposed a new fuel-pricing plan, hoping to generate more cash and cut debt levels by improving the timing of gasoline and diesel price adjustments, Chief Financial Officer Almir Barbassa said on Monday.
The new policy, once it is in place, will set automatic fuel price rises or cuts, Barbassa told investors, analysts and reporters on a conference call to discuss third-quarter earnings. Petrobras stock jumped on hopes the new system will help the company cut debt that has ballooned because Petrobras now sells imported fuel at a loss to keep domestic prices low.
He said the proposed pricing system will not change the company’s policy of targeting long-term international prices for gasoline and diesel rather than short-term changes in global benchmarks.
October 24, 2013
The Economist – 10/26/2013
SIX years after discovering giant offshore “pré-sal” oil deposits, so called because they lie beneath a thick layer of salt under the ocean bed, Brazil has finally auctioned the rights to develop some of its deeply buried wealth. On October 21st the Libra field, off Rio de Janeiro’s coast (see map), was sold to a consortium led by Petrobras, Brazil’s state-controlled oil firm, and including France’s Total, Anglo-Dutch Shell and China’s state-owned CNOOC and CNPC. Libra’s estimated 8 billion-12 billion barrels of recoverable oil make it the biggest oil prospect in the world to be auctioned this year. Once it reaches peak production, sometime in the next decade, it should increase Brazil’s output from 2.1m to about 3.5m barrels per day.
At times simply holding the auction seemed an achievement. A flurry of unsuccessful legal challenges marked the run-up. As it was under way in a Rio beachside hotel, soldiers outside used rubber bullets and tear gas to hold back striking oil workers, masked anarchists and union activists opposed to private-sector participation in the oil business. Hundreds of troops formed a human chain to the water’s edge, pushing bemused sunbathers and surfers aside. Warned that trouble was likely, Dilma Rousseff, who had planned to attend, instead watched by video-link from the presidential palace in Brasília.
October 22, 2013
Shasta Darlington – CNN, 10/21/2013
A consortium including Petrobras, Shell, Total and two Chinese companies was the winner and sole bidder in Brazil’s auction of a giant offshore oil block, considered one of the most promising in the world.
Protesters clashed with police and Army troops a couple of blocks from the hotel where the auction was carried out as oil workers and activists denounced the auction as a sale of national assets to foreign companies.
Protesters attacked parked cars and metal barriers protecting the areal while security forces fired tear gas. The government deployed Army troops ahead of the auction to help cordon off the area.
October 18, 2013
Samantha Pearson & Joe Leahy – Financial Times, 10/17/2013
Pharaoh’s motel in the industrial outskirts of São Paulo is typical of Brazil’s 5,000 secretive “love hotels” found in the suburbs of big cities. Just visible from the 10-lane highway that runs to the coast, rows of secluded, air-conditioned lodges offer the usual combination of round beds and thematic quirks – in this case, murals of Cleopatra and a selection of hieroglyphs. However, Pharaoh’s biggest, and perhaps dirtiest, secret is locked away in one of the back rooms: a diesel-guzzling generator.
Like other remote hotels cut off from the main gas system, it runs on a generator at peak times to avoid expensive electricity tariffs, taking advantage of diesel prices that are kept artificially low in Brazil.
“Is it environmentally friendly? No, but we’ve got to make a living,” says José Marchi, the motel’s manager.
October 7, 2013
Zeynep Zileli Rabanea – Al Jazeera, 10/07/2013
Two weeks ago, Brazil’s president Dilma Rousseff cancelled a diplomatic trip to Washington shortly after news broke that the United States’ National Security Agency (NSA) had spied on her personal communications and those of Brazilian oil company Petrobras.
Rousseff demanded a full public apology and an explanation from US President Barack Obama. On September 24, in a statement at the UN, she stated that such invasions of privacy are breaches of international law. “The right to safety of citizens of one country can never be guaranteed by violating fundamental human rights of citizens of another country,” she said.
With the recent stories of the mass NSA surveillance programmes there is a sense that the surveillance of Brazil should have hardly come as a surprise to anyone, and certainly not to Rousseff, the former guerrilla who fought against Brazil’s US-backed military dictatorship in the 1960s.