How important is Brazil to the world’s oil market?

Kenneth Rapoza – Forbes, 6/15/2015

Two things put Brazil’s oil wealth in the public eye again this year. One good. One not so good. First the not so good: Petrobras. The state-owned oil firm is up to its eyeballs in scandal. It’s led to the bankruptcy of around four Petrobras partner firms, and the arrest of dozens of executives, including high level Petrobras managers implicated in money laundering and accounting fraud. So that’s the bad side of Brazil’s oil business.

Then the good side. That was brought to light recently when Shell Oil bought out the BG Group, a U.K. driller that partners with Petrobras on four wells in the Atlantic Ocean. Shell’s CEO Ben van Beurden said that one of the most attractive aspects of the BG deal was Petrobras. Before BG, Shell had drilling rights to just one field. It now has rights to four more. Buying BG was like buying Brazilian oil and buying Brazilian oil, for Shell, was a good idea.

Here’s why the oil industry watches Brazil’s lucrative deep water projects closely.

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Brazil’s Petrobras sets domestic well-depth record

EFE – Fox News Latino, 4/30/2015

Petrobras has set a new Brazilian record for exploratory drilling by reaching a water depth of nearly 3,000 meters (9,836 feet), the state-controlled oil giant said.

The 3-BRSA-1296-SES well was drilled to a water depth of 2,988 meters – eight meters more than the 3-SES-184 well Petrobras drilled in February in that same basin – and a total depth of 6,060 meters (19,868 feet).

Only six wells in the world exceed the depth of 3-BRSA-1296-SES, three of which were drilled by India’s Oil and Natural Gas Corporation in that South Asian nation and three by U.S. energy companies Murphy Oil and Chevron Corp. in the U.S. Gulf of Mexico, Petrobras said.

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Brazil oil ship explosion death toll rises to five

AP – The Guardian, 2/12/2015

Two bodies were found inside an oil ship that exploded off Brazil’s coast, increasing the death toll to five, the oil workers union said on Thursday.

The Oil Workers Union of the state of Espírito Santo, where Wednesday’s explosion took place, said rescue teams are searching for four who remain missing. It said 10 workers were injured in the blast.

The union said on its Facebook page that the two bodies were found inside the engine room of the vessel, one of many floating oil production, storage and offloading units that state-run oil company Petrobras employs in developing Brazil’s massive offshore oil fields.

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Whose oil in Brazil?

The Economist (print edition), 2/14/2015

THE slogan under which Petrobras, Brazil’s national oil company, was founded in 1953 was o petróleo é nosso (“the oil is ours”). Ours, not the foreigners’, was the implication. That, too, is the sentiment behind the oil policy of the Workers’ Party (PT) governments that have ruled Brazil since 2003. But as Brazilians contemplate the huge corruption scandal now engulfing Petrobras, they might ask themselves just who “ours” refers to.

The PT disliked a successful reform of Petrobras in the 1990s, which stripped it of its monopoly of production and distribution while subjecting it to market discipline and arm’s-length corporate governance. When the company and its new foreign partners made huge deep-sea oil strikes in 2007 Luiz Inácio Lula da Silva, Brazil’s president, saw a chance partially to restore Petrobras’s monopoly. New oil laws drawn up by Dilma Rousseff, his chief of staff and successor, gave the company sole operating rights and a minimum 30% stake in the new fields.

Lula and Ms Rousseff saw oil as the spearhead of an industrial policy that involved fostering favoured sectors and presumed national champions. Lula ordered Petrobras to build four new refineries, three in the poor north-east. A new rule required up to 85% of equipment and supplies for the oil industry to be nationally produced. A dozen new shipyards studded the Brazilian coast, fed on cheap government loans. They provided 74,000 new jobs, boasted Ms Rousseff during her campaign last year for a second term. “We created an immense industry.”

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Petrobras Hits Drilling Snag at Brazil’s Biggest-Ever Oil Find

Peter Millard and Sabrina Valle – Bloomberg Business, 2/10/2015

Petroleo Brasileiro SA redirected a well at its biggest oil discovery after encountering a pressure zone, underscoring the technical challenges facing the producer’s new management team.

The “drilling phase” of the well at the offshore Libra field hasn’t been halted because of the procedure, the Rio de Janeiro-based state-run company said in an e-mailed response to questions Tuesday. A snag caused the company to halt drilling for more than a week, two people with knowledge of the matter said earlier, asking not to be named because the matter isn’t public. Libra is expected to start commercial output in 2020.

While Petrobras expanded output to a record in December at the so-called pre-salt region that holds Brazil’s largest deposits, it has also run into drilling disruptions in the past. In 2010, it abandoned the first well it started at Libra, citing mechanical issues. In 2011, it briefly halted production at the Sapinhoa field in the same region after a pipe ruptured.

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Explosion Kills Three Aboard Petrobras Offshore Natural Gas Platform In Brazil

Kenneth Rapoza – Forbes, 2/11/2015

Brazilian oil major Petrobras faced another negative on Wednesday when a floating production (FPSO) facility it was renting from BW Offshore suffered an explosion that killed three of its workers.

The explosion occurred at 12:50 local time today on board the FPSO vessel known as Cidade de São Mateus, operating on the Camarupim and Camarupim Norte fields that sit roughly 60 miles off the coast of Espirito Santo state. BW Offshore, a U.S. oil services company, said in a statement that 10 people were injured, and three were killed in the blast.

Petrobras triggered the emergency response immediately. Production has been stopped and the unit has been shut down, BW Offshore said.

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Petrobras top management resigns in Brazil corruption case

Sabrina Valle/Dense Godoy – Bloomberg, 02/04/2015

Petroleo Brasileiro SA Chief Executive Officer Maria das Gracas Foster and five of her top managers stepped down amid a corruption probe that’s wiped out billions of dollars of the oil producer’s market value and threatens Brazil’s economic revival. Shares gained.

State-run Petrobras’s board of directors will meet Friday to elect replacements for Foster and her management team, it said in a one-sentence statement Wednesday. It’s unclear whether the managers will remain until replacements are found. No single CEO candidate has yet emerged publicly.

The Rio de Janeiro-based company is facing allegations that at least three former executives were bribed to award construction contracts. Foster, 61, is an engineer who rose through the ranks to become the first female CEO of Latin America’s largest publicly traded oil company in 2012. Her resignation comes after the stock sank as much as 70 percent from a September peak.

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