Petrobras boomtown turns desolate as refinery’s billions vanish

Sabrina Valle and Carlos Caminada – Yahoo Business, 05/04/2016

Located just 30 miles east of Rio de Janeiro’s bustling Copacabana beach, Itaborai looks like many oil boomtowns after the bust — except the deserted stores and empty glass towers that loom over this town of 220,000 speak of some bigger cataclysm than the collapse of crude prices.

“They said this would be the new oil city,” says Jefferson Costa, one of scores of migrants from Brazil’s impoverished north lured here by a multibillion-dollar petrochemical project that was supposed to create more than 100,000 jobs. Work on the complex, known as Comperj, has stopped, and unless new investors materialize, the single refinery now standing may never produce a single drop of fuel. “It’s empty inside,” says Costa, a plumber who lost his job six months ago when construction came to a halt. “People say it will become a large warehouse.”

Comperj has become a symbol of pervasive corruption at Brazil’s state-run oil producer, Petrobras. A sprawling investigation by federal police and prosecutors dubbed Operation Carwash has revealed massive graft, implicating construction conglomerates, banks, oil service providers, shipbuilders and politicians. About 2 percentage points of the 3.8 percent contraction in Brazil’s gross domestic product last year can be attributed to the effects of the scandal on the company and its suppliers, according to estimates from Tendencias, a consulting firm based in Sao Paulo.

Read More…

 

Soiled by oil scandal, Brazil’s model is primed for makeover

Juan Pablo Spinetto, Anna Edgerton, Sabrina Valle – Bloomberg Business, 05/27/2015

Oil was to be the elixir of Brazil’s dreams to build a formidable economy, promote industrial development and fund a more generous welfare state even as it attracted billions in private global investment.

Instead, crisis and disappointment in the oil sector are beckoning Brazil’s leadership to move — if grudgingly — toward more deregulated industries and to temper the government’s hand in using state-run companies to forge broader economic policy.

Which helps explain why, as her second term takes shape, some of President Dilma Rousseff’s ministers have jettisoned the statist language of her first four years in office and those of her popular predecessor, Luiz Inacio Lula da Silva. Instead, they are floating some liberal notions more in keeping with the pre-Lula years.

Read more…

Brazil president says to maintain oil rules, national content

Reuters, 05/14/2015

May 14 Brazilian President Dilma Rousseff said on Thursday that her government will maintain rules that mandate production-sharing contracts for the country’s most promising areas and high national content requirements for the oil industry.

“The local content policy is not something that can be set aside, it is central to my policy of reviving our country’s investment capacity,” Rousseff said at the christening of an oil tanker at the Atlântico Sul Shipyard near Recife, Brazil.

“We are going through a period of macroeconomic difficulty, but today things are different because we have these shipyards.”

Read more…

CEO of Brazil’s state oil giant quits amid corruption scandal

Reuters/Fortune, 02/04/2015

The firm’s board of directors will meet on Friday to elect a new management team to replace CEO Maria das Graças Foster and five other senior directors.

The chief executive and other senior management at Brazil’s Petrobras resigned on Wednesday amid a festering corruption scandal, sending shares higher as the government scrambled to find replacements capable of restoring investor confidence in the state-run oil company.

The firm’s board of directors will meet on Friday to elect a new management team to replace CEO Maria das Graças Foster and five other senior directors, Petrobras said in a securities filing.

Read more…

United States Subpoenas Brazil’s Petrobras

Adriana Gomez Licon – Associated Press, 11/25/2014

The United States Securities and Exchange Commission has subpoenaed documents in its investigation into corruption allegations at Petrobras, Brazil’s state-run oil giant said.

In a statement late Monday, Petrobras pledged to “cooperate with the United States public authorities with the same dedication it has been cooperating with Brazilian public authorities.” Petrobras acknowledged the documents requested were “related to an investigation into the company initiated by the SEC” and said the materials would be forwarded to the U.S. market regulator following consultations with the company’s U.S. and Brazilian attorneys. Brazil’s largest company had already hired two law firms, one local and the other based in the U.S., in order “to conduct an independent internal investigation,” the statement said.

Shares of the energy giant are traded on the New York Stock Exchange, which allows the SEC to conduct its own investigation into Brazil’s largest company, long considered a crucial motor for the country’s development.

Read more…

Petrobras scam allegations weigh on Brazil as blacklist fears rise

Joe Leahy – Financial Times, 11/24/2014

When black money market dealer Alberto Youssef was arrested by police in March, he was carrying seven mobile phones with another 30 in a desk in his office, an officer involved in the case said.

The reason the jailed conspirator in what is emerging as Brazil’s biggest corruption scandal might have needed so many phones is becoming clearer after police this month raided the offices of Brazil’s major construction companies, arresting scores of officials and executives in the process.

The builders being investigated in the scam, in which Mr Youssef allegedly co-operated with former Petrobras director Paulo Roberto Costa to skim billions of dollars off the state-owned oil company to pay kickbacks to politicians, are responsible for much of Brazil’s infrastructure projects, from airports and nuclear submarine bases to stadiums for the 2016 Olympics.

Read more…

 

Top banker won’t be Brazil’s finance minister: official

Alonso Soto – Reuters, 11/20/2014

The chief executive of Brazilian bank Bradesco SA will not be the country’s next finance minister, a government official said on Thursday, after two local newspapers reported he turned down the job in a major setback for recently re-elected President Dilma Rousseff.

Luiz Carlos Trabuco is out of the running for the post, the official said on condition of anonymity. The official declined to confirm or deny that Trabuco had been offered the job.

Since Rousseff won a runoff vote on Oct. 26, she has yet to name a new finance minister for her second term. Brazil’s economy is struggling with slow growth, high inflation and fallout from a growing corruption scandal at state-run oil company Petroleo Brasileiro SA.

Read more…

Why GE just built its big new R&D center in Brazil

Dan Primack – Fortune, 11/13/2014

GE’s vice chairman explains why the company picked Rio de Janeiro as the location for first new global R&D center in over a decade. General Electric GE -0.41% today opened the doors to its first new global R&D center in more than a decade, with a facility in Rio de Janeiro that eventually could employ 400 people. John Rice, vice chairman of GE and CEO of its global growth and operations division, was in Brazil for the launch, and took some time to speak via phone with Fortune.

What follows is an edited transcript of our conversation:

FORTUNE: Why is GE opening such a large R&D facility in Rio de Janeiro?
RICE: Brazil and Latin America have been great markets for us for a long time. So when you do something like this, it’s really about the quality of the people we can find to work there. You can open a center but if you can’t hire great people, it self-selects to something not very significant. There’s also the fact that here we have some very progressive participants in the world of oil and gas, including Petrobras, who are really pushing the boundries in terms of going to deeper, more complicated places. We have to learn how to support them by developing new capabilities both for them and with them.

Read more…

SBM Bribery Probe in Brazil Puts Petrobras Work at Risk

Sabrina Valle and Peter Millard – Bloomberg Businessweek, 11/13/2014

An investigation into allegations that SBM Offshore NV (SBMO) bribed Brazilian officials to get work may prevent the Dutch supplier of floating oil platforms from competing for contracts with state-controlled Petroleo Brasileiro SA.

Brazil’s comptroller general opened a procedure against SBM to probe if it gained unfair advantages by bribing officials, the agency known as CGU said in a statement yesterday. Petrobras won’t invite SBM to participate in tenders until Brazil investigations end, it said in an e-mailed response today. The probe “could result, in the end, in the inability to have new contracts with Petrobras,” the CGU said. “Notification so SBM can present its defense will happen in the next few days.”

Petrobras has come under increased scrutiny this year following graft allegations. Apart from the SBM probe, Brazilian federal police, Congress and the country’s audit court are doing separate investigations into Petrobras’s involvement in a multibillion-dollar money-laundering and bribery case. It has put President Dilma Rousseff, who was Petrobras chairwoman from 2003 to 2010, on the defensive as she starts her second term.

Read more…

Next Four Years Will Be Pressure Cooker For Brazil Pres Dilma

Kenneth Rapoza – Forbes, 11/05/2014

October 26, 2014 will go down as one of those days where Dilma Rousseff should have been more careful about what she wished for. Dilma, re-elected president of Brazil with around 52% of the popular vote, has the Workers’ Party credibility on the line. More important than politics, the business community is now counting on her for revival. If she fails to resuscitate – and no one thinks she’s the Red Cross – Brazil will be mired in slow growth for most of her second term.

Within the greater Latin American economy, Brazil is the elephant in the room, says Guilherme Loureiro, a UBS economist based in São Paulo. The region’s fortunes will largely be determined by whether its biggest economy can turn its fortunes around. Loureiro thinks it is unlikely that a new Dilma administration will introduce the type of structural reforms needed to boost savings and investment in the economy. Out of the big four emerging markets, Brazil is the worst for private investment. It equals just 17% of GDP. For Loureiro’s team at UBS, the base case scenario for Brazilian growth next year is a paltry 0.6%. In 2016, it’s 1.8%.

Dilma is currently dealing with the worst political climate since the bribery scandals known locally as “mensalão” took place in 2005.  Top executives from state owned oil and gas company, Petrobras, are being investigated for fraud. Some whistle blowers are saying Dilma knew about the fraud. This is a political grenade for the Workers’ Party which– as rumor has it — is thinking about putting up Party frontman Luiz Inacio Lula da Silva as its presidential candidate in 2018. He already had 8 years as President prior to Dilma’s election in 2010.  A mis-step by Dilma would likely put an end to those plans, even if they were carried out. If Dilma sinks Brazil, Lula won’t be able to sell himself as the clean-up crew.

Read more…