Petrobras workers expected to strike

Petrobras workers are expected to meet with the company's management on 10th November to discuss wage increases and better working conditions. The union, Federação Única dos Petroleiros (FUP), will review whether or not to take strike action.

According to the head of FUP Joao Antonio de Moraes, who spoke to Bloomberg, there has been work stoppage since 6th November. The workers are demanding a 10 per cent increase above inflation and better safety. The FUP said that Petrobras had made an offer to compromise on 31st October but the union rejected it.

Recently, Brazilian automotive, construction and bank workers have gone on strike to demand raises in excess of 10 per cent after annual inflation reached a six-year high of 7.3 per cent in September. Petrobras, which produces about 90 per cent of Brazil's oil, granted union workers a 9.4 per cent raise in 2010.

Sources: Bloomberg, Business Week, Wall Street Journal

For more news and expert analysis about Brazil, please see Brazil Focus.

Brazil: Brave new technological world

Petrobras plans to exploit pre-salt deposits with very advanced submarine technology. The 300–400 km distance of the deposits from the coast makes traditional large drilling platforms non-viable, and the company therefore proposes to replace them gradually with submerged stations, an Atlantis of the future, inhabited by the machinery now found aboard the offshore platforms, only smaller.

The plan is to have these submarine stations in place within 10 years, but a submarine plant to separate oil from water will be installed in the first quarter of 2011 at the Marlim field, in the Campos basin. This will be an intermediate phase for the installation of oil-processing plants at the bottom of the sea.

According to the financial director of Petrobras, Almir Barbassa, these submarine operations will significantly reduce the cost of pre-salt exploitation.

A cluster of advanced technologies for the petroleum industry, and specifically for pre-salt, is being developed in Rio de Janeiro. A number of foreign firms such as Baker Hughes, General Electric, and Schlumberger and Brazilian firms such as Usiminas, Unespetro, and Petrobras' own CENPES research centre are in the process of establishing research labs in the city to respond to the new technological challenges of pre-salt.

More generally, beyond the petroleum sector, Brazil is bracing itself to respond to the challenges of intellectual property. The number of patents reviewed by Institut national de la propriété industrielle (INPI), the federal agency responsible, increased from 9,643 in 2005 to 16,878 in 2009, a variation of 75 per cent.

For more news and expert analysis about Brazil, please see Brazil Focus.

© 2010 Menas Associates

Brazil: A new royalties scheme

On 2nd December, the Brazilian Congress approved the fourth and last bill of the normative framework for pre-salt. The bill defines the production-sharing scheme and allocates royalties to all the states and municipalities, even those that are not producers of oil and gas from pre-salt.

The latter was the more controversial aspect of the legislation, and, by political agreement with the interested governors, it was acknowledged that President Lula would exercise his presidential prerogative of a partial veto of the legislation and proposes a new system of allocation of royalties, by gradually reducing the portion reserved for hydrocarbon-producing states over a period of ten years.

This reduction in royalties would be compensated, over time, by the increase in the volume of oil and gas produced, and hence by an enhancement of royalties accruing to producing states. The principal of these so far is Rio de Janeiro. The new scheme will be defined by Dilma Rousseff in 2011.

A recent article in the Wall Street Journal drew attention to the fact that eight out of twelve of the world's largest deep-sea petroleum deposits discovered over the last 30 years are in Brazil. All of them are being explored by Petrobras, and they are equivalent to 15 billion barrels of oil, more than Brazil's current conventional reserves and nearly two-thirds of those of the US.

There is no doubt that the new frontier of pre-salt is the key to the economic redemption of Brazil. It could spell an end to the country's staggering social iniquities.

For more news and expert analysis about Brazil, please see Brazil Focus.

© 2010 Menas Associates

Brazil changes oil sector law for offshore fields

Brazilian Congress has made certain amendments to its oil sector law, which could potentially increase the country's development of its offshore oil fields. The bill stipulates that state-owned company Petrobras will have a 30 per cent stake in all new offshore exploration ventures within Brazil.

President-elect Dilma Rousseff championed the new legislation while working as the energy minister in the outgoing government. The oil fields off the coast of Rio de Janeiro are estimate to contain more than 50 billion barrels of oil, buried approximately 7km beneath a layer of salt.

Petrobras has years of expertise in deep-water drilling as most of its ventures are located in the south Atlantic Ocean. Brazil's offshore oil fields might prove a lucrative venture for IOCs and foreign investors.

Source: BBC News

For more news and expert analysis about Brazil, please see Brazil Focus.

Petrobras discovers new crude deposit in the Amazon

Petrobras has discovered a new crude deposit in the Amazon region, where it is currently developing large natural gas reserves. The new discovery was confirmed after extensive tests in the town of Tefe, approximately 630km from the city of Manaus in the Brazilian Amazon.

The crude deposit is located 32km from the Urucu oil province, where Petrobras is in the process of developing three natural gas deposits that supply Manaus. According to the company, the new discovery is high-quality light oil with an American Petroleum Institute gravity of 46 degrees.

Despite the fact that the exploratory well's capacity of 2,500 b/d is comparatively small, Petrobras is optimistic and said that the well test was “excellent considering that type of basin”.

In an official statement released shortly after the new discovery, Petrobras said that it will conduct more seismic studies and test drills to determine the size of the Amazon deposit and assess its commercial viability.

Source: Sinchew

For more news and expert analysis about Brazil, please see Brazil Focus.

Petrobras finds light oil in a well south of the Santos Basin

Petrobras has discovered light oil in a well south of the Santos Basin off the Brazilian southeast coast. The well is located 280km off the coast of Sao Paulo state, about 15km away from the Tiro and Sidon area, in water depths of 400 metres. Petrobras announced the find on Tuesday [16th November], but did not give an estimate of how much oil the find might contain.

It made the discovery at the S-M-1352 block in the BM-S-41 concession in which it has an 80 per cent stake, after transferring a 20 per cent stake to its co-operative partner Karoon. The company said it was continuing to drill in the same well, with the possibility it could find more reserves at a greater depth.

Petrobras said the discovery proves the success of the exploratory strategy of searching for new sources of oil and gas in the southeast of Santos Basin, where a series of fields have been discovered already.

Source: Xinhua

For more news and expert analysis about Brazil, please see Brazil Focus.

Shell to sell offshore blocks in Brazil

Shell is to sell its stake in four Brazilian offshore blocks, BS-4, BM-S-8, BM-S-45 and BM-ES-28, and a field in the deep-water pre-salt region. The projects include investments by Petrobras, Chevron, Galp and Brazilian miner Vale. The company holds 20 per cent of the BM-S-8 block in the pre-salt region that includes the Bem-Te-Vi discovery.

"Shell reaffirms that it continues to see Brazil as a key area for exploration and production. This initiative has no impact on our vision for Shell's future growth and development in the country,” said a Shell spokesperson.

Shell's decision to sell off its assets comes shortly after Brazilian government sought congressional approval to revise the country's oil laws to increase state control of Brazil's new-found oil wealth.

Source: Reuters

For more news and expert analysis about Brazil, please see Brazil Focus.

Petrobras strikes oil in onshore well in Brejo Grande field, Brazil

Petrobras has discovered oil in a Brazilian onshore well, located in the Brejo Grande field. The find, in the 3BRSA849DPSE well, has undergone preliminary assessment, but it is yet to be determined whether the well can be exploited commercially.

The news of the discovery comes shortly after Petrobras' announcement of declining figures for its June and overall production in 2010. In June the average total oil, NGL and natural gas production, including international production totalled at 2,563 thousand boe/d, compared with 2,599 thousand boe/d in the month of May.

Oil and NGL production in Brazil reached 1,978 thousand barrels b/d, 2.1 per cent lower than May production of 2,020 thousand b/d. Petrobras has said that the difference in production output is due to the production-scheduled stoppage in P-43 unit, in the Barracuda field.

Source: Bloomberg BusinessWeek

To find out more about Petrobras please visit Petrobras' web site, which you can find here.

Lupatech signs anchoring ropes contract with Petrobras

Lupatech, the Novo Mercado based manufacturer of industrial equipment for the oil and gas industry, has signed an 18 month contract with Petrobras, worth around R$140 million. According to the terms of the contract, Lupatech will be responsible for supplying polyester anchoring ropes for all new Petrobras platforms, until December 2011.

A Lupatech spokesperson said that the company expects to see revenues resulting from the Petrobras contract in the latter part of 2010, and early part of 2011. Current orders for Lupatech's equipment are estimated at R$2.5 billion, with R$466 million to be converted into revenues in the next 12 months, and the remainder, R$2.1 billion, thereafter.

Talking about the new contract, Lupatech's chief financial officer, Thiago Alonso de Oliveira, said that the company has seen a steady increase in demand for their products and services.

“We are facing a moment when the things we supply are in a period of growing demand. It's a period when several discoveries are in the beginning development phase,” said Oliveira. The new Petrobras contract is expected to help boost Lupatech's sales in Brazil.

To find out more about Lupatech, please visit Lupatech's web site which you can find here.

For more news and expert analysis about Brazil, please see Brazil Focus.

© 2010 Menas Associates

Minister says there's a possibility of more stringent offshore drilling regulations

Brazil's Mines and Energy Minister, Marcio Zimmermann, has made an official statement saying that the spill in the Gulf of Mexico, has been a misfortunate accident, but one that has prompted Brazilian government to contemplate the possibility of imposing more stringent regulations in the country's offshore drilling sector.

Speaking to reporters, after an event at the World Expo, Zimmermann said that Brazil will be able to export around 20 million barrels of oil per year by 2019, and confirmed that the country has received $6-$7 billion of oil-for-loan deal from China in 2009.

In that same year, Petrobras received a $10 billion credit deal from China Development Bank, in exchange for a 10-year oil supply agreement with China Petroleum and Chemical Corp.

Chemical Corp has received 150,000 barrels of crude oil a day in the first year; the quantities are set to rise to 200,000 b/d in the next nine years. Petrobras plans to invest $118.8 billion in exploration and production in the next four years, with $30.9 billion designated for offshore oil development.

Source: Wall Street Journal

For more news and exert analysis about Brazil, please see Brazil Focus.

Petrobras signs a $300 million equipment deal

Petrobras has announced that it has signed a four-year subsea manifold frame agreement with FMC Technologies. The deal is said to be worth around $300 million, providing Petrobras is going to order all the equipment included in the agreement. The deal contains a clause which stipulates that 75 per cent of the contracted equipment will be ordered during the contract's four-year call-off period.

According to agreed terms FMC will manufacture up to eight subsea manifolds with subsea multiplex control systems. All equipment is expected to be engineered and manufactured at FMC's facility in Rio de Janeiro, with deliveries scheduled to commence in 2012.

"In February Petrobras awarded FMC a long-term subsea tree frame agreement. Today's four-year manifold agreement further strengthens our ability to support their ongoing and future activities, including deepwater and pre-salt developments," said John Gremp, FMC's president and chief operating officer.

The news of the deal with FMC comes shortly after Petrobras has agreed to pay out R$1million to the Brazilian securities regulator, following charges of inadequate market notice of an oil discovery, back in 2007.

To find out more about Petrobras, please visit the Petrobras web site, which you can find here.

To find out more about FMC Techenologies please visit the FMC Technologies webs site, which you can find here.

For more news and expert analysis about Brazil please see Brazil Focus.