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Archive for outubro \18\UTC 2014

Shell to Halliburton Seen Winning With Brazil’s Neves

Posted by iscariotes em 18 de outubro de 2014

Fonte: Bloomberg

The prospect of regime change in Brazil is making Petroleo Brasileiro SA (PETR4) the world’s best major oil stock. It’s also opening the door for foreign companies to tap more of the country’s vast energy wealth.

Policies that saddled state-run Petrobras with $139 billion in debt and made offshore projects more expensive also stunted efforts by companies including Royal Dutch Shell Plc (RDSA) and Halliburton Co. (HAL) to expand in the country. Opposition candidate Aecio Neves’s pledges to auction exploration licenses more frequently, raise fuel prices and ease made-in-Brazil requirements mirror recommendations from the industry.

Neves, whose Social Democracy Party opened oil to foreign producers in the late 1990s, surprised analysts to take second place in voting Oct. 5 and force a runoff ballot. Frustration among oil companies and their investors with President Dilma Rousseff, has grown since she took office in 2011. Last month an oil lobbying group said the industry faces difficulties and some Petrobras (PBR) suppliers may leave Brazil. Neves has attacked Rousseff’s handling of Petrobras and hired an industry consultant and an official involved in 1990s privatizations to draft his energy program.

“Opening the industry up to foreign investors, that’s what you’ll see in Brazil if Neves wins,” Robbert van Batenburg, director of market strategy at broker-dealer Newedge USA LLC, said in a phone interview from New York. “These restrictions on imports and trade barriers have been extremely unhelpful. If he wins, he will dial all that back.”

Pre-salt Grip

Neves, the former governor of Minas Gerais state, has pledged to hold regular auctions for exploration rights. He is also considering changing legislation that requires Petrobras, the biggest producer in waters deeper than 1,000 feet, to hold at least a 30 percent stake in all projects in the so-called pre-salt region.

Rousseff and Neves are statistically tied less than two weeks before the Oct. 26 runoff, according two polls yesterday, signaling the most contested presidential race in more than a decade.

Petrobras has surged 9.1 percent since Neves won a place in the runoff vote, as other major producers fell. In the past four years, the stock has lost investors 32 percent in dollar terms, the worst performance among major competitors.

Shares of Petrobras declined 5.6 percent to 20.02 reais at the close in Sao Paulo.

The requirement that Petrobras be the operator in every new discovery in the pre-salt, a formation beneath a layer of salt under the seabed, should be reviewed to boost competition, Elena Landau, who advises Neves in energy matters, said in an interview in Rio de Janeiro yesterday. Changes would need congressional approval, she said.

Sole Operator

“When you have Petrobras as sole operator, you are limiting capacity,” said Landau, who was dubbed the “iron lady of privatizations” by the Brazilian press after her involvement in the divestment of public enterprises during the 1990s under former president Fernando Henrique Cardoso. “It constrains competition.”

Petrobras declined to comment on how a Neves victory would impact the company and the industry. Existing rules maximize the country’s participation in the industry while also luring foreign companies, Aloizio Mercadante, Rousseff’s campaign coordinator, said by e-mail.

“We want Petrobras to be the only operator company, and it will be able to develop highly scientific research and innovation, and use the whole industrial chain of gas and oil,” Mercadante said in response to Bloomberg questions about the pre-salt area.

‘Not Valued’

“Foreign companies aren’t valued by this government, as if they were not very relevant,” she said.

Rousseff has pointed to more than 500,000 barrels a day of new production from the pre-salt area during her administration and said fuel price caps have shielded consumers from volatility in international oil markets. She predicts rapid output gains that will help finance social programs and reduce poverty in Latin America’s most populous nation.

The elimination of fuel subsidies that have cost Petrobras at least 60 billion reais during Rousseff’s first term would boost the company’s profit and its ability to buy goods and services from suppliers such as Halliburton, according to the Instituto Brasileiro de Petroleo, or IBP, a group that lobbies for the industry.

Losing Workers

In mid-2010, Halliburton Chief Executive Officer David Lesar said revenue from Brazil grew by almost 30 percent as the company invested in infrastructure. In January, he said service companies were “looking for relief” after drilling activity fell below expectations.

Halliburton declined to comment on the possible impact of a Neves win.

“World class products and convenient services also need to be competitive in price,” Shell’s VP for new business in the Americas Jorge Santos Silva said during an offshore oil conference last month. “One of the greatest challenges the industry faces is how to help local suppliers and develop goods and services,” he said.

Shell is always willing to work with government representatives where it operates and prefers not to comment on elections, it said in an e-mailed response.

Brazil is losing qualified oil workers to other countries because of project cancellations or delays, Paulo Cesar Martins, the head of the Abespetro association of offshore oil service companies, said at the same conference.

Oil companies need regular bidding rounds to maintain staff and investments in Brazil, he said. The number of drilling rigs operated by companies other than Petrobras has fallen to three from 17 in 2010, he said.

‘God is Brazilian’

Cardoso, the former president, broke Petrobras’s monopoly on oil exploration and production in 1997 and auctioned the first blocks under a concession model in 1999. Brazil then held exploration auctions each year until 2008.

Former president Luiz Inacio Lula da Silva declared the massive deposits showed “God is Brazilian” and decided the national oil company would be in charge of all future projects in the region. Lula halted offshore licenses to keep Brazil’s newfound oil riches under government control through Petrobras, and Brazil didn’t offer any offshore acreage at all until 2013.

In 2007, Lula and Rousseff, his energy minister and then chief of staff, started planning legislation to let the government, through its control of Petrobras, control the pace of development. Knowing it would cost hundreds of billions of dollars to develop the pre-salt region, they still wanted foreign companies to help finance production as minority partners with no power to set budgets or decide where to drill.

One Bidder

The resulting legislation was something never seen before in the industry. Oil companies are free to form consortia and bid against Petrobras. If they win, they need to invite the former rival to join the group with a 30 percent stake and grant it control over day-to-day decisions. No companies bid against Petrobras when Brazil put the model to the test. It auctioned rights to produce at Libra, a field holding nearly the equivalent of Brazil’s current proven reserves, and only one group led by Petrobras placed a bid.

The state-run producer’s “monopoly” over the pre-salt needs to be reviewed, Adriano Pires, the consultant who co-authored Neves’ oil plan and doesn’t hold a position in the campaign, said in a telephone interview from Rio.

“Petrobras can’t be an instrument for political policy,” Pires said. “A lot would need to change.”

Em http://mobile.bloomberg.com/news/2014-10-10/shell-to-halliburton-seen-winning-with-brazil-s-neves.html


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