‘Chinese funds needed’ to reach Brazil offshore oil

May 25, 2012


‘Chinese funds needed’ to reach Brazil offshore oil

Tapping Brazil’s huge offshore oil reserves will require foreign investment that only cash-rich Chinese banks are in a position to provide, industry experts said.
Alvaro Teixera of the Brazilian Petroleum, Gas and Biofuels Institute IBP told an energy forum that cumulative expenditures in the sector until 2020 were estimated to reach $400 billion.
“We need foreign capital and technology,” he told the Mare Forum on shipping and offshore business opportunities in Brazil.
For the 2011-2015 period, industry experts have forecast investments of $258 billion, of which 83.3 percent will come from Brazil’s state-owned energy giant Petrobras, he added.
Oil from the so-called pre-salt offshore fields will be the engine fueling Brazil’s economic growth in the coming decades, the experts said.
The fields, located off Brazil’s southeast Atlantic coast deep beneath the ocean floor and hot salt-beds, hold reserves that could surpass 100 billion barrels of high-quality recoverable crude, according to Brazil’s National Petroleum Agency.
Ugo Salerno, chief executive of the Genoa-based shipping classification firm RINA, said that Brazil’s current production of 2.9 million barrels of oil equivalent (BOE) is forecast to jump to 7.6 million BOE by 2020, which would turn the country into the world’s fifth largest producer.
About 53 percent of the total is expected to come from the pre-salt reserves.
Paul Schulte, a US banker who is a director at China Construction Bank, said that only cash-flush Chinese banks had the deep pockets needed to invest in Brazil’s energy sector.
He said that European and US banks had invested massively in 2008-2009 in dry bulk carriers — vessels designed to carry items like minerals and grain — but the business subsequently collapsed.
“These banks are going to be eating those losses for a very long time,” Schulte said. “European banks are going to shrink regardless of the outcome for Greece, Spain (the eurozone debt crisis).”
He urged the Brazilian oil industry to lobby Congress in Brasilia for tax changes.
Brazil “needs to tax consumption and get tax breaks for investment” to lure Chinese banks, Schulte said.
Currently those banks see a friendlier business environment in Africa, he said.
In 2009, China dislodged the United States as Brazil’s largest trading partner, with bilateral trade reaching $77 billion last year and Brazil enjoying a trade surplus of some $11.5 billion.
Beijing is also the largest investor in the South American nation.
Iron ore and soybeans represent more than 80 percent of Brazil’s exports to China, which in turn sells mostly manufactured goods to Brazil.
This resource-rich South American powerhouse, now the world’s sixth largest economy, is expected to vault into fourth place by 2050, according to International Monetary Fund statistics.

Petrobras was founded in 1953. Petrobras controls significant oil and energy assets in 18 countries in Africa, North America, South America, Europe and Asia.


Present in the United States since 1987, Petrobras has a financial office in New York and a trading and procurement office in Houston.

Petrobras operations include exploring blocks in deep and ultra-deep waters, as well as in shallow areas and areas onshore, always aiming to reach deep reservoirs.
Petrobras began operations in Nigeria, in Western Africa, in 1998, in the deep waters of the Niger Delta. Since then, our oil exploration and production operations have intensified in the country. Today, we are involved as a non-operator in the OML-127 (Agbani) and OML-130 (Akpo) blocks.
In February 2011, we arrived in Benin, which is on the Western coast of Africa, after acquiring 50% stakes in Block 4. The deal was made with Compagnie Béninoise des Hydrocarbures (CBH), a Lusitania Petroleum subsidiary, which holds the remaining 50% interest in the venture. The block covers an area of approximately 7,400 km², is at water depths ranging from 200 to 3,000 meters, and at an average of 60 km off the coast.
Petrobras started operating in Angola about 30 years ago, in 1979, after the country became independent in 1975. We have exploration and production agreements, with shares in six offshore blocks, one in production and the other five in the exploration phase.
Exploration and production
Petrobras’ history in Angola is divided into two phases. The first was through November 2006, when it was the non-operating partner in only two blocks: Block 2/85, which it has been a partner in since 1980, and Block 34, currently in the exploration phase.
The second phase began on December 2006, when Petrobras took-on the exploration and production rights for another four blocks in the country, three of which it is the operator of, Blocks 6/06, 18/06 and 26, and non-operating partner of Block 15/06. After so many years of performance, this is the first time Petrobras is an operator in this African nation.
In Block 18/06, in late 2009, we announced the discovery of oil in the well Manganese-01, located 200 km from Luanda. We have seven other discoveries in Block 15/05, where we have 5% share.
In line with its strategy of seeking opportunities in deep and ultra deep waters in Western Africa, Petrobras acquired 50% of the exploration stakes for Block 2714A, located off the Southern coast of Namibia. The remaining 50% of the stakes remained with the Chariot oil and gas exploration group, by means of its local Enigma subsidiary as the block operator.
Ranging over an area of approximately 5,500 km², at water depths between 150 to 1,500 meters, the block is located off the coastal basin of Southeastern Africa, between the Orange and Luderiz sub-basins, at an average distance of 80 km from the coast.
Petrobras is preparing to drill exploration wells in TanzaniaWe expanded our operations in the east of the African continent in 2004 when we signed a contract with the Tanzania Petroleum Development Corporation (TPDC), the national oil company. As a result, we have extended our activities to the East of the African Continent.
Petrobras holds 50% stakes in two offshore exploratory blocks (blocks 5 and 6), with water depths of 1,700 and 1,800 meters, respectively.
The office in Dar Es Salamm was opened in 2009. Since then, the main operations have been related to the 3D seismic program on part of each of blocks 5 and 6, covering a total area of 2,800 square kilometers.
The east of Africa is a region where offshore exploration activity is still limited, but is gaining the attention of the industry.
Developing operations in Libya for the third time, having already operated in onshore areas in the 1970s, Petrobras is present in the country with another strategy: offshore exploration.
With this operational focus, we have been in Libya since January 2005, when we won the first round of bids held by the Libyan National Oil Corporation (NOC). On this occasion, we acquired the oil and gas exploration rights and shared production rights for Area 18, consisting of four blocks and covering 10,307 km² overall.
The area is located in the Northeastern part of the Libyan coast, in the Mediterranean, at water depths ranging from 200 meters to 700 meters. We are operators of the consortium that explores the block and hold 70% equity stakes in it.

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