Brazil BNDES: Oil Industry Needs $5 BLN in New Investments
June 03, 2009
In testimony before Brazil's Lower House, BNDES aide Rafael Oliva said that the bank had been working with the government to establish rules needed for development of the country's recently discovered offshore oil deposits. "The BNDES has the obligation to support every segment of the oil production chain," Oliva said. According to Oliva, the BNDES targeted eight key areas for investment in the oil sector supply chain. The targets included development of Brazil's shipyards, the need to strengthen national engineering firms and stimulus packages to attract foreign firms in areas where local industry is lacking, Oliva said. Demand for equipment and services for the oil and natural gas industry is soaring in Brazil, thanks to a series of recent deepwater discoveries. State-run energy giant Petrobras (PBR) will invest $174.4 billion over the next five years to expand its production, with the lion's share of that investment in Brazil.
The BNDES is one of Petrobras' primary finance sources, and has been a key provider of funding for the company's suppliers.
Source: Dow Jones Newswires (http://www.dowjones.com/)
Lula to Send Brazil Oil Bill to Congress in July, Bernardo Says
June, 22 2009
Brazilian President Luiz Inacio Lula da Silva will present a bill aimed at increasing government control of offshore oil reserves to Congress in July before an annual legislative holiday.
Under the proposed new law, Brazil will divide oil output with companies that agree to develop blocks and give Brazil’s government a share of production, Development Minister Paulo Bernardo said in an interview in Londrina, Brazil. The company that offers the biggest share of output at auction will win the right to develop the area.
Brazil’s president asked his top ministers to review the country’s system of leasing oil exploration blocks to the highest bidder after the November 2007 announcement of Tupi, a 5 billion to 8 billion barrel offshore field that is the largest discovery in the Americas in three decades.
“We’ve already met with Lula and given him our proposals,” said Bernardo, a member of the committee advising Lula on the bill. “He will present his bill to Congress before the recess.”
Tupi is part of an offshore “pre-salt” area that may contain 100 million barrels according to Marcio Mello, president of Brazil’s petroleum geologist’s association. Congress is scheduled to go on recess July 17, according to the Web site of the Chamber of Deputies, Brazil’s lower house.
Lula has already reviewed the proposed legislation presented by a committee of ministers and the chief executive of state-controlled Petroleo Brasileiro SA, Bernardo said.
New State Company
As part of the plan, the government will set up a new state-owned oil company to manage the government’s stake in new oil developments, he said. The company will remain “skinny”, staffed by a small number of technically oriented bureaucrats and won’t operate oil fields, only manage the proceeds from fields the government owns.
Brazil also plans to require companies providing important oil equipment and services in the country to set up factories and local operations, Bernardo said.
“We want Brazil to become an exporter of oil equipment and services, not just an oil exporter,” he said.
Lula has said that existing oil exploration rights sold to companies such as Petrobras, BG Group Plc, Repsol YPF SA, Exxon Mobil Corp. and Galp Energia SGPS SA under the current auction system won’t be changed by the new proposals.
By Jeb Blount
Source: Bloomberg (www.bloomberg.com)
