Brazil's oil firm Petrobras aims for largest share issue in history
The $64m offering well surpasses the $36bn raised by Japanese telecoms firm NTT in 1987
Brazil's state-controlled oil company Petrobras is aiming to sell a record-breaking $64bn (£41bn) worth of shares to investors this week – the latest and biggest sign of the developing nation's recent ascent through the ranks of world finance.
The offering is set to become the largest issue to date, surpassing the $36bn raised by Japanese telecoms company NTT in 1987 and the $24bn raised by the Royal Bank of Scotland in June 2008, when the lender rushed to inflate its corporate buffers as the credit crunch started to deepen.
Investors are flocking to emerging markets, bonds and natural resources as they escape moribund equity markets in Europe and the US. Meanwhile, developing economies such as Brazil are booming as they sell oil, minerals and metals at record prices. Their financial systems have also been less battered by the credit crunch than those in the west, as their more traditional banks avoided the complex sub-prime lending deals that led to the global recession.
Rio-based Petrobras, an offshore oil driller, will use the funds raised to help finance its $224bn investment plan through 2014. As many as 26 investment banks have been appointed to distribute the shares, including Goldman Sachs, Bank of America, Merrill Lynch, Banco Santander and Citigroup.
Petrobras, already the fifth largest publicly listed oil and gas firm, aims to make Brazil one of the world's biggest oil exporters. It plans to tap oil buried under the sea floor in a region known as the subsalt.
Deals such as Brazilian ethanol and sugar company ETH's purchase of rival Brenco have lifted Brazil to the world's number five rank in mergers and acquisitions this year – up from eighth over the same period last year – according to Dealogic. Only the US, Britain, China and Canada have struck more deals than the South American country. Brazil is also ranked seven in terms of equity issues – up from 10th last year – and 21st in debt transactions, a jump from its 29th rank in 2009.
Banks are expanding their operations in Sao Paulo, Brasilia or Rio as they try to exploit the country's rich mineral reserves, including iron ore, aluminium or copper. Brazil is also rich in soya beans, fruit, coffee, sugar and cotton.
The Petrobras sale is also expected to attract interest from energyinvestors, who have rushed into natural resource companies as they perceive them to be safer than the recently volatile credit and equity markets. Gold last week reached a record of $1,274 per troy ounce, while Exchange Traded Funds have proliferated in stock markets across Europe as investors seek exposure to commodities and energy. In the meantime, the FTSE 100 has barely gained 1.8% this year.
Utility and energy is the second biggest generator of equity issues in Europe so far this year, with $8.4bn worth of transactions. Only banks have issued more, worth $17bn.
Source: guardian.co.uk
Production of oil in Brazil was record in August
(Source: Info-Prod Research (Middle East)) According to ANBA: Brazilian daily oil production reached a record figure in August. The figures were disclosed today (16) by the Natural Gas and Biofuel director at the National Petroleum, Natural Gas and Biofuel Agency (ANP), Victor Martins. He also pointed out the production of natural gas, the second largest in history, was only lower than that in June. "August production was a historic record for Brazil, representing 2.078 million barrels of oil [a day] and 62 million cubic metres of gas a day, which configures a volume of 2.471 million barrels of oil equivalent, record production," said the ANP director during Rio Oil & Gas a fair that brings together the main global companies in the sector. He said that the record volumes which represented growth of 6% in production of oil and 10% in gas, as against August 2009 show how correct the government policy in the area is. "This means that we are on the right route, expanding production, and that the policy developed for attraction of new partners to support activities in the oil sector is a great success. It is very good for the country to reach a level of production that exceeds self-sufficiency with such great margins." In coming months, the director at the ANP hopes for production to continue rising in a consistent manner. "They are projects that are being developed, maturing and starting to operate. It is the development of a process. This shows that Brazil is consolidating itself as a producer of oil." He also pointed out the growing participation of private companies in production, though it is still greatly concentrated on Petrobras. "Foreign companies are starting to participate, among them Shell and Chevron, although 91% of production is still in the hands of Petrobras." Victor estimated that there should be growth of foreign companies in coming years. "I believe that both Petrobras production should grow as should that of other companies that believe in Brazil, research, invest and develop their projects." Figures show that Rio de Janeiro is responsible for 78% of national production, with 1.624 million barrels a day in the month. Another eight states also produced: Esp?rito Santo (240,600 barrels a day), Rio Grande do Norte (58,100 barrels), Bahia (45,400 barrels), Sergipe (40,300 barrels), Amazonas (36,600 barrels), S?o Paulo (18,600 barrels), Cear? (8,700 barrels) and Alagoas (5,400 barrels).
Source: istockanalyst.com
