BRASIL: Dilma Pressuring Petrobras Not To Raise Gas Prices.

BLOOMBERG /

   Petrobras hasn’t changed gasoline prices in Brasil...since mid-2009.
   And, it appears that Brasil won't permit higher gasoline prices there...even if it means a decrease of returns in its sovereign wealth fund.
   The fund lost 7.4% from the end of March through April 20.
  “Society had to benefit in some way from the fact that Petrobras is owned by the state,” said analyst Felipe Salto. “The benefit is to avoid a fuel price increase in a moment of accelerating inflation, even if this affects the company’s shares or the sovereign fund.”
   The government is trying to slow the fastest inflation since 2008.

BRASIL / MEXICO : Lula Proposes Petrobras Hook-up...With Pemex.

LAHT/

    Ex-Brasilian president Lula da Silva believes that Mexico's and Brasil's oil monopolies should form a strategic partnership to work together for market growth and to further technological developments.
      In Acapulco, Lula wants the two governments to discuss the concept of exploring for oil “in other regions around the world with more competitive markets and to becoming more competitive, more profitable and larger Latin American companies.”
      Oil giant Petrobras is a world leader in deep-water drilling while Pemex’s output has stagnated from aging fields and few new discoveries.

BRASIL: Petrobras Shares Sell-Off After $40 Billion Debt Plans Revealed.

BLOOMBERG/
  Petrobras CEO Jose Sergio Gabrielli (pictured) announced plans to raise between $30 billion and $40 billion of new debt over the next four years to finance oil investments. Petrobras already has $67 billion of  debt.
   The announcement has sent bond yields climbing the most in 12 months.
   Petrobras shares have declined 6.7 percent in the past month, leaving them down 31 percent so far this year.
   Moody's rates Petrobras Baa1, the third-lowest investment grade and two steps above the Brazilian government’s Baa3 grade.

ECUADOR: Petrobras Refuses New Terms, Abandons Oil Fields.

M.PRESS/
     Petrobras was the only major foreign energy company that refused to accept new conditions set by the Ecuadorian government that would increase its share of petroleum revenue from 70% to 80%. It also wants windfall profits from future oil price hikes to go to the state.
     Petrobras produces about 20,000 bbl per day from Block 18 and the unified Palo Azul oil field in the Ecuadorian Amazon
    However, the nation's biggest foreign oil company, Repsol-YPF, accepted new contract terms.

BRASIL: Rousseff Likely To Keep Gabrielli At Petrobras, Claims Newspaper; Domestic Refining A Priority.

REUTERS/
       The newspaper O Estado de S. Paulo claims President-elect Rousseff will keep Jose Sergio Gabrielli (pictured) as chief executive of Petrobras for at least another year.
      The paper says President Lula da Silva advised Rousseff to keep Gabrielli through 2011 to overhaul oil industry rules.
     At a conference in Rio, Gabrielli defended planned heavy domestic refining investments in the next five years to avoid relying on foreign refiners as fuel consumption soars.
     "Brasil could specialize in producing oil, exporting it to China, and then importing diesel, but that's insane. It doesn't make sense to do that if you can build a refinery here and boost flexibility, reduce risk, and reduce the possibility of predatory (actions) in the market," he said.
 FOR REFINING STORY, SEE:
http://uk.reuters.com/article/idUKTRE6AL2TD20101122

BRASIL: Petrobras Disappoints Investors With $5 Billion 3Q Profit.

BLOOMBERG/
    Investors punished Petrobras and downgraded its prospects after the state-controlled oil company expanded output at a slower-than-expected pace and results declined in the third-quarter as net income rose to 8.57 billion reais ($5 billion).
     “If the government and the unions continue to see this as the goose that lays the golden egg, western investors will become wary of watching returns marginalize,” said fund manager Ted Harper.
     President Lula da Silva has “disappointed” investors by failing to improve efficiency, cut costs and trim staff at the company, said fund manager Mirela Rappaport.
    Analyst Paula Kovarsky said Petrobras’s “skyrocketing” refining costs and higher oil production costs are a “source of concern.” Unions are likely to win wage increases and drive costs higher, she said.

BRASIL: Libra Field Estimate Doubled To 15 Billion Barrels; MAY Be Biggest Since 1976's Cantarell.

BBC/
         Brasil now estimates its Libra field MAY hold “gigantic” reserves of 15 billion barrels, almost twice initial estimates. However, a national agency believes that 8 billion barrels is closer to its true potential.
      The Libra field is located 183km (114 miles) offshore from Rio de Janeiro.
        At a maximum of 15 billion barrels, Libra would be almost twice as big as the Tupi fields and make it the biggest find in the Americas since Mexico discovered Cantarell in 1976.
         Brasil currently has PROVEN reserves of about 14 billion barrels.

FOR:   The perils of deep-water drilling off Rio's coast, READ ERIK GERMAN:
"More than 200 miles out to sea and several miles below the surface, the pools of oil are thought to be among the biggest discovered on earth in recent decades. Properly tapped, they’ll make fortunes and catapult Brazil into the ranks of the world’s top oil-producing countries.
But as the crude begins to flow, some industry experts say Brazil has understated the risks involved — made apparent by the deep-sea drilling that caused this year’s disastrous spill in the Gulf of Mexico."
http://www.globalpost.com/dispatch/brazil/101026/brazil-offshore-oil-drilling

BRASIL: Dilma Clashes With Serra In TV Debate Over Abortion, Petrobras.

BLOOMBERG/
    As the two presidential candidates appeared for their first televised debate in the run-off period, a recent Datafolha poll shows Dilma Rousseff with 48 percent support to 41 percent for Jose Serra, the former governor of Sao Paulo...with 11 percent undecided.
    Rousseff accused Serra of spreading “lies” about her views on abortion, and the two argued over past sales of state assets. 
     Serra, 68, denied he had any plans to privatize state-run oil giant Petrobras and then he attacked her on abortion.
    “You clearly said you were in favor of legalizing abortion and then you changed and said the opposite,” said the pro-life Serra. “It’s about being coherent, and not two-faced, saying one thing and then another.”

 REUTER'S Analysis Of Debate by Brian Winter:
 "Rousseff, visibly angry over the recent emergence of abortion and her faith in God as major issues, at times looked more like the underdog as she went on the attack first and accused Serra of using "lies" and "slander" to close a gap that was as big as 20 percentage points in late August."
 AND: "Until now, financial markets have treated the election as a non-event, since the outcome seemed clear... Serra's insistence that Brazil's currency is overvalued could cause volatility in foreign exchange markets if he draws closer in polls."
 For MORE, SEE:

 http://af.reuters.com/article/energyOilNews/idAFN1110545120101011?sp=true

BRASIL: Petrobras Slumps To 19-Month Low Over Value.

BLOOMBERG/ Alexander Cuadros/
     Oil giant Petrobras is at its lowest price since March 2009 because investors believe there is little appetite for its shares after the recent mammoth $71 billion usd offering.
   "The supposedly strong level of demand for the world-record offer was in part an illusion,” said Brasilian analyst Oliver Leyland. “You had the government as the major participant.”
In that sale, the government also boosted its stake to 48 percent from 40 percent.
Petrobras may have to sell more equity as soon as 2013 should crude prices slump to pay for expensive deep-water development.

BRASIL: Petrobras Bumps Up Share Sale To Massive $78 Billion.

BLOOMBERG/   By Peter Millard and Alex Cuadros /
            Petrobras has raised its planned share sale to as much as 134 billion reais ($78 billion) to finance development of offshore oil fields.
            It plans to sell 1.59 billion new preferred shares and 2.17 billion new voting shares in its main offer but today DOUBLED the amount of stock that can be issued in an additional allotment to as much as 20% of the main sale. That’s on top of an already announced supplementary over-allotment of as much as 5 percent.
          Investor reaction over the offering price is mixed but tending negative. “We don’t see overwhelming demand among our clients, some of them offered to buy less than what they had a right to, and those who own no shares have no interest at all,” said one analyst.

BRASIL: Petrobras To Sell $65 Billion...Or More... Of New Stock.

BLOOMBERG/     In the world's largest public share offering, Petrobras will sell 2.17 billion common shares and 1.58 billion of preferred shares. It hopes to recoup $64.5 billion usd...that could grow to as much as $74.7 billion if there is demand. The money will finance exploitation of recently-discovered oil reserves off the coast of Rio de Janeiro.

BRASIL: Petrobras Will Pay $42.5 Billion For Oil Reserves.

BLOOMBERG/    In a long awaited announcement and after much speculation and negotiations, Petrobras said it will pay an average of $8.51 a barrel... with new stock... for 5 billion barrels of undeveloped offshore reserves. Before today, Petrobras shares had plunged 26% in Sao Paulo this year over worries that it would pay more for the oil than it’s worth and diluting earnings. Some analysts believe the price... is too high.

BRASIL: Soros Fund Dumped ALL Petrobras Shares Over Dilution And Safety Concerns.

BLOOMBERG/ Alexander Cuadros/     The $25 billion Soros Fund Management sold  ALL of its 9.1 million Petrobras ADRs of common stock and 5.88 million ADRs preferred shares in the second quarter as investors continue to speculate that the PBR stock offering slated for next month will dilute earnings. Petrobras is also suffering from deep water safety concerns raised after BP's Gulf of Mexico gusher.

BRASIL: Petrobras Reports Poor Performance Because Of Price Controls.

BLOOMBERG/ Peter Millard /      Petrobras has lost a quarter of its market value this year and tomorow will post the smallest profit gain among the world’s largest oil producers with the exception of BP.... because of government controls on fuel prices. Petrobras cut gasoline prices by 4.5% and diesel 15% in June 2009 and hasn’t increased them since. Oil in New York averaged 31% higher in the second quarter than a year earlier. “The price in Brazil is a political price,” said analyst Adriano Pires. “Petrobras makes sure it doesn’t generate problems for the government.” Also Petrobras is spending too much on “political” projects, including new refineries, instead of the offshore drilling equipment needed to tap oil fields in the deep Atlantic, claims consultant Wagner Freire.

BRASIL: New Manaus Gas Pipeline Creates Fears Of More Amazon Destruction.

GUARDIAN/    Environmentalists fear that a new gas pipeline being built to the rapidly developing Amazon city of Manaus will drive further jungle development, spill risks and illegal loggers. Manaus will finally be connected to Brasil's national grid next year.  Meanwhile, the Urucu pipeline was completed last November, but next month the first of four turbines starts sending out gas supplies.

BRASIL: Petrobras Spill Peril And Stock Dilution Chill Investors.

BLOOMBERG/ PETER MILLARD/  Long analysis /
    Ninety percent of Petrobras’s domestic production comes from beneath the waters of the Atlantic Ocean. In 2009, it pumped 20% of all the oil drawn worldwide from water deeper than 1,000 feet (300 meters), more than any other oil company. Exxon was second. What are the dangers of another massive oil gusher, this time in the deep waters  off Rio's coast? Investors also complain that the government is demanding too much control over Petrobras. Lula has said that BP cut corners “to do it cheaper” at its Macondo well. “In Brasil, we will not allow something like this to happen,” he said.

BRASIL: Petrobras Deepwater Insurance Surges Vs Pemex.

BLOOM/     BP's gulf gusher disaster is rapidly pushing-up deepwater costs. The cost for protecting against a default by Petrobras the largest oil producer in waters below 1,000 feet is surging relative to Pemex for fears that deep-water drilling costs will escalate. Credit default swaps that protect against non-payment by Petrobras, over five years cost 187 basis points, or 36 more than its Mexican counterpart, which has no production deeper than 1,000 feet.

BRASIL: Petrobras Pushes Drilling In Ultra Deep Waters Despite BP Gusher.

PBS-TV/ NEWSHOUR/ 11 Minute Video WITH transcript/  MARGARET WARNER reports from Rio on how Brasil is developing its deepwater oil drilling reserves, even as the Gulf of Mexico spill raises new environmental concerns about deepwater oil exploration.

BRASIL: Investors Wary Of Government's Role In Petrobras.

REUTERS/NYTIMES/     Foreign investors are questioning Petrobras' ability to withstand the government’s designs to use the oil giant for social policies. Reuters and the NYTimes try to explain the confusing details about a new stock offering.
"Investors know that the government will endow Petrobras with about five billion extra barrels of oil — a big lift to current proven reserves of about 15 billion barrels. What they don’t know is how many shares the government will expect in return. Estimates of how much Petrobras will pay go as high as $10 a barrel of reserves, a price that would equate to a $50 billion transfer of value from the company to the state.
Whatever the case, a dilution of minority shareholders appears inevitable."
AND..."The suspicion is that Petrobras is creeping away from its core competency as a deep-water exploration and production pioneer to satisfy government desires to create jobs through the inefficient building and operation of refineries."

BRASIL/UK: Risky Deep Offshore Drilling Subsidized By Brits.

GUARDIAN EXCLUSIVE /     "The British government is subsidising one of the world's largest and riskiest oil-drilling projects in the Atlantic Ocean and would be liable for tens of millions of pounds if a major accident took place. Documents seen by the Guardian show that UK trade ministers underwrote loans taken out by the Brazilian state-run energy company Petrobras in 2005 in order that Rolls Royce and other companies could contribute to the building of the giant P-52 platform.  The platform is now operating 125km off the coast of Brazil in 1,798 metres (5,900 feet) of water - deeper than BP's Deepwater rig that exploded in April and led to the disastrous oil spill in the Gulf of Mexico."
AND..."Environmental groups today accused the government of forcing British taxpayers to underwrite a project that could lead to a disaster similar to the spill in the Gulf of Mexico."