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Brazil2015CurrentOverview
Adhemar FreireCountry Manager February 2015
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Generaloverview Zero growth in Brazil in 2014 and inflation
growing. Expected low
growth in 2015.
Petrobras is responsible for approximately 12% of GDP
Brazilian government cutting investments and tax is
increasing
Depreciation of Real
Graa Foster is stepping down and the board meets on Friday
to
discuss appointments of five new Executive Directors
Uncertainties after the election with new ministries. Positive
signals
from the market on the new Finance Minister!
Government may stop using Petrobras as an instrument for
Inflation
control
Brazil is hit by a severe draught impacting electricity
production and
water supply
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Petrobras scandalandongoingactions
Prosecutors are investigating bribery and money-laundering
related to billion of
Reais overbilled and transferred to political parties,
politicians and company
executives
Most of contracts under suspicion are connected to civil
construction and
engineering companies, also impacting the FPSO and Drill Ship
construction
3 former Petrobras directors are involved on the corruption,
including former
Executive Managers and current staff
Mr. Paulo Costa, former Petrobras director, has admitted that
construction
companies had created a cartel influencing the price. He named
28 politicians
who had received benefits
Police arrested two dozen executives from Brazils six largest
construction
firms. 39 suspected people have been accused by the court
150 people and more than 200 companies are under
investigation
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Consequencesofthescandalandthelowoilprice
New Compliance director has been hired and approved by the
Board.
SEC Subpoena, International and National lawsuits ongoing. These
is likely to
increase Petrobras debt with future indemnities
Petrobras credit ratings reduced
Trust in Petrobras and Brazil is affected
Petrobras value is reduced more than 58% (R$ 150 Bi less) since
last October
Bidding processes in Petrobras delaying and are in slow
motion
Independent consulting companies recommended a write-down of R$
61,4 BI
assets
Audited Q3 2014 financial statements has not been released
yet
Petrobras Business Plan will be changed and is due June 2015
R$ 118 MM from suspected persons has been blocked
32 companies at Petrobras black list, including big and well
known companies.
They cannot participate on new tenders.
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Possiblechanges
Discussions ongoing to change the rules of the Production
Sharing
Regime for pre-salt areas where Petrobras today is obliged
to
participate with a minimum of 30% and be the solely operator
ANP licensing round (13th) can be amended and postponed to
the
second half of 2015 and even further
Changes on the tendering process in Petrobras (Law 8666 instead
of
a Decree 2745 which is much more simple, but with less
transparency)
Payments to companies on the black list may be suspended
Current contracts may be suspended, cancelled and may give
opportunities to new companies
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Additionalissues
Lack of licensing rounds between 2008 and 2013 is now
impacting
Services companies forcing them to reduce assets and dismiss
employees. The new licensing round may even be delayed
Political and economic influence on Petrobras Board and
management
may continue
Sete Brasil is also under investigation due to employment of a
former
Petrobras manager being suspected
Estimated cost of lifting at pre-salt fields is about US$ 45 per
barrel,
not complying with the low oil price scenario
Reduced activities may result in reduced prices for services
and
products and require changes in the industry
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Opportunitiesremains
Brazil is likely to be the largest offshore market in the world
towards
2020
Open new potential markets for foreign companies
The revised Petrobras Business Plan may change focus
challenging
the industry to come up with solutions for a low oil price
scenario
More transparency, a new Compliance Director in Petrobras
Local Content more flexible for old blocks acquired up to Round
12
(with penalties payment to ANP for not complying)
Local Content requirements may change due to lack of local
capacity
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Q&A
Tusen Takk!!
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[email protected]
PROMOTINGNORWEGIANOILANDGASCAPABILITIESININTERNATIONAL
MARKETS
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