Paraguayan deal postponed
Petrobras has postponed the execution of an international services contract with Odebrecht for marketing fuels in Paraguay, where Petrobras has 20 percent of the market.
The company operates 170 service stations in the country, but most are at least 30 years old and must be totally refurbished. In July 2011, Odebrecht signed a contract with the Paraguayan Ministry of the Environment to conduct the needed work within two years, but this was not done.
Pre-salt production boom
Petrobras took out a full-page advertisement in the Brazilian press to announce that pre-salt production reached a new record of 2,059,000 b/d in 2013. The company is expected to grow 7.5 percent in 2014.
According to the magazine Evaluate Energy, Petrobras is the only one among the majors to increase production in the last six years.
So who wins?
In a momentous decision on 24 June, the government eliminated a tender for four pre-salt fields in order to cede them directly to Petrobras. Apparently, the direct contracting was decided without a full evaluation.
The blocks are all in the pre-salt level of the Santos basin: Búzios, Entomo de Iara, Florim, and Nordeste de Tupi. Petrobras was granted exclusive rights to produce up to 5 billion barrels from the fields in return for the issue of US$42 billion in shares to the Brazilian state.
The company will have to make advance payments totaling R$15 billion from 2014 to 2018 even though the fields are not expected to produce until 2021. Its stock lost R$13 billion on the day of the announcement.
The production-sharing agreement (PSA) is for 35 years, and Petrobras is entitled to 51.5–53.5 percent of the profit oil, depending on the field, less than the 58.35 percent it receives along with its consortium partners for the Libra field, which was auctioned last year.
O Estado de São Paulo published an exclusive interview with Petrobras CEO Maria Graça Foster on 29 June. She said that the direct contracting without tender was justified by the great accumulation of data. Notably, the federal Union gains twice: first in the money paid to it for the deal, and second in the production of oil.
The cost of shrinking
A wave of layoffs has already cost Petrobras some R$120 million. Now, alleging that the company has delayed making payments currently due, several enterprises on contract (terceirizadas) have abandoned their works in progress.