Denial of fuels’ price increase in the retail, payment of R$15 billion for concession to explore the pre-salt layer, losses made with sales of assets abroad preoccupy investors, who are afraid of the biggest Brazilian company’s economic future
Carlos Brazil
The biggest Brazilian company which performs in 17 countries, is worth R$217.7 billion in the market and had R$5 billion net worth in the first six months in 2014, Petrobras has stimulated the country’s economy and its engineering industry. However, it is undergoing a moment of instability as to its management and results.
Some questions seem paradoxes such the one about the fact that the federal government has granted, without any tender, the right to explore pre-salt layer’s deposits estimated at 10 to 15 billion barrels of equivalent oil (BOE), which will virtually double the company’s reserves currently available (estimated at 16.57 billion BOE in 2013). Objections have been raised because the company will have to spend by 2018 – much sooner, therefore, than the date when it will make profits from this undertaking – R$15 billion for the concession, out of which R$2 billion already in 2014. The sales of that state company’s assets to generate money and to meet the tax goal of the government are also seen with mistrust.
Other sensitive subjects for the company are: acquisition of the refinery in Pasadena, USA, for a price deemed much higher than the proper one in that case, which has led the Federal Police to investigate the alleged involvement of former directors in the transaction, and the denial of any price increase of fuels in the retail, which has caused losses and has made the company import oil byproduct at much higher prices than those performed in the internal market.
Considering so many negative factors, Petrobras seems to make all efforts to reverse the scenario. We can mention, for instance, some productivity records recently reached, such as 2,246 million barrels/day of oil produced on average in June all over the country, out of which 90% under that state company’s responsibility. R$ 546 thousand barrels extracted last July 13 just in the pre-salt province.
Ongoing initiatives and evaluation
In its most recent Plan of Businesses and Management, Petrobras estimates that it will invest US$220.6 billion (R$500 billion at the beginning of August this year) in ongoing projects and in evaluation, by 2018. Out of that total, US$153.9 billion (R$350 billion) should be spent in the area of oil extraction and production, its core business. More US$38.7 billion (R$88 billion) will be destined to the supply network, which includes important refineries, and US$10.1 billion (R$23 billion) will be dedicated to the gas and energy area.
The biggest part of those funds (US$206.8 billion) has been committed to projects already being implemented or undergoing invitation to bid. The remaining US$13.8 billion (R$31 billion) refer to undertakings that are still being evaluated. The biggest objective is to increase the average daily oil production from 1.93 million barrels/day by the end of 2013 to 3.2 million in 2018, expecting to reach 4.2 million barrels/day in 2020. To do that, as of 2014’s second semester 25 new stationary production units are expected to start operations within four years, composed of platforms and vessels destined to oil extraction (out of which 19 in the pre-salt layer).
To support this expansion, The Program of Modernization and Expansion of the Fleet (Promef) disposes the hiring of 45 vessels that carry oil and byproducts during that period.
Supply area
With US$38.7 billion (R$88 billion) investments planned until 2018, the supply segment also has significant importance in Petrobras plans. It is there where large refineries are being built or projected.
The project that is most ahead is the Refinery of the Northeast (Rnest) or Abreu e Lima. Expectations are that the project’s first phase, estimated at US$18.5 billion (R$42 billion) will be complete by the end of 2014. Set up in Ipojuca (PE), at the Suape Industrial and Port Compound, the refinery will be able to process 230 thousand barrels/day of oil.
“The Rnest already is ready to start operations, so to speak. Because the systems are being cleared, the utility area is virtually ready, energy generation, water treatment and distillation have already been delivered, as much as the furnaces. So, we are living a process of delivery of several systems for us to star processing, so to speak”, said José Carlos Consenza, Director of Supply of Petrobras, during a teleconference on the company’s results in the second semester of 2014.
The project of Abreu e Lima Refinery, however, is still involved in controversies once originally the plant would be built in a partnership between Petrobras and PDVSA, the state oil company of Venezuela, which has left the project. Out of US$2.4 billion (R$5.5 billion) initially forecast to be spent with the refinery, the costs paid by Petrobras has increased to US$18.5 billion. In order to justify such a difference, the state company alleges considerable changes made in the initial project.
Another plant involved in questions related to high costs is the Petrochemical Compound of Rio de Janeiro (Comperj), which is being built in Itaboraí. Currently with over 75% of its physical construction ready, the project is expected to consume US$13.5 billion (R$30.6 billion) investments for the completion of its first phase, which will enable to process 165 thousand barrels/day of oil. Expectations are that the initial project will be complete in 2016. However, several engineering companies have stopped rendering services in the last months alleging disagreement with the state company about prices and payments for the construction of Comperj.
Petrobras is still doing initial works to set up Refinery Premium I in the municipality of Bacabeira, state of Maranhão. The plant, estimated at R$45 billion, will be the biggest refinery owned by the state company with initial capacity to process 300 thousand barrels/day of oil, with plans to have it reach 600 thousand barrels/day in the final phase. Operations should start by 2018.
Premium II, the refinery to be set up in the municipality of Caucaia, inside the Industrial and Port Compound of Pecém, in the metropolitan region of Fortaleza (CE) will have capacity to process 300 thousand barrels/day of oil as of 2019. Investments are expected to reach R$25 billion. The new plant already has an environmental license for its jobsite.
With the new refineries in operation and the modernization of old plants Petrobras estimates that it will be able to reach again self-sufficiency in oil refining as of 2017. For 2020, the plan is that the processing capacity reaches 3.3 million barrels/day of oil. It is worth remembering that considering an estimated extraction of 4.2 million barrels/day of oil in six years, Brazil will have considerable raw oil surplus for exports.
The Suape Petrochemical Compound (PE) has already started operations at its plant to produce pure terep
hthalic acid (PTA). To be completed are the production units of polyethylene terephthalated (PET) and polyester partially oriented yearn (POY). Scheduled to be complete this year, both plants have been included in an R$8.3 billion budget. .
Gas and energy
With US$10.1 billion investments planned in the gas and energy segments, Petrobras plans to use funds to increase the network of natural-gas delivery points along the Gasbol – Brazil-Bolivia gas tube) and the northeastern and southeastern networks that carry the product, thus increasing by 33% the fuel supply capacity.
As to the company’s capacity to generate energy, it is expected to increase by 20%. Highlight here goes to the potential installation of the following projects of gas-powered thermoelectric plants: UTE Azulão (AM), with generation capacity of 110 MW in 2017; UTE Bahia II (BA),
With potential to produce 300 MW in 2020; and UTE Sudeste VI (RJ), with 500 MW also in 2020.
Opportunities
The big difference in this new cycle, as assesses João Antonio de Moraes, with Federação Única dos Petroleiros, is that currently there is an obligation and a requirement, under the law of participation of national content in the projects of the oil industry. The new legislation on oil explorations demands minimum levels of use of local content in the development of undertakings. “And it will enable the development of industries and the country”, assesses that director.
He mentions, as an example, the naval industry. According to João Antonio, until 2002 the industry would employ about 2 thousand workers all over the country. With the legislation demanding national content in projects in the oil industry as from 2003, the industry has got some breath and ended up by employing over 80 thousand workers until 2014. However, there is at least one shipyard in Rio de Janeiro that has been delaying the payment of wages for months. However, he warns that the transfer of funds invested by Petrobras will only be consolidated when the cities, represented by the municipal and state governments, are prepared to offer qualified labor, technologically-qualified companies and the pieces of equipment required.
Among the problems pointed out by João Antonio arising from the significant funds resulting from the presence of Petrobras, he highlights the significant increase in the number of workers that usually happens during the implementation of projects. After they have been installed, the demand for labor falls drastically. “The municipalities have to be prepared to handle this increase in the population”, he explains.
Another warning given by that director is related to proper use of funds. “Investments in infrastructure have to be made. The money coming from oil has to be used in long-term undertakings, such as education and road infrastructure”.
Fonte: Revista O Empreiteiro
