Sources close to Brazil's Mines and Energy Minister Dilma Rousseff, who played a key role in recent partnership agreements between Petroleo Brasileiro SA (Petrobras) and Petróleos de Vene- zuela SA (PDVSA) for joint deepwater exploration (OGJ Online, July 29, 2003), told OGJ that the minister sees this as a first step towards creating Petroamérica, a coalition that would unite oil, gas, and electric power companies in Latin America in a comprehensive consortium.
"Venezuela has petroleum and gas; so do Brazil, Ecuador, Colombia, Bolivia, Colombia, and Argentina. Why shouldn't we form something like a Petroamérica company?" Venezuela's President Hugo Chávez asked during his April visit to Brazil.
"Petroamérica would be a transnational gas and energy producer. There is strength in union, and energy is one of the most important factors in the world's future development," said the president, who also perceives Petro- américa as an instrument for Latin American countries to gain clout in negotiations with the World Trade Organization and with the International Monetary Fund to "defend this continent's economic and financial interests."
In 1999, during Brazil's promarket President Fernando Henrique Cardoso's administration, Petrobras and PDVSA signed a similar letter of intent covering the joint development of upstream and downstream energy projects in Venezuela and Brazil, but the accord did not materialize (OGJ, July 5, 1999, p. 42).
Since 1995 Venezuela's populist Chávez has been aggressively promoting a concept like Petroamérica throughout oil-producing South American nations and particularly Brazil, which he has visited three times since Brazilian President Luiz Inácio Lula da Silva took office Jan.1. Petroamérica is part of Chávez's scheme for spearheading Latin America's energy integration, which eventually would lead to political integration, say analysts who closely follow developments in Venezuela.
According to sources close to Lula, the president is in favor of some kind of a more-solid association between Petrobras and PDVSA than the partnership agreements in deepwater exploration. A closer relationship between the two state-owned oil companies, which is favored by Lula, could become the first step towards the formation of Petroamérica, report the sources. But, because this question involves delicate political considerations, Lula wants to wait to see how the partnerships between the two state-owned oil companies work out, said the sources.
Uphill battle
Chávez faces an uphill battle to implement his project because Colombia's President Alvaro Uribe does not share Chávez's nationalistic ideology, while most Latin nations are governed by promarket administrations, point out local analysts. In addition to Lula in Brazil, Chávez's best bet is Argentina's recently elected President Nesto Kirchner, who has already shown nationalistic tendencies.
Argentina is the country where Petrobras produces the most oil outside of Brazil.
In May, it produced 128,246 boe/d of oil in Argentina compared with 46,003 b/d it produced in Venezuela, said Nestor Cerveró, Petrobras international director.
While Venezuela is a major oil exporter and the only Latin American member of the Organization of Petroleum Exporting Countries, Brazil produces about two thirds of the 1.6 million b/d of oil it consumes, and it expects to become oil self-sufficient by 2006, said Petrobras Pres. José Eduardo Dutra. In addition, Petrobras has world-class deepwater exploration and production technology, which would be very useful for PDVSA. Petrobras also controls about 98% of Brazil's refining capacity.
Analysts say Petrobras and PDVSA jointly would generate revenues of about $70.7 billion/year. At the end of the first quarter of this year, Petrobras posted record profits of $1.6 billion, representing 22% of the company's first quarter revenues, compared with ExxonMobil Corp.'s 11% and ChevronTexaco Corp.'s 7.2% for the same period.
Petrobras also has experience borrowing funds in overseas markets, allowing it to develop a 4-year investment plan totaling $34.5 billion.
Other market analysts are openly skeptical about a possible PDVSA-Petrobras merger or even a joint venture of the two in a consortium. "These companies have different corporate cultures and are administrated in totally different ways," said Genilson Santana, an analyst at MCM Consultores, a Brazilian consultancy.
Although Petrobras and PDVSA are both state-owned companies, for example, the Brazilian government interferes much less in Petrobras policies than the Venezuelan government in PDVSA. Chávez appointed many political cronies to top-level positions at PDVSA, while Brazil's President Lula retained Petrobras professionals in high-ranking posts.