Brazilian senate votes to change Petrobras role
A Snapshot of Petrobras Operations (bytes 27584)
Brazil's senate has approved a constitutional amendment to halt Petroleo Brasileiro SA's (Petrobras) monopoly in oil exploration, production, transportation, refining, and petroleum exports and imports.
The historic vote was 58-17 after 4 months of debate. Because it involves amending the Brazilian constitution, the senate must vote again on the issue in November.
There is virtually no doubt of the same outcome. The lower house of Brazil's congress in two ballots approved the same amendment in the first half of this year by a three-fifths majority.
What will change
With the approval of this amendment, other companies--foreign or domestic, private or state owned--will be allowed to do business in any sector of Brazil's petroleum industry through contracts with the central government.
Domestic and foreign companies will be allowed to conduct exploration and development in areas determined through concession tenders to be disclosed by the government. The framework for these concessions will be defined by legislation.
The amendment also clears the way for one of the largest hydrocarbon projects in the Western Hemisphere, the 3,700 km Bolivia-Brazil natural gas pipeline.
That project will require an investment of at least $2 billion, a sum the cash strapped Petrobras does not have. International financial institutions, including the World Bank, have been reluctant to finance this project because of Petrobras' monopoly. It is seen as a litmus test for the viability of expanding South America's underdeveloped gas infrastructure (OGJ, Aug. 7, p. 39).
Now that the government also will be allowed to authorize construction of privately owned and operated pipelines, financing probably will fall into place as Petrobras likely takes a minority interest in the project.
Brazil's congress also will vote on a regulatory framework to determine the rules for private or public oil companies to participate in exploration and production. One approach under study for E&P participation calls for the government to authorize those operations of companies that commit themselves to build refineries in Brazil.
The government also will be able establish authority to permit companies to import and export crude oil and refined products.
During the senate debate, Petrobras Commercial Director Percy Louzada de Abreu startled the government by staging a wide ranging press conference in defense of maintaining the constitutional monopoly of Petrobras. Louzada said ending the monopoly and subsidies for refined products would increase the price of a liter of gasoline by 43%, of liquefied petroleum gas by more than 100%, and of petrochemical grade naphtha to $200/metric ton from the current $150/ton.
Petrobras profile
Incorporated in October 1953, Petrobras is the holding company for a group of companies operating in all segments of the petroleum industry.
Petrobras owns 10 refineries plus an asphalt plant with combined refining capacity of l.5 million b/d, an industrial schist plant, more than 10,000 km of pipelines, a large crude oil and refined products tank farm, a 78 vessel tanker fleet, and about 7,000 producing oil and gas wells.
The company also owns two fertilizer plants, interests in petrochemical complexes, and an advanced technology research and development center that is largely responsible for Petrobras' leading role in deepwater oil and gas exploration and development technology.
In 1954, Petrobras produced 2,700 b/d of crude oil, compared with current average output of 791,000 b/d. It estimates current proved and probable reserves of oil and gas at a total 10.3 billion bbl of oil equivalent.
This month, Petrobras disclosed total gross annual revenues of $18 billion and global capital investments of $2.3 billion.
About 80% of material and equipment Petrobras buys--pegged at a value of about $1 billion/year--comes from Brazilian industry. With the end of the monopoly, oil and gas industry executives expect other companies to import a substantial amount of equipment.
A Snapshot of Petrobras Operations | |||
| Total | |||
| Reserves (as of Dec. 31, 1994) | |||
| Oil and condensate | 4.2 billion bbl | 5.1 billion bbl of oil equivalent | |
| Gas | 146.4 billion cu m | ||
| Daily production | |||
| Oil | Onshore | 197,748 bbl | 739,921 bbl |
| Offshore | 542,172 bbl | ||
| Gas | Onshore | 7.9 million cu m | 22.4 million cu m |
| Offshore | 14.4 million cu m | ||
| Reserves life (at current production levels) | |||
| Oil | 17 years | ||
| Gas | 19 years | ||
| Active wells | |||
| Onshore | 7,090 | 7,764 | |
| Offshore | 674 | ||
| Drilling rigs | |||
| Onshore | 12 | 29 | |
| Offshore | 17 | ||
| Production platforms | |||
| Fixed | 77 | 92 | |
| Floating systems | 15 | ||
| Pipelines | |||
| Oil | 6,052 km | 9,989 km | |
| Gas | 3,937 km | ||
| Tanker fleet | |||
| Number of vessels | 77 | ||
| Tonnage | 5. 6 million dwt | ||
| Terminals | |||
| Number | 9 | ||
| Storage capacity 60 million bbl | |||
| Refineries | |||
| Number | 10 + 1 | asphalt plant | |
| Capacity | 1.5 million b/d | ||
| Average output | 1.2 million b/d | ||
| Imports | |||
| Crude oil | 472,000 b/d | ||
| Oil products | 380,000 b/d | ||
| Exports | |||
| Gasoline | 8,000 b/d | ||
| Fuel oil | 11,000 b/d | ||
| Others | 10,000 b/d | ||
| *As of June 30, 1995. | |||