Energy giant is the nation’s biggest exporter
GROWTH SPURT BRAZIL'S LARGEST CORPORATION, THE COUNTRY'S EXPORT LEADER, HAS ITS SIGHTS SET ON EXPANSION AND HAS RECENTLY BEGUN PRODUCTION AT A MAJOR NEW OILFIELD

IN FRONT Petrobras is a leader in retail distribution of oil products in Brazil, with 34 percent of market share based on volume of sales

OIL AND GAS corporation Petrobras has become Brazil’s largest exporter, overtaking aircraft manufacturer Embraer. In the first nine months of this year, the company’s exports totalled nearly $2.5 billion.
This year the company’s production, both in Brazil and abroad, has averaged more than 1.5 million barrels per day (bpd), an increase of 14 percent on the previous year and a much higher rate than the worldwide average. If natural gas is added, the daily average of hydrocarbons produced by Petrobras rises to the equivalent of more than 1.83 million bpd. The company reported net profits for the third quarter of $660 million, a 48 percent increase on the same period last year.

The largest corporation in Brazil, Petrobras has oil and gas interests in 11 other countries, including Argentina, Bolivia, Colombia and the United States. In Angola its oil production has averaged 13,272 bpd.
The company plans to increase its international operations, partly through the acquisition of assets or companies. It has signed agreements with major international oil companies, including Texaco, ExxonMobil, Phillips and Shell, and is a partner in several consortiums which have won bids for exploration blocks auctioned off by the government.

In October, production began in the Jubarte field, in the Campos Basin about 45 miles offshore of the state of Espírito Santo. Drilling in 4,000 feet of water, output at Jubarte has been averaging 16,500 bpd. The well is also producing more than a million square feet of gas a day.
Discovered in January 2001, the Jubarte field was the greatest new find by Petrobras since the Roncador field in 1996. Reserves are estimated at 600 million barrels of oil.
The well has the potential to produce 25,000 bpd, and an increase in production is being made gradually. There are plans to drill five wells in the Jubarte field, three of which are already built. The total investment of Petrobras in Jubarte so far is estimated to be in the region of $100 million.

Petrobras is also planning to construct several new oil and gas pipelines. Among them is a $900 million network of natural gas distribution pipelines in the south-eastern states of Minas Gerais, Rio de Janeiro, the industrial center of Cubatão in São Paulo state, as well as some areas of north-eastern Brazil.
A second project is to build an oil pipeline connecting Brazil’s main oil production center, the Campos Basin, to São Paulo, the industrial heartland of Brazil. The cost of building the pipeline, part of which will be laid on the ocean floor, is estimated at $1 billion.

Petrobras also plans to construct a smaller pipeline for liquefied natural gas (LNG) in the middle of the Amazon rainforest. Company officials say the pipeline should be ready by 2006 and it is expected to cost $340 million.
Meanwhile, a gas pipeline from Bolivia to Brazil will nearly double the latter’s capacity to 1,059 million cubic feet a day. Petrobras will be responsible for selling the gas.

The company expects to more than double its natural gas sales by 2005. Brazil could certainly use the gas; the country has been hard hit by a drought that has sharply reduced the supply of hydro-power. A large portion of the projected incremental supplies of gas is expected to come from the San Alberto and San Antonio fields in Bolivia, in which Petrobras has a 35 percent stake.
Petrobras owns one of the most important South American refining complexes, with total refining capacity representing approximately 27 percent of the current total crude oil refining capacity in South America and the Caribbean.

Brazil needs more refining capacity, and, according to government energy advisor Luiz Pinguelli Rosa, the incoming Lula administration favors building a new refinery in Brazil, rather than buying one abroad.
“Why invest in refineries abroad which, like those now in Brazil, can’t process the heavy crude oil without having to mix it with lighter oil?” he asks.
Mr. Rosa says the new government will provide fiscal incentives to strengthen the competitiveness of the local exploration and production (E&P) equipment sector. The sector is currently not very competitive because the administration of President Fernando Henrique Cardoso gave foreign oil platform builders and foreign E & P equipment manufacturers tax exemptions for importing rigs and equipment into Brazil, while local E & P equipment makers do not enjoy such tax breaks.

“These sectors would be more competitive if they were also exempted from paying taxes,” says Mr. Rosa. “So the new government plans to give the local oil platform and equipment makers the same fiscal advantages now enjoyed by foreign firms.”