Petrobras

Petróleo Brasileiro S.A.
Type Semi-Public (BM&F Bovespa:PETR3, PETR4
NYSEPBR, PBRA
BMAD: XPBR, XPBRA
MERVAL: APBR)
Industry Oil and Gasoline
Founded (1953)
Headquarters Rio de Janeiro, Brazil
Key people José Sergio Gabrielli de Azevedo (CEO)
Products Petroleum and derived products
BR service stations
Lubrax motor oil
Revenue decrease US$ 104.9 Billion (2009)
Net income decrease US$ 16.6 Billion (2009)
Owner(s) Brazilian Government (50.01%)
Employees 74,240[1]
Subsidiaries BR Distribuidora, Petroquisa, Transpetro, Petrobras Energía, Braskem, among others.[2]
Website www.petrobras.com

Petrobras (BM&F Bovespa:PETR3, PETR4 / NYSEPBR, PBRA / BMAD: XPBR, XPBRA / BCBA: APBR) (pronounced [pe.tɾo.ˈbɾas] in Brazilian Portuguese), short for Petróleo Brasileiro S.A., is a semi-public[3] Brazilian multinational energy company headquartered in Rio de Janeiro.

Petrobras is the world's fourth largest energy company[4] and the largest company in Latin America by market capitalization and revenue, and the largest company headquartered in the Southern Hemisphere.[5][6][7] The company was founded in 1953, mainly due to the efforts of then Brazilian President Getúlio Vargas. While the company ceased to be Brazil's legal monopolist in the oil industry in 1997, it remains a significant oil producer, with output of more than 2 million barrels of oil equivalent per day, as well as a major distributor of oil products.

The company also owns oil refineries and oil tankers. Petrobras is a world leader in development of advanced technology from deep-water and ultra-deep water oil production.

Contents

Overview

Headquarters of Petrobras in downtown Rio de Janeiro

Petrobras controls significant oil and energy assets in 18 countries in Africa, North America, South America, Europe and Asia. These holdings as well as properties in Brazil give it total assets of $133.5 billion (2008).

Petrobras is Latin America's largest company, thanks to 2008 sales of $118.3 billion, according to a ranking from Latin Business Chronicle over Latin America's Top 500 Companies.

The Brazilian government owns 55.7% of Petrobras' common shares with voting rights,[8]. The privately held shares are traded on BM&F Bovespa, where they are part of the Ibovespa index.

Petrobras began the processing of oil shale in 1953 by developing Petrosix technology for extracting oil from oil shale. The pilot plant started in 1982 and the commercial production started in 1992. At present, the company operates two retorts, the largest of which processes 260 tonnes/hour of oil shale.

Petrobras operated the world's largest oil platform - the Petrobras 36 Oil Platform - until an explosion on 15 March 2001 led to its sinking on 20 March 2001. In 2007, Petrobras inaugurated the Petrobras 52 Oil Platform, replacing the 36. The 52 is the biggest Brazilian oil platform and third in the world[9].

Petrobras is also recognized as the largest sponsor of arts, culture, and environmental protection in Brazil. Among the environmental initiatives, Petrobras is the main supporter of whale conservation and research through the Brazilian Right Whale Project [10] and the Instituto Baleia Jubarte (Brazilian Humpback Whale Institute).[11] Petrobras has been a sponsor of the Williams Formula-1 team. The company employs the H-Bio process to produce biodiesel.[12]

According to Fortune 500 Petrobras is the 34th largest company in the world.[13]

History

Petrobras standard model for its land oil pump, popularly known as Wooden Horse (Cavalo de Pau in Portuguese) in UFRN, Natal, Brazil.

Petrobras was created in 1953 during the government of Brazilian president Getúlio Vargas, with popular support under the motto "The Petroleum is Ours!". The company's creation provoked the wrath of Brazil's elite, who reacted fervently against the institution and Vargas himself.

Petrobras commenced its activities with the collection it inherited from the old National Oil Council (Conselho Nacional do Petróleo, CNP), which, however, preserved its inspection function for the sector.

The oil exploration and production operations, as well as the remaining activities connected to the oil, natural gas, and derivative sector, except for wholesale distribution and retail via service stations, were a monopoly Petrobras held from 1954 to 1997. During this period, Petrobras became the leader in derivative marketing in Brazil, and, thanks to the company’s performance, it was awarded the Offshore Technology Conference (OTC) in 1992, one which it was granted again in 2001.[14]

After 40 years of exploration, production, refining and transportation of Brazil's oil, Petrobras started to compete with other foreign and domestic companies in 1997. The Brazilian government created the Petroleum’s National Agency (Agência Nacional do Petróleo, ANP), responsible for the regulation and supervision of petroleum sector activities, and the National Council of Energy Policies, a public agency responsible for the development of public energy policy.

In 2003, commemorating its 50 years, Petrobras doubled its daily production of oil and natural gas, surpassing the mark of 2 million barrels.

On 21 April 2006, Brazilian president Luiz Inácio Lula da Silva started production on the P-50 oil platform, in the Albacora East Field at Campos Basin, which enabled Brazil to achieve self-sufficiency in oil[15].

Many attempts were made to privatize the company, especially under the country's dictatorship from 1964 to 1985.

Chronology

Bolivian controversy

On May 2006, Bolivia's president Evo Morales announced the nationalization of all gas and oil fields in the country. Evo Morales ordered the occupation of all fields by the Bolivian Army. Petrobras was heavily affected by the nationalization. At the time, the company's Bolivian subsidiary had great importance in the country's economy[16]:

The nationalization strained the relationship between Petrobras and the Bolivian government. On October 28, 2006, after a long negotiation, Petrobras and Bolivia signed an agreement, whereby the company would take 18% of the profits, and the Bolivian government would take the remainder.[17]

Business[18]

Petrobras' most important assets are petroleum reserves in Brazil. Its oil field in the Campos Basin accounts more than 80% of the Brazilian oil production. The company also works on developing the "green energy", including biodiesel fuel. Petrobras recently opened its business to the ethanol fuel, facing great competition against the North American ethanol. However, investment in biofuels will represent only 1% of the company's profit between 2008 and 2012.[19]

Petrobras is involved in the following areas of business:

Petrobras' financial growth between 2002 and 2006

Petrobras works extensively with foreign acquisitions too, buying and controlling the most important energy companies in South America and exploring huge deep-water fields of West Africa and the Gulf of Mexico. Petrobras is known for its technology in deep-water exploration. The Tupi field, which could be the world's third largest oil field (although data is still unverified), is a deep-water discovery, located in the pre-salt layer.

The company began to increase profits from 2002, with the government's heavy investments. In the first quarter of 2008, Petrobras reached the market value of US$295.6 billion, surpassing Microsoft (US$274 billion) and becoming America's third largest company, ahead of giant oil companies such as BP and Chevron-Texaco, and only behind of ExxonMobil and General Electric. Petrobras' market value is also bigger than Industrial and Commercial Bank of China (US$289.3 billion), making it the sixth biggest company by market value in the world.

Competition

Comparison with world-wide companies

Company Reserves (MM boe) Current Years of Production Oil & Gas Production (1000s boe/d) 2006 Oil & Gas Production Growth (%) 2006
Petrobras 11,458 14.2 2,287 4.5
BP 17,368 10.4 3,926 -1.9
ChevronTexaco 11,020 10.9 2,667 6.1
ExxonMobil 21,518 11.3 4,238 3.8
Royal Dutch Shell 11,108 6.7 3,474 -1.0

Growth

Oil reserves

At the 20th National Forum, it was revealed that Petrobras, with 11.7 billion barrels of oil, has the fourth biggest oil reserves among petrochemical companies with publicly traded shares. The figure does not include the recent discoveries in the mega-fields of Tupi, Jupiter, Carioca and Bem-te-vi.[20]

Profitability

REFAP Basis

From May 1997 to June 2006, the company's value in the Ibovespa increased about 1200%, reaching a record profit in 2006, with approximately R$25.9 billion becoming the most profitable public company in Latin America of 2006. The discovery of large reserves in Santos increased its stock price by about 19% in one day. Petrobras, is considered the most reliable Blue Chip of the Bovespa Stock Exchange. While the North American Crisis of 2007 decreased the value of the stocks of a great majority of stock markets in the world, Petrobras helped hold the Bovespa's activities steady, making it one of the least affected stock exchanges in the world by the crisis.

Investment grade

On 30 April 2008, Brazil received an "investment grade" rating from Standard & Poor's, given to countries with stable and consistent growing economy. According to Standard & Poor's, Brazil jumped from a BB+ grade to a BBB-, the minimum level any country needs to reach to receive the grade. Petrobras played a big part in the country's growth, and the high rating would be useful in attracting foreign investments.

Investors criticized the company for increasing gasoline prices in Brazil, despite record oil production. The company is having problems adapting its business to the ethanol market.

Devaluation

After a great advance on its stock shares (reaching R$52.30 in Ibovespa) in May 2008, Petrobras faced a great devaluation in the following month, with its shares decreasing to R$43.90 on 19 June 2008[21]. The most probable explanation for the great fall was the lack of information about the mega-fields recently discovered by the company. The great instability in Wall Street's markets also had great weight in those terrible results.[22]

Petrobras' fall also led to bad results on the entire BM&F Bovespa, as Petrobras and Vale accounts for more than 25% of BM&F Bovespa's trade value[23], the devaluation of those companies' shares led it to lose more than 6,000 points in just 25 days.

However, with the continuous decrease of oil prices, Petrobras' stock shares fell to R$33,00 on 14 August 2008. Its market cap presented the biggest loss of value in the Americas, with US$93 billion (13 August 2008).

Milestones

Oil platform P-51, the first 100% Brazilian oil platform

List of recent oil field discoveries

From 2002-2005, Petrobras doubled its success rate at drilling new wells.[29]

Petrobras latest Oil Discoveries
Date Basin Field API gravity
April 18, 2006 Espirito Santo Golfinho 38[30]
July 11, 2006 Santos Tupi 30[31]
March 2, 2007 Campos Caxareu 30[32]
June 8, 2007 Espirito Santo Pirambu 29[33]
September 5, 2007 Santos Tupi 27[34]
September 10, 2007 Campos Xerelete 17[35]
September 20, 2007 Santos Tupi Sul 28[36]
December 21, 2007 Santos Caramba 27[37]
January 21, 2008 Santos Jupiter Huge Gas field[38]
May 21, 2008 Santos Bem-Te-Vi 36[39]
May 29, 2008 Santos Tiro 36[40]
June 12, 2008 Santos Guará 28[41]
July 14, 2008 Espirito Santo Golfinho 27[42]
August 20, 2008 Campos Aruanã 28[43]
September 26, 2008 Santos Sidon 36[44]
November 21, 2008 Espirito Santo Jubarte 30[45]
November 25, 2008 Jequitinhonha BM-J-3 ?[46]
January 26, 2009 Santos Piracucá ?[47]
April 08, 2009 Santos Corcovado-1 ?[48]
November 16, 2009 Campos Marimbá 29[49]

Mega-fields

The company's most important discoveries started at the end of 2007, when the first mega-field, named Tupi, was found at a depth of 5,000 meters below the sea level, the first discovery of the company in the pre-salt layer. The second discovery was announced on January 21, 2008: the new mega-field was named Jupiter and had the same size as Tupi.[50]. The company revealed no more information about the field, forcing many investors to regard those facts as an "industrial secret".

On May 21, 2008, the company announced the discovery of a third oil megafield[51], located 250 km distant from the state of São Paulo, at a depth between 6000 and 6300 meters below sea level. The discovery was made by a consortium formed by Petrobras (66% of participation), Shell (20%) and Galp Energia (14%). The field's oil reserves had an API gravity between 25 and 28.

In June 2009, Petrobras signed a three year $180 million contract with the American Dril-Quip for the supply of deep-sea drilling systems to be used in Brazilian offshore wells [52]

Criticisms

According to the Brazilian economy website InfoMoney.com, North American stock companies are considering the oil mega-field discoveries suspicious. On May 24, 2008, the company's shares fell 4% because of the scarce information given by Petrobras about the fields.[53] (Portuguese)

An article written by Roberto Altenhofen Pires Pereira for InfoMoney.com said (translated from Portuguese):

Despite the incredible advance of 14% in Petrobras stock shares after the discovery of Tupi and Jupiter fields, the North American answer for the shares was the worst possible. Petrobras' ADR's - American Depositary Receipts - fell more than 4% in New York. It seems that the market is interpreting the discovery with mistrust.

(...) Everyone knows that the potential of the fields is huge, but that stills being only a "potential". No concrete information about the fields' capacity has been released at any time. These are only expectations, which still face a great technological challenge to the exploration of so deep deposits, which may even make this exploration unfeasible.

[54]

Reputation

By the end of 2003, Petrobras subscribed to the United Nations Global Compact, a voluntary agreement which encompasses a set of principles regarding human rights, working conditions and the environment.

The company's growth since 2006 has made Petrobras the most profitable company in the Brazilian economy, and gave it great importance worldwide, being recognized as the eighth biggest oil exploring company in the world.[55]

Since 2006 Petrobras has been listed in the Dow Jones Sustainability Index, an important reference index for environmentally and socially responsible investors.

On February 25, 2008, the Spanish consultancy firm Management and Excellence acknowledged Petrobras as the world's most sustainable oil company.[56]

The civil society named Transparency International, which fights against global corruption, published a list on April 28, 2008 containing the names of 42 companies with high transparency levels, in which Petrobras was included.[57]

In May 2008, World Trademark Review magazine awarded[58] the Petrobras trademark team with an Industry Award for Latin American Team of the Year, a category in which Petrobras competed with Coca-Cola, Pepsico, and Procter and Gamble. [59]

Global operations

Petrobras' global oil exploration, as shown in December 2006 with a total of 243,292 BOED [60]
Refinery in Cochabamba, Bolivia.

Petrobras global operations extends over 27 countries (including Brazil). Those operations are more related to diplomatic trades than oil exploration, although the company has important fields in India, Turkey, Angola and Nigeria. The most important countries for commercial agreements are Japan, United Kingdom and China. The complete map can be seen in Petrobras official link Petrobras Worldwide.

Petrobras is a member of the following international associations:

Offices

Petrobras in popular culture

See also

References

  1. About us,
  2. Petrobras Group
  3. Petrobras - Investor Relations
  4. "Brazil's Petrobras Overtakes Shell to Become World's 4th Largest Energy Co". http://www.brazzilmag.com/component/content/article/81-january-2010/11769-brazils-petrobras-overtakes-shell-to-become-worlds-4th-largest-energy-co-.html. 
  5. Latin Business Chronicle
  6. http://notibiz.notiemail.com/noticias.asp?leng=en&id=2037 Notibiz
  7. Hora do Povo(Portuguese)
  8. Source: 09-July-2006 - Petrobras Investor Relation Site
  9. Lula inaugura a maior plataforma de petróleo do Brasil
  10. Brazilian Right Whale Project
  11. Instituto Baleia Jubarte
  12. Petrobras.com
  13. http://money.cnn.com/magazines/fortune/global500/2009/full_list/
  14. OTC Distinguished Achievement Awards for Companies, Organizations, and Institutions
  15. Petrobras sets oil production record
  16. Saiba o tamanho da Petrobras na economia da Bolívia, e a importância da Bolívia para a Petrobras - 02/05/2006 - EFE - Economia
  17. Folha Online - Dinheiro - Acordo com Bolívia garante rentabilidade para Petrobras, diz Silas - 29/10/2006
  18. http://www2.petrobras.com.br/ri/spic/bco_arq/2778_form_20f_2005_port_16ago_alt8dez06.pdf
  19. Microsoft PowerPoint - Petrobras and Biofuels - May 2007.ppt
  20. Petrobras.com
  21. [1]
  22. InfoMoney: Petrobras: perda de suporte pode levar ações preferenciais aos R$ 43,00
  23. InfoMoney: JPMorgan Chase rebaixa recomendação do Brasil para underweight
  24. "Petróleo mostra que 'Deus pode mesmo ser brasileiro'". BBC Brasil. 2007-11-16. http://oglobo.globo.com/economia/mat/2007/11/16/327191975.asp. Retrieved 2008-05-26. 
  25. "Global 500 2007 accounts" (pdf). Financial Times. 2007-07-29. http://media.ft.com/cms/ac6bbb8c-2baf-11dc-b498-000b5df10621,dwp_uuid=95d63dfa-257b-11dc-b338-000b5df10621.pdf. Retrieved 2008-05-26. 
  26. Duffy, G (2008-01-22). "'Huge' oil field found off Brazil". BBC News. http://news.bbc.co.uk/2/hi/americas/7201744.stm. Retrieved 2008-05-26. 
  27. "Brazil Finds New Huge Oilfield, Possibly World's Third Largest". Brazzil Mag. 2008-04-14. http://www.brazzilmag.com/content/view/9245/1/. Retrieved 2008-05-26. 
  28. WJS, May 19, 2009
  29. Petrobras 2006 20-f, item 4, p 26 via Wikinvest
  30. Petrobras descobre petróleo leve no Espírito Santo
  31. Petrobras encontra petróleo em área de novas fronteiras na Bacia de Santos
  32. Petrobras Brazil finds light oil in Campos Basin
  33. PETROBRAS ACHA ÓLEO LEVE NO PRÉ-SAL DA BACIA DE CAMPOS
  34. Petrobras faz nova descoberta de óleo leve na bacia de Santos
  35. Petrobras confirma que óleo encontrado em Xerelete é viável comercialmente
  36. Petrobras confirma descoberta de petróleo leve na bacia de Santos
  37. Petrobras anuncia a descoberta de poço de óleo leve na Bacia de Santos
  38. Petrobras descobre grande jazida de gás na bacia de Santos
  39. Petrobras anuncia descoberta de óleo leve na bacia de Santos
  40. Petrobras anuncia descoberta de óleo leve na bacia de Santos
  41. Petrobras anuncia nova descoberta na Bacia de Santos
  42. Petrobras anuncia descoberta de petróleo no mar do Espírito Santo
  43. Petrobras descobre óleo leve na bacia de Campos
  44. Estatal faz segunda descoberta de óleo em Santos
  45. Petrobras Hits 1.5-2 Billion Barrels at Pre-Salt Levels
  46. Petrobras informa descoberta na bacia do Jequitinhonha
  47. Petrobras anuncia descoberta de reserva de gás na bacia de Santos
  48. Corcovado-1, Santos Basin, offshore Brazil, encounters hydrocarbons
  49. Petrobras anuncia descoberta de óleo leve na Bacia de Campos
  50. Press Release: Important Gas and Condensate field discovered in the Pre-Salt layer
  51. New Oil Accumulation Discovered in the Santos Basin Pre-Salt Layer
  52. Dril-Quip wins $180 million contract Tradingmarkets.com, June 2 2009
  53. InfoMoney: Reação às descobertas da Petrobras é posta em xeque, e compromete rumo da ação
  54. Roberto Pereira (2008-05-24). "Reaction to Petrobras' Discoveries Undertakes the Share's Future". InfoMoney.com. http://web.infomoney.com.br/templates/news/view.asp?codigo=1129571&path=/investimentos/noticias/. Retrieved 2008-06-01. 
  55. Portuguese: Petrobras Press release (2007-01-30). "Petrobras é 8ª empresa de petróleo com ações em bolsa". Petrobras. http://www2.petrobras.com.br/portal/frame.asp?pagina=/ri/port/Noticias/Noticias/Index.asp&lang=pt&area=ri. Retrieved 2008-05-26. ; "English". http://www2.petrobras.com.br/portal/frame_ri.asp?pagina=/ri/ing/index.asp&lang=en&area=ri. 
  56. Management And Excellence
  57. "Petrobras is a "transparency reference" in the oil sector". 2008-04-29. http://www.agenciapetrobrasdenoticias.com.br/en_materia.asp?id_editoria=8&id_noticia=4824. Retrieved 2008-05-29. 
  58. WTR Industry Awards 2008
  59. Petrobras.com
  60. Untitled Document

External links