http://www.nytimes.com/2013/09/18/world/americas/brazils-leader-postpones-state-visit-to-us.html
September 17, 2013 Brazil’s Leader Postpones State Visit to Washington Over Spying By SIMON ROMERO RIO DE JANEIRO — Brazil’s president, Dilma Rousseff, said Tuesday that she was postponing a state visit to the United States, delivering a sharp rebuke to the Obama administration over revelations that the National Security Agency had spied on her, her inner circle of top aides and Brazil’s largest company, the oil giant Petrobras. The move by Ms. Rousseff showed how the disclosures of United States surveillance practices by Edward J. Snowden, the former N.S.A. contractor, were aggravating Washington’s ties with an array of nations, including European allies like Germany. In the case of Brazil, Latin America’s largest nation, the move to effectively suspend a state visit to the United States — a remarkably rare decision in the annals of diplomacy — threatens to unravel years of Washington’s efforts to recognize Brazil’s rising profile in the developing world and blunt the growing influence of China, which has surpassed the United States as Brazil’s top trading partner. [snip] http://online.wsj.com/article/SB10001424127887324807704579087161199340046.html September 20, 2013, 2:03 p.m. ET Brazilian Oil Field Draws Asian Bidders, but Not Exxon By JOHN LYONS And JEFF FICK RIO DE JANEIRO—Major U.S. producers Exxon Mobil Corp. and Chevron Corp. and U.K oil giant BP PLC are sitting out Brazil's first auction of massive deep-water finds, reflecting the changing landscape of the oil business and Brazil's government-heavy strategy for developing the fields. The potential bidders for the Libra field, announced late Thursday, include Royal Dutch Shell PLC, France's Total SA and Portugal's Galp Energia . But the list is dominated by Asian state-run firms. In addition to energy companies from India and Malaysia, China's Cnooc Ltd., China National Petroleum Corp. and China Petroleum & Chemical Corp., also known as Sinopec, said they may bid. Sinopec will participate via its joint venture with Spain's Repsol SA. The decision by Exxon, the world's biggest oil company, and several other oil majors to skip the auction stands in contrast to the excitement over the deep-water oil strikes six years ago. They were the biggest finds in the hemisphere in decades—so big that Brazilian leaders made it the engine of a national strategy to lift the nation into the developed world. But the oil market has changed. Back when Brazil found the oil, some experts were fretting that the world's oil supply was destined to peak as easy-to-reach oil became scarce. But technologies such as fracking opened up new oil frontiers. Also, posing an alternative to Brazil, regions such as Africa have increasingly attracted oil prospecting. Many in the industry are expecting long-closed Mexico to invite in more oil firms. But the biggest factor is Brazil's state-dominated strategy for developing the field that puts the squeeze on profits that oil firms can make, oil experts say. The rules for the Libra field call for an upfront fee of $7 billion, a dominant role for Brazil's state-owned oil firm and buying equipment locally. As a result, the venture is more attractive to big state-oil companies such as China's Cnooc, which are focused on staking claims to barrels of reserves rather than turning big profits. "The government can't say this was a surprise because the rules were designed to attract Chinese companies," said Adriano Pires, a Brazilian oil and infrastructure consultant. "The strategy seems to be use, Brazilian manpower and technology and get the state oil firms to pay for it." State-owned Petróleo Brasileiro SA, or Petrobras, is considered among the world's best at deep-water oil drilling. But oil majors bring a wealth of technological and management expertise as well. Not having their broad participation in Libra could backfire if it turns out that the deep-water oil, which is located beneath layers of seabed and a tricky layer of salt, is harder to get than is expected. In a statement, Exxon said it looks for opportunities "where we can leverage our experience and technology," and that it looks forward "to evaluating [other] potential opportunities in Brazil." Brazil's left-wing government has had a run of infrastructure auctions for trains, airports and other projects that drew fewer top-tier companies than expected. A much-heralded plan for a high-speed rail line between São Paulo and Rio has been delayed so many times that many experts suspect it will never be built. Rules capping ticket prices risk making the project unprofitable. All told, 11 oil companies signed up to bid on a stake in the Libra field and its estimated eight billion to 12 billion barrels of oil. The companies who have signed up are not required to place bids in the auction, which is scheduled for late October. Political risks hang over Brazil's oil industry. Chevron executives were angered after Brazilian authorities sued the company for $20 billion and threatened to jail its local managers following a relatively small leak and quick cleanup at an offshore field it operates. Chevron ultimately settled for less than $50 million. But the episode sent a signal that minor complications will have grave consequences for firms, raising the cost of doing business in Brazil. Meantime, allegations that the U.S. National Security Agency was spying on Petrobras raised political issues for U.S. companies seeking to participate in Libra. In nationalistic Brazil, a U.S. company could be open to suspicions that it relied on espionage to make its bids. U.S. intelligence officials have vehemently denied ever giving information to corporations to help them gain a commercial advantage. Underscoring the political sensitivity, at least one Brazilian union has called for the auction round to be canceled in the wake of the NSA spying allegations. Development costs for the Libra field are expected to be enormous—more than 400 billion reais ($181 billion) over the next 35 years, according to Brazil's oil regulator. The means only the largest oil companies are expected to bid. Analysts at Credit Suisse said in a report that interest in the auction was lower expected, in part because oil firms are looking at opportunities in West Africa, the Gulf of Mexico and U.S. shale gas. "Brazil does face competition with other geographies in terms of resource," the investment bank said. Petrobras's mandated participation could also be a deterrent. The state-owned firm will automatically become a partner with the winning bidder, as it is guaranteed at least a 30% financial stake in the field and status as operator. Petrobras also registered to participate in the auction, indicating it may seek more than the 30% minimum stake. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
