Petrobras pullls out of NZ

Brazilian oil giant Petrobras dumps NZ exploration permits

NZ Herald,

4 December, 2012

Brazilian oil company Petrobras has handed back exploration licences it holds for deep sea oil and gas prospects in the Raukumara Basin, off East Cape, in what appears a reaction to a string of difficulties which have seen the oil giant report losses for the first time in 13 years.

Prime Minister John Key told The New Zealand Herald that the decision was "not a reflection on the capacity to undertake deep-sea drilling or the prospect of activity of that area."

The Raukumara Basin lies in very deep water off the east coast of the North Island and has barely been explored. Petrobras contracted a seismic survey ship to undertake initial surveys of parts of the basin early last year, where it encountered stiff opposition from a protest flotilla organised by Greenpeace and a local Maori tribe, Te Whanau a Apanui.

The New Zealand Navy was despatched to ensure the seismic survey could continue.

The Ministry of Business, Innovation, and Employment (MBIE) said this afternoon it had accepted Petrobras' application to surrender its permit

Petrobras has had what the Financial Times newspaper described early last month as an "annus horribilis", reporting its first quarterly loss in 13 years in the second quarter, disappointing investors in the third quarter, and facing a 40 per cent plunge in its share price over the year.

Among its difficulties have been falling production, foreign currency losses caused by the need to import fuel owing to a lack of refining capacity in Brazil, government interference, and most recently an order to pay back taxes of US$2.4 billion dating back a decade, relating to offshore activities.

Key said he understood Petrobras was "going through a bit of a regrouping phase and they're stepping back from what they're doing. I don't think it has got anything to do with the capacity to do the mining activity they were looking at undertaking.'

"I think it's the context of their local and domestic issues they're dealing with" and should not be seen as a blow to the government's agenda for accelerating economic growth through oil and gas discoveries.

"I wouldn't really put it in those terms. That's a long-term project and opportunity out there. There are plenty of other people looking at lots of other options in the Canterbury Basin and the likes."

Key did not believe the court challenge from Greenpeace or Te Whanau a Apanui played any role in the decision.

MBIE Director Petroleum Kevin Rolens said Petrobras had the option to surrender its permit after gathering 3,305 kilometres of 2D seismic data during its exploration.

"This is a commercial decision, based on a number of factors including how the company will be prioritising its oil and gas exploration portfolio worldwide."

The Raukumara Basin is "an important frontier basin" for future oil and gas exploration activity in New Zealand, Rolens said.

"It is a relatively unexplored area, where no commercial activity had previously been undertaken and I expect that the data will be of interest to other companies exploring in New Zealand.

"The work Petrobras has done has added to the information regarding the potential for oil and gas projects in the region and will be freely available for other companies wanting to explore."

While this is good news for New Zealanders and while Greenpeace are giving credit to the protest movement I suspect this decision by Petrobas was taken for their own reasons – they are in trouble

Petrobras announce that they ain’t lovin New Zealand

Greenpeace,

4 December, 2012

Today we learned that the Brazilian oil giant Petrobras has handed back its licence to drill for oil in the deep waters off the East Cape. And this news has been welcomed by those communities whose beaches and livelihoods were at risk from an oil spill and the pollution that comes from oil drilling. The cultural and environmental heritage of this beautiful, pristine part of Aotearoa is now safe.

However, this news should also be a wake-up call for Steven Joyce and his Cabinet colleagues who have pinned our economic hopes on the whims of overseas oil companies. Every effort has been made by this National Government to court some of the world’s most polluting industries, allowing them to damage the once proud reputation New Zealanders had by lobbying for the weakening environmental safeguards and demanding taxpayer handouts.

As Bill English said today; “the Government has invested a bit of time and money making sure that oil and gas exploration is attractive”. But it’s just not working, is it Bill.

Earlier this year, Anadarko announced they were delaying their drilling activities until the end of next year, perhaps the next, and now Petrobras has pulled out. It’s like a young John Key’s posted on Facebook that his parents have left him the keys to their bach and everyone’s invited to come drink Vermouth from their drinks cabinet, but nobody’s turned up.

And from an economic standpoint, this is good news. Not only because the risk of a catastrophic oil spill on our coastlines is reduced, but making the right choice for building a more prosperous economy has become easier.

The Government’s business growth agenda – the route map to National’s economic road to nowhere – is failing. They’ve bet the house on big oil to help them think big, but this is not what’s going to help raise the standard of living in New Zealand. Neither is diminishing our global reputation by weakening laws to favour our biggest polluters or undermining global efforts to tackle climate change. All of this will harm our economy, not strengthen it.

So now, as the Ministers stand around scratching their heads looking for excuses, it’s time for us all to demand that our Government make a different choice. One which will help us build a cleaner, smarter, more inclusive economy, that is supported by progressive business and industry and will help us grow a wealthier by reducing our pollution.

An economy which is built upon our greatest resources – our values and ability to innovate – and the bedrock of our world class renewable know how.

The Portuguese have a saying: ‘Cada carneiro por seu pé pende’ which roughly translates as ‘we must depend on ourselve’s, and perhaps if the Government started believing in our ability to build our own prosperous nation, we would be well on our way to a brighter future.

Petrobras Kills Order for Five Drill Ships

24/7 Wall Street,
30 November, 2012



Brazil’s state-controlled oil giant Petroleo Brasileiro S.A. (NYSE: PBR), or Petrobras, announced today that it was cancelling an order for five new drill ships that had been placed with Ocean Rig UDW Inc. (NASDAQ: ORIG). The five rigs were planned to be put to work in the presalt layer of the Santos Basin, at water depths up to 3,000 meters (just shy of 10,000 feet).


In its press release, Petrobras said:


This decision is based on the reduction of future needs for drilling, due to a fewer number of wells expected to be drilled in the pre-salt Santos Basin, relating to a higher productivity gained through the project wells in that area.


Given the company’s lack of production growth, however, that may not be the entire story. Petrobras could be looking for ways to maintain profitability in the face of its long-term $236 billion spending plans.



The five rigs were ordered in February at a daily rate of $548,000 for a 15-year term. At the time, Petrobras ordered a total of 26 new rigs, all to be built in Brazil.



Shares of Petrobras are down 1.4% in early trading this morning, at $18.23 in a 52-week range of $17.27 to $32.60. Ocean Rig shares are down 1% at $15.68, in a 52-week range of $11.70 to $18.43.