Brazilian oil giant Petrobras expands investments and seeks joint venture in the US. Nestor Cerceró, the director of International Affairs for the state-owned company is spending a lot of time in airplanes and is a great collectors of stamps in his passport.
From Saudi Arabia to London, Chile, Argentina and Venezuela, his traveling is more than a hint to Petrobras’ serious intentions to grow internationally in all areas of the oil business.
The company plans to spend US$ 1.4 billion in international investments, an increase of 40% on the 2005 one billion figure. Between 2006 and 2010 Petrobras will spend US$ 7.1 billion in international investments, a significant 13% of its total investment budget.
The rest of the money, US$ 49.3 billions will be spent in Brazil. According to information given out to Brazilian press, Petrobras plans to invest US$ 1.4 billion in Africa and the United States, and US$ 1.2 billion in other countries.
Seen as ambitious inside and outside Brazil, Petrobras investment plans are causing much speculation. But the solidly established company wants to produce 2.3 million barrels by 2010, against the 1.9 million of today’s production. It also plans to more than double the foreign production, going from 263,000 barrels a day to 545,000 by the same year.
Petrobras started its international activities in 1972, with Braspetro, created to increase oil offer in Brazil. After 1997, the company’s goals changed and the year marks a more assertive approach in the international market. Today Petrobras has activity in all different scales of the oil industry in 14 countries.
With branch offices in China and Japan, it recently opened a branch in Chile. In eight countries, Petrobras produces 263,000 barrels of oil a day and a similar amount of natural gas. The company concentrates more activity in Latin American countries, where it plans to act in an even more assertive way.
Petrobras has determined three priority areas for investment: South America, United States, in deep waters of the Gulf of Mexico and Africa’s west coast. The Middle East, where the biggest oil reserves of the world are located, is another target being considered by the Brazilian company.
Iran and Saudi Arabia are on focus for future business deals. Other countries are also being analyzed for future inclusion in the South American giant’s international business plans.
The plans for the US are big and include the acquisition of an oil refinery in a join venture to adapt it to process the heavy oil produced in Brazil, about 300 thousand barrels a day, expected to grow to 500 thousand barrels by 2010. The idea is to have the oil refined in the US.
The expansion of oil production will receive 80% of the total sum for investments in 2006. In some countries, Petrobras has acquired significant value in the economy. It represents almost 20% of the GDP in Bolivia, it owns 10% of oil reserves in that country, and it represents 98% of the Bolivian refinery market, same number as in Brazil.
Petrobras was responsible, in 2005, for 17% of the oil production in Latin America, and 26th of refinery capacity.
Investing in Latin America at No Risk
According to a report released by the United Nations, 875 million persons throughout the world accessed the Internet in 2004. In the United States alone, the top of the list, 185 million people had Internet, followed by China, with 94 million.
Japan follows with 75 million and Brazil is number 10, with more than 22 million Brazilians connected to the Internet, 4 million more than in the previous year.
Google is opening branch offices in Brazil and Mexico, to get closer to the Latin American market. Alexandre Hohagen, former HBO general manager in Brazil, will lead Google’s Brazilian office.
The American giant, Internet’s most resourceful search site, was created by Larry Page and Sergey Brin in 1998. With Orkut, gmail, online classifieds, and about to start an online payment system, Google is an example of the power of the growing Internet business.
Estimated today in US$ 118.8 billion, Google loses only to Microsoft, Intel and IBM in the technology business, but it is worth more than Coca Cola already, with only successful stories to tell.
Deforestation
Another UN report, this one on deforestation, shows Brazil as the world champion in forest devastation. Anything but a complimentary title, to say the least. Brazil’s Environment Authority Office disagrees and says that in 2005 alone there has been a noticeable 40% reduction of devastation of forests in Brazil.
UN reports a loss of 3.1 hectares. After Russia, Brazil has the world’s biggest forest and it has 52% of Latin America’s forests. The UN reports that 7.3 million of hectares is lost all over the planet every year, the size of a country like Panama and the biggest devastation occurs in Brazil and the rest of Latin America.
Forests today cover around 4 billion hectares, around 30% of the earth. Ten countries concentrate two thirds of this natural wealth, Australia, Canada, China, Brazil, Congo, India, Indonesia, Russia and the United States. The information comes from UN research done in the last five years.
Coconut Coast
Driving along the Green Line highway in the state of Bahia in Brazil is an unforgettable experience. The road was built alongside the coast, filled with coconut trees, mango trees and the sounds of parrots and parakeets in the background make the trip cozy and relaxed, even though the highway does not have enough lanes.
There is another very noticeable feature to any driver, the many constructions of mega-hotels and inns in the area, more so when one approaches the so-called Coconut Coast, not too far from the capital city of Salvador.
The region is quickly becoming the main tourism region in Bahia. It all started with the beginning of the Projeto Tamar, a government program developed in Praia do Forte to protect sea turtles from extinction.
People started coming to visit the turtles and investors came along, bringing the first resorts of the area. The whole area is beautiful, with miles and miles of the finest beaches and hundreds of thousands of coconut trees all along, with warm waters and lots of sunshine.
Today, Portuguese groups own a lot of land in the area, like the Reta Atlântico Grupo Espírito Santo, with 35 km of land for sale. Vila Galé, another group, owns today 80 km of land. The Brazilian Odebrecht is among the main investors of the area.
Paradise
Around US$ 1.1 billion dollars are being spent in construction in the Coconut Coast and US$ 4.1 billion more are on the way, according to State Secretary of Tourism and Culture Paulo Gaudenzi, with concentration of the spending in Sauípe, Imbassaí, Praia do Forte and Guarajuba. The ultimate goal is to turn the area into the biggest tourism region of South America, which is not far from being accomplished.
The Spaniard group Iberostar is investing US$ 500 million in a mega hotel expected to open in 2007 at Praia do Forte, 78 km from Salvador, Bahia’s capital city.
Together there are 193 km of coast north of Salvador. Costa de Sauípe, a resort in the area that is part of the Marriott chain of hotels, registered 54% of occupation in 2004 and 67% during the first three months in 2005. The interest of many tourist groups in the area was the green light to attract new investment.
The new resort will feature four hotels with around 400 rooms each, and a total of 3,200 beds. A 27-hole gulf field is meant to attract many foreign tourists and a condominium with 208 houses will be the ideal accommodation for those seeking more homelike surroundings.
A spa and a convention center for 1,500 people will make sure modern beauty requirements are met, and businesses can be made in paradise land. By the end of 2005 the first hotel will be ready, featuring 406 rooms and an 18 hole gulf field, with nine additional holes to be added as the construction follows its plan.
This is the first time the Reta Atlântico Group invests in Brazil and the Imbassaí Reserve will mount to R$ 220 million reais distributed in three hotels and three condominiums with 181 houses, with a commercial villa, sports and leisure club, tennis, volley, soccer courts and a nautical center.
The Hotel Starfish with 334 apartments and the villa will be ready early 2007. 40% of the houses have been sold, 50% to state residents and 45% to foreigners, 90% of which are Portuguese.
Another Portuguese hotel, the Vila Galé Marés will open early 2006, an investment of 70 million reais, with all units integrated with nature.
Clara Angelica Porto is a Brazilian bilingual journalist living in New York. She went to school in Brazil and at the University of Wisconsin in Madison. Clara is presently working as the English writer for The Brasilians, a monthly newspaper in Manhattan. Comments welcome at clara.angelica@gmail.com.
