Petrobras wants to become a global operator in the liquefied natural gas (LNG) area. For this purpose, the Brazilian state-owned company has started negotiating partnerships with companies and governments in the Middle East and Africa.
"We are interested in optimizing and guaranteeing the supply to Brazil and the best way is to operate in the market together with other players," said the gas and energy director at the company, Ildo Sauer, who was in Bahrain this Tuesday, June 19, and last Sunday met with authorities in Qatar together with company president José Sérgio Gabrielli. Qatar is the main world producer of LNG.
Petrobras wants to diversify gas suppliers, especially to guarantee the supply of thermoelectric mills, and to sponsor a flexible market for the commodity. That is, to guarantee the delivery of the product when it is necessary and to pay for what is really used.
"The market was fixed, if you get the product, you pay, and if you don't, you also pay," stated Sauer. "Creating a more flexible market it is possible to protect yourself from possible accidents in production in Brazil, Bolivia or Argentina, for example, as alternative suppliers are generated and fixed costs are not generated, like the construction of pipelines. We are trying to develop a model together with producers and I believe that our operation will increase in this (flexible) market," he added.
With the Bolivian government's decision of nationalizing production of petroleum and natural gas, the fear of lack of supply and of prices of the gas transported through the Brazil-Bolivia Gas Pipeline has started spreading throughout the Brazilian market. With partnerships in the Middle East, Petrobras believes that it will be possible to make use of the seasonal aspect regarding the global demand.
According to Sauer, in Brazil, where most of the electric energy is generated in hydroelectric power plants, there is greater need of gas between May and October, the dry season. In the Northern Hemisphere, on the other hand, the greatest demand is at a different period, during the winter.
"The characteristic favoring LNG is that it is a commodity that you may bring when you need it and pay when you use it, or else it may be sold to the Northern Hemisphere. The demand in Brazil is during the drought, when the demand in the North is low," stated Sauer. As an example he mentioned the operation the company already has in the area of oil and derivatives, in which it imports and exports, depending on the market situation. The excess LNG may be exported to the United States, Europe or Asia.
In this respect, more than simply importing LNG, the company is interested in participating in exploration and production in the countries of the Gulf, and to promote joint business in the region, in Brazil and in other countries.
In Qatar, for example, Gabrielli, Sauer and other company representatives met with the deputy prime minister for Energy and industry in the country, Abdullah bin Hamad Al Attiyah, with the minister of State, Mohammad Saleh Al-Sada, with the CEO of state-owned company Qatar Petroleum International, Nasser Khalil Al-Jaidah, and with the director general of the also state-owned company RasGas, Hamad Rashid Al-Mohannaidi.
During their visit, the Petrobras representatives discussed the import of LNG, the possibility of exploration and production in the Arab country and the establishment of joint ventures in the promotion of business in Brazil and other countries. The Brazilian delegation also visited Ras Laffan industrial district, in the North of the country, where there are enormous gas reserves.
In Bahrain, Sauer met with representatives of the petroleum and gas agency in the country, which invited Petrobras to participate in tendering processes for exploration and production in local blocks. He also met with executives from Oman LNG, who also invited Petrobras to participate in tenders in the country and negotiated the sale of LNG to Brazil. "The negotiation has advanced very much," stated Sauer.
According to the executive, "master sales agreements", which permit the spot purchase of LNG, should be signed in the near future with companies in Qatar and Oman, for the later signing of longer term contracts. Petrobras has already signed similar agreements with Sonatrach, from Algeria, and with the Nigeria LNG.
Petrobras recently leased two LNG tankers from Golar LNG, specialized in the transport of gas, to operate in port terminals in Guanabara Bay, in Rio de Janeiro, and Pecém, in the northeastern state of Ceará. Both of the vessels are LNG transport, regasification and storage units.
One of them, according to Petrobras, will have a capacity for regasification of up to 14 million cubic meters a day and the other, 7 million cubic meters. This does not mean that it will all be used in Brazil.
Apart from that, installations are being built to receive the floating units, in Rio and Ceará. The first, according to Sauer, will have a cost of US$ 100 million and will be ready in 2008, and the second will cost an estimated US$ 70 million and will be delivered in 2009. The cost of lease of these two vessels is US$ 90 million.
Still in Bahrain, Sauer met executives of the Gulf Finance House (GFH) investment bank and of Energy City, a business district in the energy sector that is being established in Qatar and is financed by GFH. "They invited us to study the possibility of opening an office in Energy City, in accordance to our needs," stated the Petrobras director.
According to the Brazilian ambassador to Doha, Paulo Dyrceu Pinheiro, who participated in meetings in Qatar, the receptiveness to the visit of the Brazilians was very positive, even being news in the main press organizations in the country, like papers The Peninsula, Gulf Times and Qatar Tribune and on television network Aljazeera.
"This is part of a Petrobras strategy to develop new business in other parts of the world," stated the ambassador. "It is necessary to take care not to waste this opportunity," he added.
To him, a good development of talks in the area of gas and oil may also influence the business in other sectors, like engineering and civil construction. He pointed out that there is abundance of capitals in Qatar, powered by exports of energy commodities. During the visit of the Brazilian delegation, according to Pinheiro, the idea of establishing a Brazil-Qatar Business Council arose, mainly to stimulate contacts between companies in both countries.
Qatar has around 5% of the natural gas reserves of the world. The oil and gas sector answers to 62% of the country's Gross Domestic Product (GDP), according to information in the Economist Intelligence Unit (EIU), an information service provided by British magazine The Economist. According to EIU, despite already being the main global producer of LNG, the country intends to triple its production by 2012.
Still according to EIU, the country's GDP reached US$ 52.7 billion last year, posting real growth of 7.1% in comparison with 2005, for a population of just 900,000 inhabitants.
The institution estimates that the economy of Qatar should grow another 8.3% this year and 9.5% in 2008. With this performance, another sector that is expanding is the civil construction sector, as is the case with other countries in the Gulf Cooperation Council (GCC), the economic bloc that includes Qatar, Saudi Arabia, Bahrain, the United Arab Emirates, Kuwait and Oman.
The country's exports totaled US$ 30.6 billion last year and imports reached US$ 12.36 billion, according to EIU. In the same period, Brazil exported the equivalent to US$ 87.1 million to Qatar, mainly chicken, electric transformers, iron ore, cartridges for shotguns and cattle beef. Imports, in turn, totaled US$ 7.9 million, especially urea.
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