DJ INTERVIEW: Brazil's Oil Watchdog Bullish On New Era
By JAMIE MCGEEVER
Dow Jones Newswires
RIO DE JANEIRO -- Just over a month to go until Brazil's oil sector
takes another major step toward full deregulation, and the country's
chief oil watchdog is already thinking about what the following step
will be.
On June 15-16, the National Petroleum Agency (ANP) will hold a landmark
bidding round for 27 land and off-shore oil and natural gas blocks, in
which 42 companies from all over the world are registered to compete.
ANP General Director David Zylbersztajn, speaking in an interview,
dismissed recent financial and economic instability in Brazil, along
with analysts' reservations about the degree of interest shown.
"Everything is going extremely well, demand for the data and information
has been excellent, and all the world's major (oil) companies will be
present," he said.
Zylbersztajn has said in the past that the minimum investment in the
blocks - from spending on initial seismic surveys to actual production -
would total a minimum $1.2 billion.
"What's more important in the short-term isn't money, but finding oil
and setting up business," the ANP general director said.
Zylbersztajn said it was the quick-fire roadshow covering Houston, New
York and London in January - when the crisis here exploded following the
devaluation of the real - that set the ball rolling.
"Not one of the 100 or so companies present at the roadshow expressed
any concern at all over the economic situation in Brazil, and there's
been no change since," said Zylbersztajn.
He said the bidding process could well be followed by further bidding
rounds as early as next year. "There are more blocks to be auctioned,
but it's not been decided how many," the ANP chief said.
August 1997 saw the beginning of the end of federal oil holding Petroleo
Brasileiro SA, or Petrobras' (E.PTB) monopoly over the sector. The ANP
was created in the same piece of legislation to oversee the sector's
liberalization.
The mid-June auctions are particularly important because it's the first
time blocks will be handed over to companies outside the Petrobras realm
for exploration and development.
Since August 1997, market speculation has mounted that Petrobras will be
fully privatized sooner rather than later, which the government and
Zylbersztajn both deny. Already, all but 50% plus one of common shares
trade, and a change in the company's bylaws last month allows foreigners
to buy Petrobras stock for the first time.
"I don't see any chance of this (full privatization), and anyway, it
doesn't form part of the government's strategy," Zylbersztajn said.
Sees Alliances Increasing Petrobras Competitiveness
Zylbersztajn insisted that Petrobras is well equipped to compete against
U.S. and European giants in the new market being modeled here. As far as
the bidding next month is concerned, Petrobras will receive the same
treatment as any other company involved.
But Zylbersztajn admitted certain weak spots.
"Petrobras is competitive in upstream, but there are a few more problems
in downstream," he said, noting that refineries in particular require
large sums for upgrade and modernizing. "But I'm convinced Petrobras is
competent enough to adapt," he added, pointing out that the company is
involved in talks with companies all over the world which aim to make it
more and more competitive.
Venezuela also is pushing for a strategic alliance between its PDVSA and
Petrobras, which could also incorporate Colombian and Mexican oil
players and which would produce a pan-Latin American petroleum giant.
Although the global oil market has seen better days, Zylbersztajn said a
turnaround is around the corner, and that Brazil will be at the
forefront.
He said current world oil stockpiles have been kept from rising by a
drop in production, but this will reverse in the years ahead as global
population levels keep climbing.
"Demand will rise again soon, which will coincide with with the start of
production (from the blocks) here," Zylbersztajn confidently predicted.
He was equally bullish about Brazil's role in this process, saying the
country's oil basins are under-explored and that exploration and
production potential here is "one of the best in the world."
"Brazil is the new frontier, and things are getting better and better."
-By Jamie McGeever; 5521-580-9394; jmcgeever@ap.org |
