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Libra oil auction shaping up as a major disappointment for Brazil

  • More on Brazil's planned auction of the Libra oil prospect: Only 11 companies registered to participate - far fewer than the expected 40 - and some of the biggest firms backed out, including Exxon (XOM), Chevron (CVX) and BP (earlier).
  • Asian state-owned companies dominate the list of participants: India's ONGC, Malaysia's Petronas, Colombia's Ecopetrol (EC), China's Cnooc (CEO) and China National Petroleum (PTR); China's Sinopec (SNP) will take part through joint ventures with Brazilian units of Spain's Repsol (REPYY.PK, REPYF.PK) and Portugal's Galp Energia (GLPEF.PK).
  • Also taking part: Shell (RDS.A, RDS.B), Total (TOT) and Mitsui (MITSY.PK, MITSF.PK).
  • Analysts blame the lack of interest on new rules drawn up by Brazil's government that place development and profits under greater state control; too many companies don't want "the trouble of dealing with Petrobras (PBR) and the government. You can get good oil assets elsewhere without that."
  • ETFs: EWZ, BRF, EWZS, BRAF, BRXX, UBR, BZQ, BRAZ, BRAQ, BRZS, BRZU.
Comments (10)
  • Arthur Fisher
    , contributor
    Comments (223) | Send Message
     
    Just wait until the Brazilians try suing the Chinese.
    19 Sep 2013, 06:31 PM Reply Like
  • doc47
    , contributor
    Comments (994) | Send Message
     
    When your country is run by left-wing lunatics with a history of screwing companies it tends to put a damper on deals needing "BIG BUSINESS"!!!!
    19 Sep 2013, 06:41 PM Reply Like
  • quesinberry
    , contributor
    Comments (2) | Send Message
     
    Try telling that to the people at AMBEV, Paulo Lemann and the people at 3G Capital, and Warren Buffett-- following advice based on gross generalizations never helped me make any money investing, but I have made a lot of money in select Brazilian stocks over the last 8-10 years-- emerging economies are a "work in progress": they take time, the "rule of law", and a capitalist/ entrepreneurial spirit which pervades the population (which, if you've been there is clearly evident).
    19 Sep 2013, 09:25 PM Reply Like
  • sonik
    , contributor
    Comments (29) | Send Message
     
    Country screwing companies, Macondo, US fines, legal system comes to mind
    20 Sep 2013, 05:00 AM Reply Like
  • attunix
    , contributor
    Comments (60) | Send Message
     
    Colombia is in Asia now? How things have changed...
    19 Sep 2013, 08:09 PM Reply Like
  • sonik
    , contributor
    Comments (29) | Send Message
     
    The bullet says Asian states dominate the list, NOT consists only of Asian states.
    20 Sep 2013, 08:23 AM Reply Like
  • Rappenco
    , contributor
    Comments (542) | Send Message
     
    Brazil is learning very quickly that their games with a minor spill resulting in fines of $70,000 per gallon with criminal charges filed against Chevron employees will be devastating to their desire to develop highly complex offshore oilfields.
    This is no foolish game which they tend to play. It is billions of dollars that need to be invested. They seriously sought criminal charges against employees of Chevron over a minor offshore leak not to mention the financial levy. Let Petrobras do the leg-work on these fields. Who in their right mind would invest under these conditions??
    Impossible to predict if this environment worsens into a Chavez like situation where they just confiscate all assets invested by foreign interests..
    Let them go it alone and suffer the consequences. Or better yet ; let them partner with the Chinese and enjoy that scenario.
    19 Sep 2013, 09:06 PM Reply Like
  • Bogie 1
    , contributor
    Comments (103) | Send Message
     
    Rapenco: You couldn't be more correct in your statement! New regime in the future will see where the socialist piggy bank has evaporated and changes will be forthcoming. Until then this mess will continue and take down other viable Brazilian companies. The government will be played liked a drum by the Chinese and the corruption will only get worse. As a distraught investor I am highly disappointed by this government's total disregard for the investors who had hope and faith they would do right by us.
    19 Sep 2013, 09:29 PM Reply Like
  • epeon
    , contributor
    Comments (508) | Send Message
     
    doesn't surprise me. If you look at what these 3rd world countries have done the risk of investing in these countries is very high. It is rational to look for other places to invest.
    19 Sep 2013, 10:30 PM Reply Like
  • Journey57
    , contributor
    Comments (3) | Send Message
     
    Let the Chinese lock up all of the oil assets that they can. We'll have the money and one day soon the country of China will be a quiet place again with not much need for oil. Then we buy it back at a steep discount.
    20 Sep 2013, 10:23 AM Reply Like
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