Total issues optimistic estimate for Libra Field

Petrobras and its exploration partners are still evaluating the latest drilling results in Libra, the main field of the Brazilian pre-salt layer, but France’s Total, one of the partners, has already advanced that only the northeast part may hold 3 billion to 4 billion barrels of oil. It’s the first volume estimate released since exploration started in the area, two years ago, and is already higher than the recoverable oil volume of Sapinhoá, another top pre-salt asset, which is estimated to hold 2.1 billion.

Libra is operated by Petrobras (40%) in partnership with Total (20%), Shell (20%) and Chinese companies CNOOC (10%) and CNPC (10%). Although the first stage of exploration investments in the area is still being finalized, the French oil major already considers it one of the most competitive projects in its portfolio.

Total expects to extract 100,000 barrels a day from Libra at peak production, making the project one of its main long-term production growth drivers. The oil major also expects Libra to become a low-cost production asset. “It’s clear we have a gigantic and homogenous deposit in the northeast part of the block that is an ideal candidate for equipment standardization and which will optimize production costs, as we have been doing in Angola,” the company’s exploration and production president, Arnaud Breuillac, told investors recently.

Source: Valor Econômico S.A.

Indian group UPL plans R$1bn investment in Brazil

India’s United Phosphorus Limited, one of the largest manufacturers of generic agrochemicals in the world, intends to invest R$1 billion in the construction of a facility to synthesize and produce pesticides in Brazil.

The information was disclosed on September 22nd in New Delhi by the Brazilian minister of Agriculture, Blairo Maggi, and confirmed by the company, which didn’t have spokespeople available for interviews on that day. The place where the plant will be built has not yet been decided, and the production capacity was not disclosed.

In September last year, Carlos Pellicer, president of UPL in Brazil, had already advanced that the company was analyzing the possibility of investing in an organic-synthesis plant in Brazil, country with the largest demand for agrochemicals in the world.

At the time, however, the project was more modest. Mr. Pellicer estimated the total investment would range from R$150 million to R$200 million. UPL already has a plant in Ituverava, interior of São Paulo, but currently imports most of what it sells in Brazil.

According to information from the Ministry of Agriculture, UPL also plans to develop lentil research in Brazil, whose total demand, of about 14,000 tonnes per year, is currently supplied by imports.

Source: Valor Econômico S.A.

NTS sale is landmark for Brazilian gas industr

Petrobras’s sale of Nova Transportadora do Sudeste (NTS) to Canadian group Brookfield represents a mark for the natural gas industry in Brazil. By putting an end to the de facto monopoly that the state-controlled company had in the transportation of gas, the deal becomes an important first step toward reducing the vertical integration of the sector, but by itself is not yet enough to make the market develop fully, experts told Valor.

On September 23rd, Petrobras announced that its board of directors approved the transfer of 90% of NTS shares to the consortium led by the Canadian fund for $5.19 billion. The first installment of the deal, representing 84% of the total, or $4.34 billion, will be paid when the transaction is completed, which should happen still this year. The remaining $850 million will be paid over five years. Petrobras said the sale “encourages new investments in the expansion of gas transport infrastructure” and favors the development of a competitive environment in the country.

Gas consumers, producers and traders see the need of some adjustments in the regulatory framework to bring new players to this market. The sector eagerly awaits the launch of a package of regulatory changes that the Ministry of Mines and Energy expects to present to the market in October.

One of the main fronts for the government is the sharing of infrastructure considered essential for producers to reach the consumer market, such as gathering pipelines, processing units and re-gasification plants. The Gas Law ensures the right of free access for third parties only to the transmission pipelines, but there are entry barriers to the rest of the chain.

Source: Valor Econômico S.A.

Order blocking permit for ThyssenKrupp Brazil mill lifted

A Brazilian judge on September 22th lifted an injunction blocking Rio de Janeiro from granting an operating license for ThyssenKrupp AG’s Cia Siderurgica do Atlantico steel mill, saying there were no irregularities in the 11-year permit process.

The ruling by Judge Natascha Maculan Adum Dazzi of the Rio de Janeiro-state Justice Tribunal reversed the injunction she granted on September 20th, according to a copy of the ruling provided by ThyssenKrupp.

On September 20th, Dazzi prohibited the state government from granting the CSA steel mill a permanent operating license. The mill has been operating on provisional licenses since it began producing steel in 2010.

The injunction was issued to give courts time to evaluate other legal requests seeking new studies on the environmental and health impact before the license is issued, said prosecutors, who requested the injunction in July.

In her ruling, Dazzi said her examination of the case led her to conclude that there were no irregularities in the licensing process by the Rio de Janeiro-state environmental protection agency INEA.

“ThyssenKrupp fully complies with the license conditions established by the state environmental authorities,” the company said earlier on September 22th. “State environmental protection agency INEA is ready to approve the operating license as soon as there is a final decision by the courts.”

Source: Reuters Brazil

Vale in final talks to sell stake in fertilizer business

Mining company Vale is in an advanced stage of talks to sell its fertilizer unit. But sources who are following closely the situation say any deal still needs board approval and it remains unclear whether what will be negotiated is a slice of or the entire business.

US fertilizer company The Mosaic Co. is pointed by the market as a leading candidate to close the deal with Vale, but other players have looked at the mining giant’s fertilizer assets in the recent past. Among them is Yara, the Norwegian giant, which already is one of the largest producers of fertilizer inputs in Brazil.

In August, at a meeting with investors in Belo Horizonte, Minas Gerais, Vale’s investor relations director, Rogério Nogueira, said the company was looking at some possibilities. But Vale’s idea was to keep a stake in the business.

In 2015, Vale’s fertilizer unit yielded an EBITDA of $567 million — more than double from the previous year, of $278 million. The increase was possible thanks to the positive currency impact, cost-cutting measures, and higher prices.

Vale’s fertilizer arm had last net operating revenues of $2.2 billion in 2015, accounting for 8.7% of the company’s total revenue. In 2014, that share was 6.4%. This year, the scenario has changed a little due to falling fertilizer prices in the global market. There are estimates that Vale’s fertilizer assets may be worth about $3 billion.

Mosaic is the world’s largest producer of concentrated phosphate. According to information already circulating in the market, Mosaic and Vale would be discussing alternatives for the business. One of the options in the transaction would be Vale becoming a shareholder of Mosaic, with a slice between 12% and 15%, depending on the size of the deal.

Source: Valor Econômico S.A.

Growing clashes over changes on capital repatriation bill

The political fight to change the capital repatriation bill, which allows Brazilians with funds deposited illegally abroad to pay back taxes and bring back the money, is intensifying. On one side is Congress, which has been advancing negotiations with presidential aides to make three important changes, including allowing politicians and their relatives to participate in the program, while on the other is the Secretariat of the Federal Revenue, which remains adamantly opposed to any changes.The officials expect to collect at least R$25 billion with the program. Legislators also want to extend the deadline to December 30 from October 31, but economic officials counter that such change would make it impossible for the funds to reach states still this year.

Source: Valor Econômico S.A.

Itaú gets exclusive rights to negotiate acquisition of Citi assets

Itaú Unibanco has made a better offer than Santander and become the favorite to buy Citigroup’s retail banking operation in Brazil. The largest Brazilian private-sector lender has obtained the right to negotiate exclusively the acquisition of the American bank’s assets in Brazil, one person familiar with the talks said.

Before that, Santander was also taking part in the process. The Spanish bank, however, obtained exclusive rights to negotiate Citi’s retail operation in Argentina. The operation in Colombia, also up for sale, is likely to be sold to Canada’s Scotiabank, say people familiar with the negotiations. Citi is expected to announce in the last weeks of September 2016 the outcome of the three negotiations.

The American banking giant had announced in February plans to sell its retail network in the three countries. Citi initially expected to announce the final deals in September.

Itaú became the leading candidate to buy the operation on the second week of September. With the exclusivity, talks for the sale of Citi’s retail banking operation in the country enter a new phase, now with a more detailed discussion on price and contract terms.

Source: Valor Econômico S.A.

Start of 2016/17 planting feeds optimism in Brazil’s soy capital

The first rains that fell about a month in Sorriso were the last drop needed to restore the city’s confidence. Even below the ideal level, the moisture ensured the beginning of soybean planting in the district located in the mid-north of Mato Grosso state on September 16th, as allowed by law after the fallow period, when sowing is prohibited in order to reduce disease risks.

And Sorriso’s producers have optimistic forecasts. They expect to harvest about 2.1 million tonnes of soybean in the 2016/17 season, according to the local rural union and based on the first rainfall estimates calculated by meteorology institutes. If confirmed, the volume will go back to the 2014/15 level, as in the last crop the drought of more than 20 days affected farms’ yields.

Given the recovery signs, Sorriso, always among the country’s largest soy producing municipalities and Mato Grosso’s agribusiness symbol, lives up to its name, which means “smile” in Portuguese. The beans to be harvested will not only fill the 60kg bags to leave for nearby stores or are intended for export, mainly to China. The soybeans will also, as usual, become the most valuable currency in the region, used to pay from a doctor’s appointment to a new stove.

Source: Valor Econômico S.A.

Protection of Amazon’s biodiversity could fuel ‘fourth industrial revolution’: study

The Amazon rainforest holds the biological keys to kick-start a “fourth industrial revolution” if its biodiversity is protected, said a study published on September 16th.

New digital technologies such a 3-D printing and quantum computing create the potential for the Amazon’s unique plants to drive major advances in medicine and engineering, said the study by Brazilian scientists.

“Leveraging the Amazon’s vast biomimetic and biodiversity assets, we can aspire to develop revolutionary innovations in multiple fields. For example, a long-lasting foam produced by a species of frog has inspired the creation of new technologies for capturing carbon dioxide from the atmosphere,” said Juan Carlos Castilla-Rubio, one of the study’s authors and chairman of Space Time Ventures, a Brazilian technology company.

Amazon plants could also lead to breakthroughs in antiseptics, anti-wrinkle creams, gynecological medicines and anti-inflammatory drugs if they are coupled with new technologies, said the study published in the Proceedings of the National Academy of Sciences.

Source: Reuters Brazil.

Commerzbank starts operating in Brazil amid market concentration

Having just returned to Brazil, while international competitors as Citibank and HSBC go in the opposite direction, Germany’s Commerzbank thinks that the time to open its local unit couldn’t be better. “There is room for more banks and with new ideas in Brazil,” says Roland Boehm, board member for international corporations, in an interview at the bank’s offices in São Paulo.

Mr. Boehm visited the country on September for meetings with potential customers, just over a month after Commerzbank obtained Brazil’s Central Bank final approval to operate here. With €533 billion in assets, the lender, founded in 1870 and headquartered in Frankfurt, operates in the middle market in Europe.

In Brazil, its focus is on larger companies and subsidiaries of European multinationals. The process for obtaining the license to operate as a commercial bank took about two years. In this period, Brazil has faced one of its biggest recessions and a political crisis that led to the impeachment of former President Dilma Rousseff.

The bank didn’t change its plans for the country at any moment, Mr. Boehm says. He believes that the current situation is an opportunity for Commerzbank to present itself to Brazilian customers. “Now there is greater interest from costumers in talking to new banks than two years ago,” he says.

Source. Valor Econômico S.A.