Petrobras Launches Sale of Bonds to Raise $11 Billion

SAO PAULO - Brazilian state-run energy giant Petroleo Brasileiro SA on Monday began its enormous 2013 financing campaign with one of the largest bond issues this year.

Petrobras, as the company is better known, on Monday launched the sale of $11 billion in bonds through six separate sets of bonds, with maturities of between three and 30 years, according to term sheets provided by fund managers.

There was sufficient demand for Petrobras' investment-grade bonds for the firm to have raised up to $40 billion, according to a person with knowledge of the transaction. The total size could still increase, as the company has an option to offer up to 5% more to Asian investors later in the day.

Investors had been preparing for the sale, as Petrobras has stated it aims to borrow about $20 billion this year and a similar amount next year to fund its ambitious $237 billion multi-year investment plan. The company is leading Brazilian efforts to develop huge offshore oil fields known as the pre-salt reserves.

"We reduced our Petrobras exposure significantly earlier this year in expectation of this issue," said Joon Hyuk Heo, head of global fixed income at Mirae Asset Global Investors, with more than $2 billion in emerging-market assets.

Prices on Petrobras' existing bonds have traded around 110 cents to the dollar in recent months from its 2012 high of 115 cents to the dollar--according to MarketAxess BondTicker data--on concerns about fresh supply and the level of government intervention in the company.

Mr. Joon said recent valuation on Petrobras' debt makes the deal attractive, but the longer-term outlook for commodities and Brazilian companies is less of a draw. Mr. Joon said Petrobras had an advantage in issuing floating rate notes, as they were rare and would drive up demand. He planned to buy the five-year tranche of the deal.

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Petrobras Will Be 'Selective, Focused' in Oil Concession Auction

RIO DE JANEIRO - Brazilian state-run energy giant Petroleo Brasileiro SA, or Petrobras, is in talks with the world's largest oil companies about forming partnerships to bid for new oil and natural-gas exploration concessions at a much-anticipated auction set for next month, Chief Executive Maria das Gracas Foster said in an interview.

"Our participation in the auctions this year is going to be focused and selective," Ms. Foster said. "We are making it a priority to work in partnership with big oil companies."

Brazil will auction off 289 oil and natural-gas exploration blocks on May 14-15, the country's first such auction of new exploration acreage since 2008. This auction doesn't include blocks from the subsalt area, as these will be sold later this year at an auction that will be under new legislation passed in the wake of the discovery.

Potential tie-ups with big oil companies for the round of blocks in May would help to reduce costs for Petrobras as the company embarks on a $237 billion investment plan through 2017, one of the world's largest corporate-spending campaigns, as well as ease the company's workload as it moves quickly to boost flagging crude-oil output by bringing the massive new subsalt fields into production.

While partnerships would help to diminish the company's financial risk in the new exploration areas, they would also provide a sounding board to discuss the best way to develop any potential discoveries, Ms. Foster said in an interview this week.

After primarily playing the lead role in Brazil's offshore oil industry for more than 30 years, Petrobras also appears ready to let potential partners take the reins for awhile. "We are negotiating to not be the operator" in new exploration blocks, Ms. Foster said.

Because Petrobras already serves as the operator in many of its oil fields and exploration blocks, Ms. Foster said that "we are discussing the partner's interest in being the operator. We're not going to fight about that."

But with whichever companies Petrobras forms partnerships for this year's planned auctions, they will be major players, Ms. Foster emphasized. The companies will have know-how and be strong financially, Ms. Foster said.

On Thursday, Royal Dutch Shell PLC Chief Executive Peter Voser noted that his company has "a very successful partnership" with Petrobras and is interested in further collaboration. The oil major will study the bid areas but hasn't yet decided whether it will participated in the May auction, he said.

Separately, Ms. Foster said Petrobras isn't considering taking an active role in developing infrastructure projects with billionaire Brazilian businessman Eike Batista's EBX Group of companies. EBX holds interests in such diverse areas as mining, real estate, shipbuilding, oil production and ports.

"Petrobras is not going to participate in the construction of any shipyard," Ms. Foster said. "Petrobras doesn't know anything about shipyards, Petrobras wants to use shipyards."

Mr. Batista's shipbuilding company, OSX Brasil, was part of a consortium that won a tender to provide processing modules for two floating-production platforms, Ms. Foster noted.

Brazil is especially keen to see the Acu port currently under construction by Mr. Batista's LLX Logistica completed, according to a person close to the government. Since September, Petrobras has held talks with EBX Group about buying services from the group, but won't go beyond that, Ms. Foster said.

"What we are seeking with this group are contracts to use the infrastructure it's building," Ms. Foster said. "Because [LLX] is building the port, but hasn't completed construction yet, these contracts will only happen when the port is built and will have to be at the lowest cost."

Petrobras will hold a tender that will make sure any services are contracted at the lowest-possible price, Ms. Foster added. Talks with EBX Group will likely be "better defined" starting in June, but contracts are unlikely to be signed at that time, Ms. Foster said. "I don't have any dates set to sign contracts," the executive said.

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Petrobras Will Be 'Selective, Focused' in Oil Concession Auction

RIO DE JANEIRO - Brazilian state-run energy giant Petroleo Brasileiro SA, or Petrobras, is in talks with the world's largest oil companies about forming partnerships to bid for new oil and natural-gas exploration concessions at a much-anticipated auction set for next month, Chief Executive Maria das Gracas Foster said in an interview.

"Our participation in the auctions this year is going to be focused and selective," Ms. Foster said. "We are making it a priority to work in partnership with big oil companies."

Brazil will auction off 289 oil and natural-gas exploration blocks on May 14-15, the country's first such auction of new exploration acreage since 2008. This auction doesn't include blocks from the subsalt area, as these will be sold later this year at an auction that will be under new legislation passed in the wake of the discovery.

Potential tie-ups with big oil companies for the round of blocks in May would help to reduce costs for Petrobras as the company embarks on a $237 billion investment plan through 2017, one of the world's largest corporate-spending campaigns, as well as ease the company's workload as it moves quickly to boost flagging crude-oil output by bringing the massive new subsalt fields into production.

While partnerships would help to diminish the company's financial risk in the new exploration areas, they would also provide a sounding board to discuss the best way to develop any potential discoveries, Ms. Foster said in an interview this week.

After primarily playing the lead role in Brazil's offshore oil industry for more than 30 years, Petrobras also appears ready to let potential partners take the reins for awhile. "We are negotiating to not be the operator" in new exploration blocks, Ms. Foster said.

Because Petrobras already serves as the operator in many of its oil fields and exploration blocks, Ms. Foster said that "we are discussing the partner's interest in being the operator. We're not going to fight about that."

But with whichever companies Petrobras forms partnerships for this year's planned auctions, they will be major players, Ms. Foster emphasized. The companies will have know-how and be strong financially, Ms. Foster said.

On Thursday, Royal Dutch Shell PLC Chief Executive Peter Voser noted that his company has "a very successful partnership" with Petrobras and is interested in further collaboration. The oil major will study the bid areas but hasn't yet decided whether it will participated in the May auction, he said.

Separately, Ms. Foster said Petrobras isn't considering taking an active role in developing infrastructure projects with billionaire Brazilian businessman Eike Batista's EBX Group of companies. EBX holds interests in such diverse areas as mining, real estate, shipbuilding, oil production and ports.

"Petrobras is not going to participate in the construction of any shipyard," Ms. Foster said. "Petrobras doesn't know anything about shipyards, Petrobras wants to use shipyards."

Mr. Batista's shipbuilding company, OSX Brasil, was part of a consortium that won a tender to provide processing modules for two floating-production platforms, Ms. Foster noted.

Brazil is especially keen to see the Acu port currently under construction by Mr. Batista's LLX Logistica completed, according to a person close to the government. Since September, Petrobras has held talks with EBX Group about buying services from the group, but won't go beyond that, Ms. Foster said.

"What we are seeking with this group are contracts to use the infrastructure it's building," Ms. Foster said. "Because [LLX] is building the port, but hasn't completed construction yet, these contracts will only happen when the port is built and will have to be at the lowest cost."

Petrobras will hold a tender that will make sure any services are contracted at the lowest-possible price, Ms. Foster added. Talks with EBX Group will likely be "better defined" starting in June, but contracts are unlikely to be signed at that time, Ms. Foster said. "I don't have any dates set to sign contracts," the executive said.

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Sources: Petrobras to Auction $5 Billion of Nigeria Oil Assets

Brazilian oil company Petrobras is to auction off its stakes in Nigerian oil fields to raise cash for domestic projects, a deal that may fetch up to $5 billion, sources close to the deal said.

The state-controlled company, formally known as Petroleo Brasileiro SA, has hired Standard Chartered to run the process, which will kick off in the next two months, banking and oil industry sources said.

Asian state oil companies are expected to bid in the hopes of adding more production assets to their portfolios. Private equity funds are also interested, banking sources said.

Standard Chartered and Petrobras declined comment.

The decision to sell the Nigeria assets marks a retreat away from foreign markets once considered strategic in favor of realizing the government's goal for Brazil to become self-sufficient in energy.

Petrobras will sell its 8 percent stake in the Nigerian offshore Agbami blocks, which are operated by U.S. energy major Chevron and its 20 percent share of the offshore Akpo project, operated by France's Total.

Crude oil production from the Agbami field fields began in 2008. Output from the project can reach 250,000 barrels per day (bpd), and it holds estimated reserves of 900 million barrels.

Akpo began production in 2009 and has plateau output of 175,000 bpd of light condensate oil and 9 million cubic meters of gas. It has proved and probable reserves of 620 million barrels of condensate and more than 28 billion cubic meters of gas, according to Total.

Petrobras began operations in Nigeria in 1998 in the deep waters off the coast of the Niger Delta.

Petrobras is divesting assets and redirecting investment towards higher-return activities such as exploration and production to finance a five-year, $237 billion capital spending plan, the world's largest corporate investment program.

Petrobras hopes to more than double current oil and gas production by the start of the next decade to about 5.2 million barrels of oil equivalent a day and also help Brazil become self-sufficient in refined products as well. 

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Petrobras: Transport Helicopter Makes Emergency Sea Landing

RIO DE JANEIRO - Brazilian state-run energy giant Petroleo Brasileiro SA on Wednesday said a cargo helicopter operated by Lider Taxi Aereo made an emergency landing at sea after taking off from a production platform off the coast of Brazil.

The three crew members of the Bell 412 helicopter were safe aboard the P-7 platform in Brazil's Campos Basin, where more than 85% of the country's crude oil is produced, Petrobras said. The helicopter, meanwhile, remains floating on the sea surface.

The "controlled" landing took place after the helicopter lifted off from the FPSO Cidade de Rio de Janeiro floating production, storage and offloading vessel, or FPSO, Petrobras said. The helicopter had been on its way to the P-7 platform, which produces oil from the Bicudo field, before the emergency landing, the company added.

Petrobras said it was investigating the cause of the accident, which has been reported to local regulators, the Navy and Air Force.

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Petrobras: Transport Helicopter Makes Emergency Sea Landing

RIO DE JANEIRO - Brazilian state-run energy giant Petroleo Brasileiro SA on Wednesday said a cargo helicopter operated by Lider Taxi Aereo made an emergency landing at sea after taking off from a production platform off the coast of Brazil.

The three crew members of the Bell 412 helicopter were safe aboard the P-7 platform in Brazil's Campos Basin, where more than 85% of the country's crude oil is produced, Petrobras said. The helicopter, meanwhile, remains floating on the sea surface.

The "controlled" landing took place after the helicopter lifted off from the FPSO Cidade de Rio de Janeiro floating production, storage and offloading vessel, or FPSO, Petrobras said. The helicopter had been on its way to the P-7 platform, which produces oil from the Bicudo field, before the emergency landing, the company added.

Petrobras said it was investigating the cause of the accident, which has been reported to local regulators, the Navy and Air Force.

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FMC Technologies Bags Petrobras Subsea Work

FMC Technologies, Inc. announced it has received an order from Petrobras for the supply of the first subsea manifold systems for its pre-salt fields, located offshore Brazil. The value of the contract is approximately $130 million in revenue.

This initial award includes three manifolds, tools, spare parts and system integration with subsea controls. The manifolds will be designed with retrievable injection modules to allow water alternated gas injection for up to four wells and will be installed in water depths up to 8,200 feet (2,500 meters). The equipment will be manufactured in Brazil and the development engineering and system integration testing will be conducted at FMC Technologies' Technology Center in Rio de Janeiro. Deliveries are scheduled to commence in 2015.

"The pre-salt fields require customized solutions and we are proud to have been selected by Petrobras to develop and deliver these manifolds," said Tore Halvorsen, FMC Technologies' senior vice president of Subsea Technologies. "We have made significant investments in our Brazilian operations to enable large-scale product manufacturing and the development of new technologies that comply with local content requirements."

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Aker Solutions Pens Frame Agreement with Petrobras

Aker Solutions has entered a frame agreement with Petrobras to provide subsea equipment for the oil company's deepwater pre-salt field developments in Brazil. The contract value is approximately $800 million (NOK 4.6 billion).

The scope of work is for 60 well-sets with vertical subsea trees, subsea control systems, tools and spares within the 2014-2018 period.

"Aker Solutions is honoured to work with one of the world's leading deepwater operators. This long-term agreement confirms our partnership with Petrobras and reflects our dedication to the Brazilian market," said Øyvind Eriksen, executive chairman of Aker Solutions.

Petrobras will deploy the 60 well-sets in the pre-salt field developments located 186 miles (300 kilometers) off the São Paulo coast in the Santos Basin.

"We are committed to developing the subsea industry in Brazil by growing our Brazilian expertise supported by our international competence network," said Luis Araujo, president and country manager of Aker Solutions in Brazil.

Aker Solutions has decided to further invest and expand in Brazil due to the $800 million-frame agreement with Petrobras and market forecasts for the Brazilian oil and gas industry.

A new subsea manufacturing facility will be established in Curitiba in the state of Parana, 497 miles (800 kilometers) south of Rio de Janeiro. This new technology center will replace the current plant by 2015 and will employ approximately 1,100 people.

Only the first few well-sets within the new frame agreement will be manufactured at the existing plant, while the remaining well-sets will be assembled and tested at the new facility.

"We are continuing our efforts to establish large scale manufacturing capabilities based on the technologies developed for Petrobras during our first pre-salt projects. Our proven pre-salt technology gives Aker Solutions a strong position in this market, and this will be used to further enhance local content, such as subsea control systems. Aker Solutions has continuously invested in developing the know-how and expertise of its employees in Brazil," said Araujo.

Aker Solutions is also investing within other parts of the Brazilian offshore industry. Last year, the company announced that it will build a new multi-purpose service site for its drilling equipment business in Macaé, 112 miles (180 kilometers) northeast of Rio de Janeiro, significantly expanding its capacity to serve the country's fast-growing drilling market. This site will be Aker Solutions' fourth facility in Brazil, in addition to sites in Rio das Ostras, Curitiba and Rio de Janeiro.

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FMC Technologies Bags Petrobras Subsea Work

FMC Technologies, Inc. announced it has received an order from Petrobras for the supply of the first subsea manifold systems for its pre-salt fields, located offshore Brazil. The value of the contract is approximately $130 million in revenue.

This initial award includes three manifolds, tools, spare parts and system integration with subsea controls. The manifolds will be designed with retrievable injection modules to allow water alternated gas injection for up to four wells and will be installed in water depths up to 8,200 feet (2,500 meters). The equipment will be manufactured in Brazil and the development engineering and system integration testing will be conducted at FMC Technologies' Technology Center in Rio de Janeiro. Deliveries are scheduled to commence in 2015.

"The pre-salt fields require customized solutions and we are proud to have been selected by Petrobras to develop and deliver these manifolds," said Tore Halvorsen, FMC Technologies' senior vice president of Subsea Technologies. "We have made significant investments in our Brazilian operations to enable large-scale product manufacturing and the development of new technologies that comply with local content requirements."

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Aker Solutions Pens Frame Agreement with Petrobras

Aker Solutions has entered a frame agreement with Petrobras to provide subsea equipment for the oil company's deepwater pre-salt field developments in Brazil. The contract value is approximately $800 million (NOK 4.6 billion).

The scope of work is for 60 well-sets with vertical subsea trees, subsea control systems, tools and spares within the 2014-2018 period.

"Aker Solutions is honoured to work with one of the world's leading deepwater operators. This long-term agreement confirms our partnership with Petrobras and reflects our dedication to the Brazilian market," said Øyvind Eriksen, executive chairman of Aker Solutions.

Petrobras will deploy the 60 well-sets in the pre-salt field developments located 186 miles (300 kilometers) off the São Paulo coast in the Santos Basin.

"We are committed to developing the subsea industry in Brazil by growing our Brazilian expertise supported by our international competence network," said Luis Araujo, president and country manager of Aker Solutions in Brazil.

Aker Solutions has decided to further invest and expand in Brazil due to the $800 million-frame agreement with Petrobras and market forecasts for the Brazilian oil and gas industry.

A new subsea manufacturing facility will be established in Curitiba in the state of Parana, 497 miles (800 kilometers) south of Rio de Janeiro. This new technology center will replace the current plant by 2015 and will employ approximately 1,100 people.

Only the first few well-sets within the new frame agreement will be manufactured at the existing plant, while the remaining well-sets will be assembled and tested at the new facility.

"We are continuing our efforts to establish large scale manufacturing capabilities based on the technologies developed for Petrobras during our first pre-salt projects. Our proven pre-salt technology gives Aker Solutions a strong position in this market, and this will be used to further enhance local content, such as subsea control systems. Aker Solutions has continuously invested in developing the know-how and expertise of its employees in Brazil," said Araujo.

Aker Solutions is also investing within other parts of the Brazilian offshore industry. Last year, the company announced that it will build a new multi-purpose service site for its drilling equipment business in Macaé, 112 miles (180 kilometers) northeast of Rio de Janeiro, significantly expanding its capacity to serve the country's fast-growing drilling market. This site will be Aker Solutions' fourth facility in Brazil, in addition to sites in Rio das Ostras, Curitiba and Rio de Janeiro.

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Petrobras, SBM Shake Hands on Lula FPSO $3.5B Conversion Deal

Petrobras awarded a Letter of Intent (LOI) to SBM Offshore for the 20-year charter and operation of two floating production storage and offloading vessels (FPSOs) from BM-S-11 subsidiary Tupi BV. The contract value is estimated at $3.5 billion.

"We are delighted to have been selected by Petrobras for this significant project and look forward to starting work on the FPSOs, which are amongst the largest ever built by SBM Offshore," said Bruno Chabas, CEO of SBM Offshore, in a released statement. “Jointly, the two FPSOs represent the biggest contract ever awarded to us, underlining our unparalleled expertise and leading position in the market for large-scale tanker conversions to FPSOs."

The scope of work includes the conversion of two double hull sister vessels into FPSOs to be moored in about 7,546 feet of water with a storage capacity of 1.6 million barrels each. The topside facilities of each vessel will come in at around 22,000 tons and will be able to produce 150,000 barrels per day of well fluids with the capability to treat associated gas.

A joint venture company owned by SBM Offshore and partner, Queiroz Galvão Óleo e Gás S.A. will own and operate the FPSOs, which will be deployed at the Lula field in the pre-salt province offshore Brazil. The vessels are planned for delivery by the end of 2015 and early 2016.

Lula, formerly Tupi, considered the largest hydrocarbon find in the world, is undergoing several development stages to fully exploit the reserves. The pre-salt field is located about 186 miles offshore Rio de Janeiro and is operated by Petrobras.

With more than 10 years of journalism experience, Robin Dupre specializes in the offshore sector of the oil and gas industry. Email Robin at rdupre@rigzone.com.

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Petrobras in Talks to Sell Argentine Assets

RIO DE JANEIRO - Brazilian state-run energy giant Petroleo Brasileiro, or Petrobras, is in talks to sell off its Argentine unit as part of a $9.9 billion divestment plan, Chief Executive Maria das Gracas Foster said Tuesday.

Speaking to reporters, Ms. Foster declined to provide any additional details about the talks because of their sensitive nature. Petrobras officials also declined to comment about other assets that the company may have up for sale.

Petrobras, however, has taken its Pasadena Refining System, a refinery located in Pasadena, Texas, off the market, Ms. Foster said. "Pasadena is no longer part of the divestment plan," Ms. Foster said.

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CFO: Petrobras Will Need to Raise Net $4.3B Per Year to Fund Investments

RIO DE JANEIRO - Brazilian state-run oil company Petroleo Brasileiro, or Petrobras, expects to raise a net $4.3 billion in global capital markets each year to fund its investment plan over the next five years, Chief Financial Officer Almir Barbassa said Tuesday.

Speaking during a presentation to analysts, Mr. Barbassa said increased crude oil production during the 2013-2017 period covering the investment plan had allowed Petrobras to reduce its net financing needs by 50% compared with the 2012-2016 investment plan. Petrobras also expects to raise about $9.9 billion from divestments as part of the plan, Mr. Barbassa said.

Petrobras plans to invest $236.7 billion to develop massive offshore oil fields recently discovered off Brazil's coast, virtually the same level as last year's investment plan. Crude oil production is expected to reach 2.75 million barrels per day by 2017, according to the company.

Gross debt needs are expected to be about $12.3 billion annually over the next five years, Mr. Barbassa added.

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Petrobras Approves $236.7B Investment Plan for 2013-2017

RIO DE JANEIRO - Brazilian state-run energy company Petroleo Brasileiro SA, or Petrobras, said late Friday that it plans to invest $236.7 billion over the next five years, maintaining spending and production targets at the same levels as last year plan.

The 2013-2017 investment plan remains one of the world's largest corporate spending plans, but is up only marginally from the $236.5 billion Petrobras earmarked for investments in the 2012-2016 period. Petrobras has been criticized by analysts and investors because its hefty investment spending has not resulted in increased crude oil production, despite finding some of the world's largest oil discoveries in 20 years.

The company failed once again to meet its production target in 2012 as maintenance shutdowns at aging offshore platforms and declining output in the mature Campos Basin undermined crude-oil production. Petrobras ended 2012 with average domestic crude-oil production of 1.98 million barrels a day, short of the 2.02 million barrel-per-day target, and expects output to remain stable in 2013.

Financial measures have also tracked a deterioration in the company's balance sheet as Petrobras continued to spend more than it earns, a situation that will peak during the 2013-2017 investment plan, Petrobras said. In 2013, Petrobras will make its largest annual investment while generating its lowest operational cash flow. Petrobras expects to start generating more cash than it spends in 2015, the company said.

Despite the gloomy financial outlook, Petrobras said it was committed to maintaining its investment-grade credit rating and pledged not to sell shares to fund the 2013-2017 investment plan. Leverage should remain below 35%, and the company's level of net debt should return to the company's target of 2.5 times earnings before interest, taxes, depreciation and amortization in 2014, Petrobras said.

Exploration and production will receive nearly two-thirds of the 2013-2017 investment budget at $147.5 billion, Petrobras said. The emphasis will be on installing new platforms, with 11 new production units expected to come onstream between 2013 and 2015. Crude-oil output is expected to reach 2.75 million barrels per day by 2017, Petrobras said. By 2020, crude-oil output is expected to hit 4.2 million barrels per day.

Petrobras's troubled refining division will see spending fall slightly to $43.2 billion after the company completed overhauls at existing refineries from the previous plan. Two main refining projects, Abreu e Lima and Comperj, are currently under construction, while Petrobras is evaluating plans to build two more new refineries. The company is expanding its refining park to meet increased demand for fuels. Petrobras has been forced to increase imports of gasoline and diesel fuel because of a refining shortfall.

Budgeting for the investment plan was based on Brent crude, Petrobras's reference crude oil price, at around $100 a barrel over the 2013-2017 period, the company said.

Petrobras also expects Brazil's currency, the real, to trade between BRL1.85 and BRL2.00 to the U.S. dollar during the five-year period. The real ended Friday at BRL1.98 to the dollar.

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Subsea 7 Scoops Up Petrobras Work Offshore Brazil

Subsea 7 S.A. announced the award of three contracts with a combined value in excess of $300 million from Petrobras.

The scope of work comprises the installation of flexible lines by the Seven Seas, under two lump sum contracts and one day rate contract.

The lump sum contracts encompass the installation of two export flexible Lazy Wave Risers at the Sapinhoa and Lula NE fields in the Santos Pre-Salt Basin in water depths of approximately 6,890 feet (2,100 meters). The day-rate contract encompasses the project management, engineering and installation of Petrobras - supplied flowlines and umbilicals. Operations will commence in 2013.

"We’re proud to be selected by Petrobras to perform these important projects, using our in-depth experience of operating in ultra-deep water. We look forward to supporting Petrobras in future developments," Subsea 7 Senior Vice President for Brazil Victor Bomfim said.

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Subsea 7 Scoops Up Petrobras Work Offshore Brazil

Subsea 7 S.A. announced the award of three contracts with a combined value in excess of $300 million from Petrobras.

The scope of work comprises the installation of flexible lines by the Seven Seas, under two lump sum contracts and one day rate contract.

The lump sum contracts encompass the installation of two export flexible Lazy Wave Risers at the Sapinhoa and Lula NE fields in the Santos Pre-Salt Basin in water depths of approximately 6,890 feet (2,100 meters). The day-rate contract encompasses the project management, engineering and installation of Petrobras - supplied flowlines and umbilicals. Operations will commence in 2013.

"We’re proud to be selected by Petrobras to perform these important projects, using our in-depth experience of operating in ultra-deep water. We look forward to supporting Petrobras in future developments," Subsea 7 Senior Vice President for Brazil Victor Bomfim said.

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Endeavor to Advise Petrobras on Papa Terra Project

Endeavor Management announced Monday that Petrobras has retained the Houston-based consulting firm to provide third party review and advisory services on the Papa Terra project. Endeavor will work with the Papa-Terra Integrated Project Team to identify potential improvements to the drilling and completion program of all wells to be drilled with the new Tension Leg Wellhead Platform (TLWP) and Tender Assisted Drilling Rig (TAD) for the Papa Terra field. Endeavor Management will also evaluate the schedule status of the TAD semi and TLWP drilling package.

The Papa Terra field is a heavy crude oil field located in the Campos Basin offshore Brazil. Bruce Crager, executive vice president of Endeavor Management, stated, "This is a major project for Petrobras and is their first use of a TLWP and tender assisted drilling unit. We are pleased to have been selected to join Petrobras on the Integrated Project Team along with personnel from Chevron, who are a partner in the Papa Terra field."

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Endeavor to Advise Petrobras on Papa Terra Project

Endeavor Management announced Monday that Petrobras has retained the Houston-based consulting firm to provide third party review and advisory services on the Papa Terra project. Endeavor will work with the Papa-Terra Integrated Project Team to identify potential improvements to the drilling and completion program of all wells to be drilled with the new Tension Leg Wellhead Platform (TLWP) and Tender Assisted Drilling Rig (TAD) for the Papa Terra field. Endeavor Management will also evaluate the schedule status of the TAD semi and TLWP drilling package.

The Papa Terra field is a heavy crude oil field located in the Campos Basin offshore Brazil. Bruce Crager, executive vice president of Endeavor Management, stated, "This is a major project for Petrobras and is their first use of a TLWP and tender assisted drilling unit. We are pleased to have been selected to join Petrobras on the Integrated Project Team along with personnel from Chevron, who are a partner in the Papa Terra field."

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Petrobras Confirms Plans to Start Platform Work in China

RIO DE JANEIRO - Brazilian state-run energy giant Petroleo Brasileiro, or Petrobras, confirmed late Monday that it will start building four oil platforms in China instead of Brazil, but denied that the shift means the company will not meet strict requirements to use local goods and services.

Petrobras said that work to convert oil tankers into the P-67, P-75, P-76 and P-77 platforms would start in China, but that the work represented less than 3% of the value of the contracts to build the floating production, storage and offloading vessels, or FPSOs. The conversion, however, will be completed in Brazil, Petrobras said. The P-67 platform is part of an order for eight replicated FPSOs, while the other three platforms will be used to produce oil from areas transferred to the company from the government.

Earlier Monday, the local O Estado de S. Paulo newspaper had reported that Petrobras shifted construction of the FPSOs overseas amid concerns that local shipyards would not meet deadlines to complete construction and cause production delays. Petrobras is currently struggling with stagnant oil production because of maintenance shutdowns at aging offshore platforms and declining output at mature fields.

Concession contracts in Brazil require companies to use a certain percentage of local goods and services, part of a government strategy aimed at creating a robust oilfield-services sector to accompany development of recently discovered offshore oilfields. Petrobras plans to spend $237 billion through 2016 to develop the fields, where oil was discovered under a thick layer of salt miles under the seabed off Brazil's southeast coast.

"The index of contracted local content is immutable, and Petrobras is not trying to alter it," the company said.

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Fitch Unlikely to Alter Petrobras Credit Rating

RIO DE JANEIRO - Brazilian state-run energy giant Petrobras is borrowing heavily to develop massive new oil fields, but the investments should result in a cash surge that offsets any concerns about the recent rise in the company's debt levels, said Ana Paula Ares, senior director of corporate finance at Fitch Ratings.

Petrobras's finances have come under increasing scrutiny after a series of billion-dollar losses in the company's refining unit, which has been hurt by subsidized imports of gasoline and diesel fuel. The company sells the expensive imported fuels at a loss in the domestic market because of government reluctance to raise fuel prices for fear of stoking inflation.

The losses have undermined Petrobras's earnings and called into question the company's ability to carry out ambitious plans to spend $237 billion through 2016 developing some of the largest oil discoveries made in the past 20 years. With Petrobras spending more than it makes, net debt jumped more than 30% in 2012 from 2011 while the company's cash on hand--once flush with proceeds from a $70 billion share offer in 2010--fell more than 20% to $13.5 billion.

Still, "the deterioration was pretty much in line with what we were expecting," Ms. Ares said in an interview. "At this point, it doesn't impact the rating." Petrobras is in the midst of a significant exploration and investment program, so the increased leverage isn't necessarily a red flag, she added.

Fitch rates Petrobras triple-B with a stable outlook, two notches into investment grade and the same as Brazil's sovereign credit rating. While Ms. Ares doesn't anticipate any changes to the rating over the next 12 to 18 months, a change in the outlook for Brazil's sovereign rating to negative or an unexpected event could lead Fitch to re-evaluate Petrobras, she said.

Part of the credit-rating agency's confidence in Petrobras is based on its potential to quickly boost crude-oil production and reserves in coming years, Ms. Ares said. Petrobras's long history of exploration success, especially the discovery of multibillion-barrel oil fields buried under a thick layer of salt off Brazil's coast, make the company unique among its state-run and private-sector peers, she said.

Petrobras is "able on a yearly basis to replace in reserves the volume it has produced," Ms. Ares noted. Petrobras said that it ended 2012 with reserves of 12.3 billion barrels of oil-equivalent under Securities and Exchange Commission criteria, enough to keep Petrobras pumping oil for 15 years if it never discovered another drop. But the reserve figures currently include only a fraction of the newfound fields and should grow dramatically in coming years.

Petrobras is counting on the new fields to more than double current output to 4.2 million barrels per day by 2020. Fitch, meanwhile, expects crude oil production to start picking up in 2015, which should lead to a recovery in the company's finances as the new output generates cash, according to Ms. Ares.

The political tussle over domestic fuel prices, however, has Fitch watching closely, Ms. Ares said. Fuel-price increases granted in January and last year aren't enough to reverse Petrobras's losses on imports, but the hikes do suggest that the government is paying attention to Petrobras's losses, she said.

"There is a strong incentive for the government to have Petrobras performing and repaying its debt because of the significant financing resources Petrobras will need in coming years to fund its investments," Ms. Ares said.

Petrobras has faced similar situations where it lost money on imports in the past, only to later reap the rewards of selling local fuels at higher prices when international crude oil and fuel prices fell, she noted. The government's focus on fighting inflation, however, means future price hikes are uncertain.

"How politics play out this year will decide whether those price increases will come or not," Ms. Ares said.

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