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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Norway Plans to Raise Taxes on Oil Companies

OSLO - Norwegian Prime Minister Jens Stoltenberg, who faces an election in September, on Sunday laid out plans for a modest tax cut for mainland businesses while increasing taxes on oil companies and multinationals, as the small Nordic nation looks to maintain a competitive business climate.

Mr. Stoltenberg's plan, part of the government budget presentation on Tuesday, includes a reduction in the general corporate tax to 27% from 28% starting in 2014.

The move is expected to shave 2.4 billion kroner ($413 million) off the annual tax bill for mainland industry, as well as NOK500 million annually for those who are self-employed, the government said. Lawmakers will vote on the budget, but Mr. Stoltenberg's ruling coalition has enough votes to pass it.

Neighboring Sweden recently cut its corporate-tax rate to 22%, and Denmark plans to reach the same level by 2016. Finland, meanwhile, is aiming to take its tax rate at 20%.

Norway's oil-and-gas industry has helped keep unemployment low, public finances intact and wages rapidly growing. While this has insulated Norway from much of Europe's economic malaise, it has forced many companies outside the energy sector to be noncompetitive.

"Some sectors are performing very well, pushing prices and salaries higher," Mr. Stoltenberg said at a news conference. "At the same time, businesses that can't increase prices because they depend on global markets are squeezed by high costs and lower demand from abroad."

Norway's wage growth is expected to slow to 3.5% in 2013, but is still high enough to erode the competitiveness of companies in the international market.

Oil companies won't benefit from the tax cut, the government said, because it will be offset by an increase in the special petroleum tax to 51% from 50%.

Mr. Stoltenberg criticized oil companies for cost overruns on big projects, and said they would have to pay a bigger share of the investments from now on.

"We think we give a better signal to the oil companies when they must now bear a bigger share of the investments themselves, not the least because we need more cost awareness in that sector," he said.

The 24 oil projects under development offshore Norway have recorded cost overruns of NOK49 billion, government figures show. Mr. Stoltenberg said "90% of this is paid for by the society."

Oil companies would still be able to deduct most of their investment costs, but slightly less than before. By reducing a tax deduction called the "uplift," oil companies' tax bill was expected to increase by NOK70 billion in current value between 2013 and 2050, the government said, or slightly below NOK3 billion annually.

Norway's dominant oil company, Statoil ASA, wasn't available for comment Sunday.

The Norwegian Oil and Gas Association said it worried the changes could undermine Norway's reputation as a stable environment for oil-company investments, and warned that marginally profitable oil and gas projects could be shelved.

Amid a high oil price, some offshore projects "have a pretty high break-even price," association spokesman Erling Kvadsheim told The Wall Street Journal. "I don't think this measure in itself will necessarily affect those, but some of the more expensive projects to increase the oil recovery [on mature fields] may be impacted."

Some of the bill for the tax cuts would go to big corporations. The government said it planned to reduce multinational companies' ability to shift profit into low-tax countries from Norway through internal loans. Lowering interest deductions on such loans would increase tax revenue by NOK3 billion annually, the government said.

In addition, a higher tax rate on people who own more than one home would increase Norway's tax revenue by an additional 500 million kroner annually, the government said.

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Norway Plans to Raise Taxes on Oil Companies

OSLO - Norwegian Prime Minister Jens Stoltenberg, who faces an election in September, on Sunday laid out plans for a modest tax cut for mainland businesses while increasing taxes on oil companies and multinationals, as the small Nordic nation looks to maintain a competitive business climate.

Mr. Stoltenberg's plan, part of the government budget presentation on Tuesday, includes a reduction in the general corporate tax to 27% from 28% starting in 2014.

The move is expected to shave 2.4 billion kroner ($413 million) off the annual tax bill for mainland industry, as well as NOK500 million annually for those who are self-employed, the government said. Lawmakers will vote on the budget, but Mr. Stoltenberg's ruling coalition has enough votes to pass it.

Neighboring Sweden recently cut its corporate-tax rate to 22%, and Denmark plans to reach the same level by 2016. Finland, meanwhile, is aiming to take its tax rate at 20%.

Norway's oil-and-gas industry has helped keep unemployment low, public finances intact and wages rapidly growing. While this has insulated Norway from much of Europe's economic malaise, it has forced many companies outside the energy sector to be noncompetitive.

"Some sectors are performing very well, pushing prices and salaries higher," Mr. Stoltenberg said at a news conference. "At the same time, businesses that can't increase prices because they depend on global markets are squeezed by high costs and lower demand from abroad."

Norway's wage growth is expected to slow to 3.5% in 2013, but is still high enough to erode the competitiveness of companies in the international market.

Oil companies won't benefit from the tax cut, the government said, because it will be offset by an increase in the special petroleum tax to 51% from 50%.

Mr. Stoltenberg criticized oil companies for cost overruns on big projects, and said they would have to pay a bigger share of the investments from now on.

"We think we give a better signal to the oil companies when they must now bear a bigger share of the investments themselves, not the least because we need more cost awareness in that sector," he said.

The 24 oil projects under development offshore Norway have recorded cost overruns of NOK49 billion, government figures show. Mr. Stoltenberg said "90% of this is paid for by the society."

Oil companies would still be able to deduct most of their investment costs, but slightly less than before. By reducing a tax deduction called the "uplift," oil companies' tax bill was expected to increase by NOK70 billion in current value between 2013 and 2050, the government said, or slightly below NOK3 billion annually.

Norway's dominant oil company, Statoil ASA, wasn't available for comment Sunday.

The Norwegian Oil and Gas Association said it worried the changes could undermine Norway's reputation as a stable environment for oil-company investments, and warned that marginally profitable oil and gas projects could be shelved.

Amid a high oil price, some offshore projects "have a pretty high break-even price," association spokesman Erling Kvadsheim told The Wall Street Journal. "I don't think this measure in itself will necessarily affect those, but some of the more expensive projects to increase the oil recovery [on mature fields] may be impacted."

Some of the bill for the tax cuts would go to big corporations. The government said it planned to reduce multinational companies' ability to shift profit into low-tax countries from Norway through internal loans. Lowering interest deductions on such loans would increase tax revenue by NOK3 billion annually, the government said.

In addition, a higher tax rate on people who own more than one home would increase Norway's tax revenue by an additional 500 million kroner annually, the government said.

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Egypt Says It Will Invest To Raise Oil Output

DUBAI - Cash-strapped Egypt will spend $18 billion over coming years to build new refineries and modify existing plants in a move to increase its annual fuel output, the country's oil minister said in an interview with Al Tahrir Television.

"There are some urgent measures to be taken this fiscal year to operate some refineries safely ... and there are measures in the next couple of years to lift the output of the existing refineries from the current 25-26 metric tons a year to more than 30 million tons," Osama Kamal told the Egyptian channel.

Overall "we have decided in November to invest $18 billion until 2017 to build new refineries and upgrade the existing refineries we have," he said.

Egypt has been paying hefty premiums for its crude deliveries for its refineries due to a weaker pound and difficulties in securing letters of credit for its transactions, while a shortage of state-subsided diesel has paralyzed transportation in many parts of the country.

Continuing unrest in the country since the ousting of former President Hosni Mubarak has led to a risky economic mix of dwindling foreign-exchange reserves, declining tourism revenue and costly price subsidies, economists said. To prop up the Egyptian currency, the central bank has gone through nearly two-thirds of its foreign-currency reserves, pushing the country to the brink of a liquidity crisis.

Egypt is trying to secure a $4.8 billion loan from the International Monetary Fund, a move viewed as critical to rescuing its economy and mending its reputation as a place to do business.

The IMF wants Egypt to reduce its subsidy spending, as part of a reform plan for the loan, say those close to the talks. But any subsidy changes would likely only enrage the legions of poor who rely on cheap fuel.

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Egypt Says It Will Invest To Raise Oil Output

DUBAI - Cash-strapped Egypt will spend $18 billion over coming years to build new refineries and modify existing plants in a move to increase its annual fuel output, the country's oil minister said in an interview with Al Tahrir Television.

"There are some urgent measures to be taken this fiscal year to operate some refineries safely ... and there are measures in the next couple of years to lift the output of the existing refineries from the current 25-26 metric tons a year to more than 30 million tons," Osama Kamal told the Egyptian channel.

Overall "we have decided in November to invest $18 billion until 2017 to build new refineries and upgrade the existing refineries we have," he said.

Egypt has been paying hefty premiums for its crude deliveries for its refineries due to a weaker pound and difficulties in securing letters of credit for its transactions, while a shortage of state-subsided diesel has paralyzed transportation in many parts of the country.

Continuing unrest in the country since the ousting of former President Hosni Mubarak has led to a risky economic mix of dwindling foreign-exchange reserves, declining tourism revenue and costly price subsidies, economists said. To prop up the Egyptian currency, the central bank has gone through nearly two-thirds of its foreign-currency reserves, pushing the country to the brink of a liquidity crisis.

Egypt is trying to secure a $4.8 billion loan from the International Monetary Fund, a move viewed as critical to rescuing its economy and mending its reputation as a place to do business.

The IMF wants Egypt to reduce its subsidy spending, as part of a reform plan for the loan, say those close to the talks. But any subsidy changes would likely only enrage the legions of poor who rely on cheap fuel.

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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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Sinopec Seeks to Raise $3.1B of Fresh Funds

China Petroleum & Chemical Corporation, otherwise known as Sinopec, disclosed late Monday that it is looking to raise some $3.1 billion of funds, through a private placement of new Hong Kong-listed H shares.

In its statement, Sinopec said that it agreed to sell 2.85 billion new shares for $1.09 (HKD 8.45) each, representing a 9.5 percent discount to Monday's close of $1.20 (HKD9.34).

The integrated crude, oil products and petrochemicals giant revealed that it plans to use the proceeds for "general corporate purposes", but did not provide any specific details.

Industry watchers are speculating that Sinopec could use a portion of the fund to defray costs amid a time of rapid foreign expansion.
Sinopec is understood to be planning to buy its parent's – China Petrochemical Corp – upstream assets in countries such as the U.K., Russia, Colombia, and Kazakhstan.

The acquisition slated to take place in April, is aimed at putting Sinopec on par with other international oil majors like Exxon Mobil Corp., Chevron Corp. and Royal Dutch Shell PLC, whose operations globally span refining, exploration and production of oil and gas.

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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Sinopec Seeks to Raise $3.1B of Fresh Funds

China Petroleum & Chemical Corporation, otherwise known as Sinopec, disclosed late Monday that it is looking to raise some $3.1 billion of funds, through a private placement of new Hong Kong-listed H shares.

In its statement, Sinopec said that it agreed to sell 2.85 billion new shares for $1.09 (HKD 8.45) each, representing a 9.5 percent discount to Monday's close of $1.20 (HKD9.34).

The integrated crude, oil products and petrochemicals giant revealed that it plans to use the proceeds for "general corporate purposes", but did not provide any specific details.

Industry watchers are speculating that Sinopec could use a portion of the fund to defray costs amid a time of rapid foreign expansion.
Sinopec is understood to be planning to buy its parent's – China Petrochemical Corp – upstream assets in countries such as the U.K., Russia, Colombia, and Kazakhstan.

The acquisition slated to take place in April, is aimed at putting Sinopec on par with other international oil majors like Exxon Mobil Corp., Chevron Corp. and Royal Dutch Shell PLC, whose operations globally span refining, exploration and production of oil and gas.

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here