Also, I haven't read anything recently, but Argentina and Great Britain were getting heated up over the Falklands because of the oil find there
No more oil there , it ran out already. The North sea stuff is running out as well.
Their basis isn't going to be as low that's for sure (rumor is the Saudi's basis is about $.25/barrel). However, they think at today's price (I think it was $42 in the article) they think they'll make money and at $75 they'll do well. So far, they don't seem to be having any problem floating the debt to get the project off the ground
First they gotta find some deep water rigs, and all of those are tied up on other projects. There is no spare capacity in high tech deepwater drill rigs. And yes, I'm sure they'll make $$$ when oil hits $150 again soon, if they ever find some more rigs....
It sounds like they're building them.
http://www.economist.com/world/americas/displaystory.cfm?story_id=13110394Petrobras sets some ambitious targets
AMID all the graphs resembling ski slopes which plot jobs and car sales, the boldness of Petrobras may come as a relief to Brazilians. Last month the state-controlled oil giant published its revised investment plan for the next five years. Its proposed capital spending of $174 billion over this period is bigger than the entire economy of Chile. By 2020, if all goes to plan, Petrobras and its foreign partners will be producing 5.7m barrels of oil and gas per day (see chart), more than half the output of Saudi Arabia. New refineries and gas terminals are planned, as well as drilling rigs (29 of them to be delivered by 2012, with a further 28 arriving by 2017). And all this after the oil price has fallen by $100 a barrel from its peak last year.
When Petrobras announced in November 2007 that it had made the biggest oil discoveries of this century deep below the seabed, politicians became intoxicated at the prospect of untold riches. The government withdrew exploration rights in nearby areas from auction, and talked of setting up a new wholly state-owned company to do the job. It proposed a sovereign-wealth fund in which to house the treasure. Only a few critical voices worried that oil wealth might aggravate some of Brazil’s problems, such as corruption, resistance to reform and public-sector inefficiency.
The fall in the oil price, and the realisation that not much will be pumped from the new field until 2013, have cooled the fever. The Petrobras plan assumes that the current licensing regime remains in place. The company proposes to spend around $6 billion a year developing the new fields, which lie between five and seven kilometres under the sea, beneath a thick layer of unstable salt. The technical challenges are huge. Just getting workers to the rigs will be tough: some of them will sit 300km (185 miles) off the coast, requiring helicopters to carry three times their normal fuel.
José Sérgio Gabrielli, Petrobras’s chief executive, is undaunted. “We have the technology and access to reserves and we think we can finance it. Why not?” He says the biggest problem is to gather data about the nature of the field in order to minimise drilling. Others wonder whether in a world where credit is crunched, Petrobras can raise the cash.
Mr Gabrielli reckons Petrobras can generate $10 billion from operations this year and $12 billion-16 billion next year. These assumptions are conservative, says Gustavo Gattass of UBS Pactual, an investment bank. Petrobras has secured a large slug of cheap funding from BNDES, Brazil’s state development bank. It is negotiating a $5 billion bridge loan from a syndicate of five banks, which would give it up to two years to pick its moment to raise a similar amount in the bond market. This month it issued $1.5 billion of debt at an interest rate of 8 1/8%—a vote of confidence from wobbly financial markets. The company is also talking to the export-credit agencies of countries that supply it with equipment (such as the United States) or that might import its oil (such as China).
Even so, some Brazilians suspect the investment plan has been inflated to please the politicians who sit on Petrobras’s board. This is chaired by Dilma Rousseff, whom Brazil’s president, Luiz Inácio Lula da Silva, has anointed as his favoured candidate in the presidential election due next year. Proposed spending on new refineries may fail to materialise, argues Edmilson dos Santos of the University of São Paulo’s Institute of Electronics and Energy. “Lula has made a lot of the idea that Brazil must refine its own oil but the market is in crude, as are the profits,” he says. He also predicts that Petrobras will end up flaring much of the gas that rushes out with the oil, rather than spending lots of money to liquefy it to generate electricity.
Mr Gabrielli insists that the investment in the sub-sea field can pay its way even if the oil price averages no more than its current level of around $45. With many oil companies cutting investment and production, the price may well be higher than that by the time the oil comes up from below the ocean. That, at least, is the reasonable bet behind an ambitious plan.
