Petrobras already backtracking on Pecém

Speaking in London, Sergio Gabrielli, president of Petrobras, said that the company's 2009-2013 investment plan was not set in stone. They may need to revise spending plans for cash-flow reasons.

The company is still US$8.9 billion short of the investment funds needed for 2010, and needs a US$5.0 billion bridging loan. He said that 35% could be cut from the existing US$174 billion investment plan without impacting current spending. Pecem, of course, is part of this 35%.

When talking to the international market Gabrielli has to keep his words in the real world, a challenge the Cearense politicians don’t have to face. Obviously, I was waiting for the Pecém investment to be delayed or downgraded or cancelled after the 2010 election. I didn’t expect sounds of back-tracking less than two weeks after the announcement to proceed.

I have the impression that Petrobras’ ultimate involvement in Pecém will be using the regasification plant to pump gas into the network they are constructing. From a current economic perspective, one wonders if the steel plant will actually happen. There seems little immediate logic for the oil refinery (although I did see a drilling platform off Beira Mar yesterday). Petrobras has every reason to be furious with the state government over their handling of the Pecém dispute.

Vale to spend US$1.6 on buying RTZ assets

It is reported that Vale (Vale do Rio Doce) is buying Rio Tinto mining assets in Argentina, Brazil and Canada for US$1.6 billion.

Not sure if this has implications for Pecem. Presumably their bank account is not bottomless, but Pecem would give them a market for iron ore pellets.

Details of Dongkuk's UK Deal Revealed

Dongkuk is to pay US$144 million to take a 24% of Corus' Teeside steel plant in northern England.

Witness claims seeing police beat Neil Juwaheer

According to The Sutton Guardian newspaper, a witness has now come forward claiming to have seen the police beat up Neil Juwaheer (pictured), the British tourist who died in police custody in Aldeota police station. He was arrested after climbing over a condo wall near his hotel. His family say that he had mixed medication with alcohol and was confused.

I have seen Fortaleza police be a bit rough with a possible pickpocket, so don't discount the possibility that Juwaheer was beaten to death as his family claim. The police say he died from the consequences of swallowing a bag of cocaine.

Dongkuk invest elsewhere

The Financial Times newspaper reports that Dongkuk is part of a partnership to buy a steel plant at Teeside in the north of England from Corus, the steelmaker bought by Tata Steel. Does this have implications for Pecém?

The 75% stake in the business is being bought for US$450 million by Marcegaglia (Italy) and Dongkuk. The Korean partner is thought to be buying a 30-35% interest in the steel plant at a cost of US$180-210 million. This is not a huge sum compared to the planned investment in Ceará, but money is tight. There may possibly be further delays on the Ceará project.

Dongkuk has been buying slab from the plant since 2005, under a ten year supply contract.

Gas is finally used at Pecem

Dow Jones report that Petrobras delivered its first load of regasefied natural gas from its plant at Pecem.  The gas, from the Golar Spirit, was delivered to Petrobras's 220MW Termoceara generating unit and Endesa's 346MW  Termofortaleza gas-fired power plants from January 18 through January 26. The Termoceara unit consumes around 1.4 million cubic meters of gas per day, while the Termofortaleza unit consumes 1.55 million cubic meters of gas per day.

The Golar Spirit has installed capacity to regasefy about 7 million cubic meters a day. The ship first arrived at Pecem in July. 

Pecém refinery to happen, probably, but not yet!

Despite the economic crisis, Petrobras has announced they are sticking to their $28.6 billion refinery building plan for 2009-2013, which includes the one at Pecém. 

The new plant in Pernambuco will start operations in 2011, the one in Rio de Janeiro in 2012, and Maranhão and Ceará in 2013.  A cynic might note that construction in Ceará probably does not need to start until after the 2010 Presidential election. For the moment, the Pecém project is on the back burner.