Energy was one of the most dynamic sectors in 2007 and will continue to be so in 2008. The need to find new hydrocarbon reserves, generate more electricity and build energy import infrastructure has coincided with the emergence of biofuels production, a growth industry in which Brazil has become a world leader.
The energy boom is not without controversy, especially among environmental organizations, but what is certain is that billions of investment dollars will continue to flow in 2008 and beyond.
Petrobras: Bingo!
With the announcement of the Tupi discovery in November 2007, Petrobras took a quantum leap as an international oil company, putting Brazil in the major league of oil countries. The new reserves, found at a great depth, add up to 5-8 billion barrels of light crude and natural gas. The discovery of these reserves was not accidental, and resulted from an accurate concept of Petrobras management that started in the late 1990s under the presidency of Henri Philippe Reichstul, and which is more like the administration of a private oil company than a state run agency. Unlike other state companies in the region, Petrobras has been an active global explorer and has developed technologies and know how, especially with regard to deepwater operations.
Ecopetrol: investors’ favorite
Petrobras is not the only exception to the rule among Latin American state oil companies. A few years ago Colombia’s Ecopetrol began a process of transformation that reached one of its milestones in August 2007: the offering of shares on the Bogota stock exchange. Faced with declining reserves and oil production in Colombia, Ecopetrol decided to take the bull by the horns and get itself into shape to become more agile and go out and look for oil, both in Colombia and abroad. The success of its initial stock offering is the best indication of the market’s opinion on the company: half a million investors paid nearly US$3 billion for 10.1% of the shares offered in this first phase.
Petro Rubiales: Colombian gamble
While oil eyes are on Brazil, Venezuela and Mexico (although in the case of the latter, look, don’t touch), Canadian oil company Petro Rubiales has given all it’s got to investing in Colombia, a country that has only recently steadied falling production and reserves. In mid-2007, Petro Rubiales raised Cdn$440 million to acquire oil holding RHL and finance an investment program seeking to increase its heavy crude production in Colombia from 18,500 barrels/day to 66,000b/d and eventually to 126,000b/d. Investments in Colombia will include the construction of a pipeline.
Hunt Oil: from Camisea to the world
In 2007, the independent US oil company that leads the Peru LNG consortium gave the green light to the construction of a natural gas liquefaction plant that will make Peru a natural gas exporter. The US$3.8 billion project is the largest industrial investment ever made in Peru.
Alusa: regional plans
The Brazilian electrical and engineering holding plans to make an initial stock offering on the Sao Paulo Exchange in 2008. Alusa is one of the largest power transmission companies in Latin America, and transmission represents some 80% of the group’s income. The company is looking to grow further throughout the region, and is partnering Brazilian power company Cemig in Transchile, wich will operate a 205km, 220kV transmission line in southern Chile that will start operations this year, it also showed interest in acquiring Chilean power distributor Emel and Argentine transmission company Transener.
BRASIL ECODIESEL: Coming of Age
The third quarter of 2007 was a milestone in the path of Brasil Ecodiesel: the alternative fuel producer made its first profit in its history, US$630,000. Brasil Ecodiesel was created in 2003 and listed on the stock market in 2006. It is by far the largest biodiesel producer in Brazil, with a market share that reached 63% in the third quarter of 2007. Business for the company looks promising in 2008, when it will become obligatory for all diesel consumed in the country to include 2% biodiesel.
PROMIGAS: HEADING SOUTH
The largest natural gas distributor in Colombia has taken its international expansion seriously and its presence will be felt in 2008 in a number of the region’s countries. In October 2007 its fuel distribution subsidiary Terpel acquired Repsol YPF’s Chilean service stations for US$210 million. This purchase follows the acquisition of Peruvian natural gas distributor Calidda, in partnership with US company Ashmore Energy. In addition, the company plans to establish vehicular natural gas service station networks in Chile, Peru and Mexico.
BRASILIANA ENERGIA: SWEET OBJECT OF DESIRE
The suspense continues. The tender in which Brazil’s national development bank BNDES was going to offer its 49.99% stake in Brasiliana Energia, controlling holder of AES Eletropaulo and AES Tiete, among other companies, has been postponed for early 2008. The holding, which through its companies serves 17 million clients and invoices about US$6.5 billion, has attracted the interest of several suitors, with local electric company CPFL heading the list. US company AES owns 50.01% of Brasiliana and has preferential rights to BNDES’ stake, but there are doubts as to its ability to finance the US$3 billion that the stake is anticipated to sell for.
ELETRONUCLEAR: THE RETURN OF NUCLEAR ENERGY
Nuclear energy is again seducing governments around the world as an alternative to the high prices of fossil fuels and to the problems of carbon dioxide emissions. In Latin America the discussion on following the nuclear path is ongoing. But in the case of Brazil, it is more than words. State-owned Eletronuclear, which already operates the Angra I and Angra II nuclear plants, will begin work in 2008 on completing the long-mothballed 1,350MW Angra III project.
PACIFIC HYDRO: IN PURSUIT OF CARBON CREDITS
Global warming, the Kyoto Protocol, the Bali Conference and carbon credits are topics familiar any environmentalist. They’re also on the agenda of Pacific Hydro, an Australian power generator focused on renewables. Mike Brown, Pacific Hydro project development manager for Latin America, has put it clearly: renewable energy project development depends on continuous growth of the emissions certification market. The company has a US$1 billion renewable energy project portfolio in Chile and a US$500 million wind energy portfolio in Brazil.
