Agip offering to finance Petrobras' development projects

Aug 13, 1999 02:00 AM

Agip Oil do Brasil is looking to team up with Petrobras in the exploration and production of its Brazilian oil blocs. It wants to finance the operations, leaving development to the Brazilian state-owned oil firm.
This new model was proposed by Petrobrás president Henri Philippe Reichstul. The idea is that multinational oil firms enter oil production projects as financiers, in place of banks.
Agip Oil president Rocco Valentinetti says the company hopes to use the model to increase funds for the development of the three production blocs it bought during the recent Brazilian oil rights auctions. In essence, Agip will act as a financial intermediary arranging project finance on the international market. "Since we are dealing with very large sums, large multinational companies are better equipped to raise this type of money," explained Valentinetti.
One industry sources forecast this could be the first of many such deals. The arrangement allows Petrobrás to concentrate on its speciality - deep sea exploration and production - while gaining access to cheap foreign funding, the source explained.
The Agip president said the company is still studying the package it will offer Petrobrás. In addition to financial assistance, Agip intends to provide engineering services, thus "taking advantage of the know-how of companies in the Eni group [Agip's controller]," he added.

Source: IINX via Iinoil
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