Replies to post #4648 on The Rising Influence of Rising Affluence

[DewDiligence]

CLB Says ‘No Thanks’ to Projects in Brazil

[The way Brazil is trying to criminalize Chevron’s behavior (#msg-73644515) in what amounted to a tiny oil spill was not specifically cited by CLB’s executives as a reason for avoiding Brazil, but it certainly doesn’t help.]

http://www.reuters.com/article/2012/03/29/corelabs-brazil-idUSL2E8QS2ZK20120329

›Wed Mar 28, 2012 8:32pm EDT

NEW ORLEANS, March 28 (Reuters) - Core Laboratories, an oilfield services company that specializes in boosting the output of wells, said on Wednesday it was consciously not invested in the red-hot Brazilian energy industry because it was too tough to make money there.

Addressing a noticeable gap in its offices around the world, executives from Amsterdam-based Core Labs said it was no accident their map was missing a dot in Brazil.

"We choose not to be there because we will not get a good return in today's market there," Chief Financial Officer Richard Bergmark told the Howard Weil Energy Conference in New Orleans.

Chief Executive David Demshur explained after the speech that the tax regime and stringent requirements for locally produced content were the main challenges, and expected to see some of his rivals leave the country eventually.

"If I were one of the big four, I wouldn't be there," Demshur said, referring to Schlumberger, Halliburton Co , Baker Hughes Inc and Weatherford.‹

[DewDiligence]

CVX/RIG—Brazil’s overzealous prosecutor from Campos has been stripped of the oil-spill case against the companies:

http://www.reuters.com/article/2012/04/18/chevron-transocean-idUSL2E8FIHJ920120418

A judge moved a criminal case against Chevron and Transocean to a court in Rio de Janeiro, a court document said on Wednesday, removing crusading prosecutor Eduardo Santos de Oliveira from the proceeding.

LOL re the characterization of Oliveira as crusading. As noted in #msg-73644515, Oliveira’s threat to convict CVX/RIG employees of criminal charges with 30+ year jail terms proved that he was grandstanding for the local populace in utter disregard of any standard of reasonableness.

The criminal case was the last of three high-profile cases by Santos de Oliveira to be moved to Rio, including two 20 billion reais ($11 billion) lawsuits against the companies.

Fines of this magnitude probably won’t stick insofar as the actual damages from the spill were de minimis.

The transfer of the criminal case comes on the heels of another decision in favor of the companies last week from yet another court, which denied a request by the prosecutor to bar the two companies from operating in Brazil… “Chevron is pleased with the court decision [to remove Oliveira],” Chevron Corp's head of media relations, Kurt Glaubitz, said in a statement.

CVX and RIG are not quite out of the woods, but their legal predicament in Brazil looks much less troublesome. I continue to presume that Brazil needs companies like CVX to invest in pre-salt development projects more than CVX needs Brazil, and hence the ultimate resolution of this case will not be onerous for CVX and RIG.