Brazilian Company Says LNG Is Key to Amazon Gas

Brazilian oil and natural gas producer HRT Participações SA said on Wednesday that liquefied natural gas is its preferred solution to move gas from isolated Amazon wells to paying customers.

HRT and its partner in the company's Brazilian operations, Russia's NK Rosneft' OAO, have signed letters of intent with Brazil's state-run oil company Petroleo Brasileiro SA, or Petrobras, to cooperate on projects to "monetize," or sell gas from the remote and sparsely populated region.

The LNG plants needed to chill natural gas to a negative 162 degrees Celsius (negative 260 degrees Fahrenheit) so it can be pumped as a liquid aboard specialized ships are expensive. LNG's costs, plus large future exploration needs in Brazil and Namibia, have prompted the company to look for partners or buyers for stakes in individual company assets, Chief Executive Milton Franke said on a conference call with investors.

To help raise the capital needed to finance such projects and to pay for future exploration and production, HRT hired investment bank Goldman Sachs Group Inc to find companies interested in buying a stake in HRT or shares in existing HRT subsidiaries and other assets. Franke expects Goldman Sachs' efforts to show results by the end of the year.

A final decision on what options to use in the Amazon could come as early as this month.

HRT shares, which fell more than 3 percent on Wednesday morning after the Rio de Janeiro-based company posted a 546 million real ($236 million) second-quarter loss on Tuesday, were up 5.13 percent to 1.64 reais in the afternoon.

The stock is on track for its highest close in nearly two weeks and its second-biggest, one-day gain in a month.

While drilling and exploration costs fell, most of the loss came from charges related to writing off and closing dry and non-commercial wells.

Franke said it is likely that Rosneft will increase its stake in HRT Brazil unit to 55 percent as planned and that HRT will reduce its stake to 45 percent or less. HRT needs to reduce the risk associated with the large investments needed to fund new gas exploration and finance the production of the oil and gas found, he said.

Franke said he is confident Rosneft's share of new capital needed for the Amazon operations will appear on time.

New drilling in the Amazon could happen in early 2014, he said.

The company also said its separate HRT Americas unit plans to complete a third well in Namibia by mid-September. The Moosehead prospect in the Orange Basin, has a 25 percent chance of finding commercial quantities of oil, the company said in a statement, citing Dallas-based oil resource certification company DeGoyler and MacNaughton.

HRT is drilling Moosehead in partnership with Portugal's Galp Energia SGPS SA. Two previous wells inNamibia's offshore Walvis Basin, did not find commercial accumulations of oil, though they reinforced the company's belief that the little-drilled frontier basins will eventually be an oil producing region.

"We remain confident that the Namibia basins contain oil and gas resources," Franke said. Ocean.

New partners and investment for future drilling campaigns in Namibia will probably have to wait until 2014, he said.

"It's hard to find partners to put money into a project in the middle of drilling."

_{By Jeb Blount (C) Reuters 2013.}

_{Source : maritime-executive.com}