• 1 day PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 1 day Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 2 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 2 days Schlumberger Warns Of Moderating Investment In North America
  • 2 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 2 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 2 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 2 days New Video Game Targets Oil Infrastructure
  • 2 days Shell Restarts Bonny Light Exports
  • 2 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 2 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 2 days British Utility Companies Brace For Major Reforms
  • 3 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 3 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 3 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 3 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 3 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 3 days Rosneft Signs $400M Deal With Kurdistan
  • 3 days Kinder Morgan Warns About Trans Mountain Delays
  • 3 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 3 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 4 days Russia, Saudis Team Up To Boost Fracking Tech
  • 4 days Conflicting News Spurs Doubt On Aramco IPO
  • 4 days Exxon Starts Production At New Refinery In Texas
  • 4 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 5 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 5 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 5 days China To Take 5% Of Rosneft’s Output In New Deal
  • 5 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 5 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 5 days VW Fails To Secure Critical Commodity For EVs
  • 5 days Enbridge Pipeline Expansion Finally Approved
  • 5 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 5 days OPEC Oil Deal Compliance Falls To 86%
  • 6 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 6 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 6 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 6 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 6 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 6 days Aramco Says No Plans To Shelve IPO
Alt Text

This Key Data Points At Strong U.S. Oil Demand

U.S. Gasoline prices haven’t risen…

Alt Text

The Geopolitical Consequences Of U.S. Oil Exports

The United States has ramped…

Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

More Info

Spectacular Fall From Grace For Former Brazilian Oil Tycoon

Spectacular Fall From Grace For Former Brazilian Oil Tycoon

The concluding act in the legal saga of a former Brazilian oil and mining tycoon kicked off this week.

Eike Batista’s trial began in Rio de Janeiro on November 18, where he faces charges of insider trading. If convicted Batista faces up to 13 years in prison.

The stunning fall from grace seemed unimaginable as recently as two years ago. Batista was worth $35 billion in 2012, enough to make him Brazil’s richest person and the seventh richest person in the world. He even flamboyantly crowed about how he would soon surpass Mexico’s Carlos Slim to become the world’s richest person.

Batista sat atop EBX, a conglomerate of companies that ranged from oil and gas production, to mining, shipping, and infrastructure. He is well known in Brazil, where he is often referred to by just his first name, and he was once a revered business figure. He was a major philanthropist and poured his money into reviving the city of Rio de Janeiro where he lived. Batista even chipped in $9 million to help Rio de Janeiro win its 2016 Olympic bid.

Related: Four More Years Of Pain For Petrobras

The seeds of his demise began when his flagship company OGX – an oil and gas firm – overpaid for some offshore oil blocks in the Atlantic in 2007. In characteristic fashion, Batista made grand promises about production levels.

Despite his confidence, the oil never flowed in the way he described. A 2011 company report suggested that its oil reserves were not as certain as the company led investors to believe. As its stock price began to falter, OGX took on more debt to shore up the company’s finances.

The following year production test results came in far below OGX’s and Batista’s estimates. From there, confidence in his array of companies began to vanish and their share prices plummeted.

But as his companies shed their values, Batista promised to throw in $1 billion of his own money to keep them steady. This helped right the ship for a period of time, but Batista never actually invested any money. Instead, he sold off his shares. And that act is what he will stand trial for – whether or not he deliberately mislead investors and used privileged information before selling his stake, knowing the stocks were about to fall.

OGX declared bankruptcy in 2013, Latin America’s largest bankruptcy ever. He lost nearly all of his $35 billion empire in “one of the largest personal and financial collapses in history—if not the largest,” as Bloomberg Businessweek dubbed it in a 2013 feature report. He says he is now $1 billion in debt.

Batista’s downfall is mirrored in the country’s current troubles. The economy has stalled out, and state-owned oil firm Petrobras is mired in scandal. Two former Petrobras executives have been arrested for their involvement in a bribery scheme. They allegedly inflated contracts and skimmed off money, which was diverted to officials in the ruling Workers Party.

Related: The 10 Biggest Energy Company Bankruptcies

Not only that, but Petrobras also just revised downwards its oil production figures, estimating that production will rise by 5.5 to 6 percent, lower than its original 7.5 percent guidance. Petrobras cited delays in equipment delivery and licensing.

The arrest of Petrobras executives, and especially the trial of Batista, could have huge ramifications for the rule of law in Brazil. “This is the first case that a Brazilian businessman of this relevance will stand trial with enough proof indicating he could go to jail,” said Flavio Roberto de Souza, the judge who Batista will face in court, according to the Wall Street Journal. “It's a historic moment for the justice system,” he reiterated after the proceedings on November 18.

The rich often get off criminal charges by paying fines in Brazil so a potential conviction of Batista for inside trading – which would make him the first person in Latin America to be convicted of such a crime – could be a watershed moment for the country.

By Nick Cunningham of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News