• 3 minutes Nucelar Deal Is Dead? Iran Distances Itself Further From ND, Alarming Russia And France
  • 5 minutes Don Jr. Tweets name Ukraine Whistleblower, Eric Ciaramella. Worked for CIA during Obama Administration, Hold over to Trump National Security Counsel under Gen McCallister, more . . . .
  • 9 minutes Shale pioneer Chesepeak will file bankruptcy soon. FINALLY ! The consolidation begins
  • 12 minutes China's Blueprint For Global Power
  • 2 hours Who writes this stuff? "Crude Prices Swing Between Gains, Losses"
  • 35 mins EU has already lost the Trump vs. EU Trade War
  • 2 hours Pioneer's Sheffield in Doghouse. Oil upset his bragging about Shale hurt prices. Now on campaign to lower expectations, prop up price.
  • 9 hours Climate Change Consensus Shifts in Wind, But Gas Is Still the Right Move
  • 11 hours World oil demand will keep growing until 2030, climate-damaging emissions longer, says IEA
  • 3 hours Atty General Barr likely subpeona so called whistleblower and "leaker" Eric Ciaramella
  • 53 mins Does .001 of Atmosphere Control Earth's Climate?!
  • 6 hours Iran's Master Plan?
  • 2 hours Joe Biden, his son Hunter Biden, Ukraine Oil & Gas exploration company Burisma, and 2020 U.S. election shenanigans
  • 17 hours Shale Gas News – November 9, 2019
  • 5 hours Iran Finds New Oil Field With Over 50 Billion Barrels: Rouhani
  • 19 hours ''Err ... but Trump ...?'' #thedonkeystays
  • 1 hour Trump On Farage's Radio Show ...

Breaking News:

Oil Rebounds On Surprise Crude Draw

Alt Text

Why One Analyst Thinks Tesla's Stock Could Soar To $400

While many analysts remain skeptical…

Alt Text

Oil Giant Stoically Refuses To Pay Ransom

Mexico’s Energy Minister Rocio Nahle…

Nick Cunningham

Nick Cunningham

Nick Cunningham is an independent journalist, covering oil and gas, energy and environmental policy, and international politics. He is based in Portland, Oregon. 

More Info

Premium Content

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:




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play