Big spending needs investment

Brazil has big plans as it sets its sight on increasing oil exports – but it will need investment in technology as it moves into ever deeper waters. Elaine Maslin reports from Subsea Expo.

Various vessels await deployment in Guanabara Bay near Niterói. Photos by Audrey Leon/OE.

Brazil’s offshore sector, in plain numbers, is eye-watering. In 2012, the country already has some 37% of the world installed Xmas trees, a figure expected to rise to 44% by 2020.

In 2012, the country had 21% of the global FPSO fleet, a number also on the rise and expected to hit 26% by 2020.

The figures were outlined by Marcelo Vertis, undersecretary, Secretariat of Economic Development and Energy, Governo Do Rio de Janeiro, at Subsea Expo in Aberdeen, in February.

He cited International Energy Agency World Energy Outlook 2013 figures which say up to 2030 US$90 billion will be spent on the energy sector in Brazil, with 71% of that total, or $51 billion, being spent in the oil and gas sector (the majority, or 64% of that being on gas).

“This is an incredible amount of investment and for a long time,” Vertis says. If the investment happens, Brazil should be exporting some 3 MMb/d by 2015, with the same amount being used for domestic consumption.

Chris Wall, an expert in international trade, who led the UK Trade and Investment session during Subsea Expo, said: “It is Brazil’s intention over the next few years to become a net exporter of oil.” But, to meet their goals they need co-collaboration with international companies. In Rio State, a subsea cluster has been developed, just for this purpose.

The FPSO Cidade de São Paulo, currently deployed in the Sapinhoá field offshore Brazil for Petrobras. Photo from BG Group.

Rio Negocios, an inward investment agency, has been developing relationships with their counter parts in other countries, such as Subsea UK, which runs Subsea Expo, NCE Subsea, in Norway, and others, to attract international companies to Brazil. But, it’s not necessarily smooth running, even without local content rules. Businesses need to be competitive and help the local supply chain become competitive.

The event heard that Brazilian foundry Grupo Metal, which supplies Shell, but has gaps in its capabilities, is working with Shell Brazil and UKTI to find international partners to plug those gaps.

The investment target still stands, however. “These are very impressive figures for a country, both for the commercial budget and geopolitically,” says Vertis, not least as the country is in the wider Atlantic basin, putting it in the same ring as America and Europe, he says – not the Far East or Middle East, but “calm waters.”

“For the subsea industry, the Brazilian discoveries offshore, in the ultra-deep offshore, technology and subsea equipment will be very important,” he says. “Today, 25% of all exploration and production spending in Brazil is in the subsea equipment, and that might increase in our view. It is a huge opportunity for developing the supply chain. That is what we wish.”

Ships line up near the Rio-Niterói Bridge, crossing Guanabara Bay, linking the cities of Rio de Janeiro and Niterói.  From OE Staff.

The government in Rio undertook a survey to find out what particular services and equipment requirements are needed. The list included forged alloys, coatings, fasteners and special bolts, fittings, subsea metallic structures, fine machining, subsea valves, panels and multiplexed control systems, ROVs and UPVs, smart actuators, pipe bending and cladding, polymers for flexible lines, metallic structures for flexibles.

Vertis says while the tier 1 suppliers – FMC Technologies, Aker Solutions, GE, Schlumberger, etc. – are already in country, they would like to see the tier 2 and 3 contractors come in. “That is what the government of Rio wants,” he says, and to encourage more firms in.

There have already been some recent moves into Brazil by UK firms, including BEL Valves, which moved into São Paulo state, and cables firm JDR, which moved to Macaé. Rolls Royce recently opened test and assembly facilities for gas turbines in Brazil.