BRAZIL SPONSORED ARTICLE
Shipping and ports in Brazil
Claudia Elena Bonelli (Administrative Law Practice Group and Logistics Industry Group) and Pedro Dittrich (Oil & Gas Industry Group) of TozziniFreire Advogados, São Paulo, review growth opportunities in the shipping and ports sectors
In Brazil, a country with a coastline of approximately 8,000km, 95% of the flow of imports and exports is made through Brazilian ports, which demon- strates the importance of the port sector to the national economy. Moreover, with the discovery of giant reservoirs of petroleum and natural gas in the so-called pre-salt area in 2007, the offshore exploration and production gained further importance. The need for a large number of vessels, from drillships to FPSOs and support vessels, combined with a local content pol- icy, has made the Brazilian naval industry reemerge.
Nevertheless, the infrastructure sector in Brazil is still facing difficulties.
Among all the bottlenecks that still hinder Brazilian development, logistics is definitely one of the top concerns for the Brazilian Government and in- vestors and its improvement is considered to be an inevitable step for the achievement of the sharp development targets ahead.
Therefore, it is not without a reason that the shipping sector, especially
shipbuilding activities, is the object of comprehensive public policies for the financing and revitalisation of the Brazilian naval industry, with a special focus on supplying vessels for the exploration and production of oil and gas in the pre-salt area. In connection with that effort, Brazil has been under- going a major public debate since the Federal Government decided to change the regulatory framework for the operation and improvement of ports by means of a Provisional Measure (MP 595) that aims at boosting investments.
What is the current situation of the Brazilian naval industry and what are the factors driving its development? The resurgence of the Brazilian naval industry is one of the most outstanding issues in the current infrastructure sector. In 2003, there were 3,000 people working in this industry in the country; today, this number has mounted to 62,000, and an additional 40,000 job positions are expected by 2017, according to the Brazilian Union of the Offshore and Naval Industry (Sinaval).
This new life in the sector is led by the oil and gas perspectives in the
country. The discovery of giant reserves in the Brazilian territory, with a spe- cial emphasis on the pre-salt area, has brought the need for a dramatic in- crease in the availability of all kinds of vessels required for offshore activities. For example, the Energetic Research Company (‘EPE’ in the Portuguese acronym), a federal state-owned company responsible for planning studies of the Brazilian energy sector, estimates that Brazil will need 90 FPSOs by 2021. By 2020, Petrobras alone, the company with the most significant budget for offshore heavy industry, is expected to acquire 43 floating pro- duction units, 38 drillships and 88 oil tankers through Transpetro, its sub- sidiary for transport services. To get an idea of the size of this market, there
40 ENERGY & INFRASTRUCTURE | LATIN AMERICA 2013
are currently 159 FPSOs worldwide. Furthermore, to meet some of Petro- bras’ needs, the Federal Government launched the Program for Expansion and Modernization of Transpetro’s Fleet – PROMEF, which has as its target the construction of the required vessels with up to 70% of local content, that being precisely one of the reasons for the revitalisation of Brazilian ship- yards.
What are the main challenges for shipbuilders in Brazil? The main challenge is to develop a well-qualified network of national sup- pliers, as a result of the local content policy implemented by the Federal Government, especially for oil and gas vessels such as oil tankers and floating production units. According to the concession agreements for the explo- ration and production of oil and gas blocks signed between oil companies and the National Agency of Petroleum, Natural Gas and Biofuels (ANP), all the concessionaires are contractually bound by minimum local content requirements, which reflect directly in the shipbuilding business. As men- tioned above, in the case of Petrobras and Transpetro, the national content percentage contractually established with Brazilian shipyards can mount to 70%.
Penalties for the non-compliance with such requirements are consider-
able, and have become a problem for oil companies and their main suppliers in Brazil. Especially in the shipbuilding industry, a heavy user of high tech- nologies for services and equipment that are not yet available in the national market, the imposition of such fines has not been followed by the develop- ment of local suppliers, and sometimes there is no option for shipyards other than going abroad for services and equipment and consequently facing the applicable penalties. Finding the correct balance in this trade-off is the most challenging task for national shipbuilders.
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This new life in the sector is led by the oil and gas perspectives in the country
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