ANALYSIS • BRAZIL
pre-salt fields in the Santos Basin and by entering the promising gas value chain.
Bidding Rounds
Two new bidding rounds will heat up the O&G market this year. The 14th round of O&G exploration blocks, under a concession regime and the second round of pre-salt blocks, under a production-sharing regime, are scheduled to take place in September and November respectively, promoted by the Nation Petroleum and Biofuels Agency (ANP). Both rounds are expected to attract major international players not only due to the good volumes and quality of many of the reservoirs but also because of more relaxed local content demands.
Ship in dry dock for repair
The downside for local shipyards, however, is that this new reality in local content requirements for ships, rigs and equipment may steer investors, including Petrobras to foreign shipyards, which offer lower prices and a better history of honouring delivery deadlines, along with somewhat greater experience in building FPSOs and drillships for deep water operations.
Local Shipyards
Many industry analysts consider ship repair and maintenance along with FPSO module construction and/or integration as the main drivers to help sustain local shipyards until major orders for new ships, rigs and FPSOs materialize, yet, it may be a bit far- fetched to expect ship repair and module integration alone to assure industry growth. To that end it will be up to local shipyards to offer competitive prices and quality in order to attract new ship orders.
There is little to no hope that the Brazilian government will offer any more subsidies to shipyards. The local
equipment and service supply chain have also been heavily hit by the slump in ship orders and some executives and unions have been vocal in their disagreement with the decreased local content demands, while others see it as offering a new lease of life to the local shipbuilding industry.
‘There are demands for the repair market and when compared to the area of new construction, with the perspective of flexibility of local content and other factors, the alternative to this redirection, in the short and medium term, is actually more positive’, said Mario Barbosa, Wärtsilä Brazil's Maritime Solutions sales manager in late 2016.
For investors in Brazil’s maritime industry, there are still attractive local financing options available through BNDES (Brazil’s Industry and Development Bank) and its Merchant Marine Fund (FMM) and Caixa Econômica Bank, including financing for OSV construction, which
according to BNDES, has not seen much demand. Other local and foreign banks, and investment funds are also interested in financing infrastructure and industry in Brazil. Industry specialists point out that shipbuilding and ship repair cycles do not necessarily correlate, but can complement the long-term sustainability of the shipyards.
There is presently somewhat of a warming up of the shipbuilding sector due to the remaining impulse provided by continued demand from the offshore segment. In this way, construction yards tend to have robust revenues in the short term.
Repair activity, on the other hand, tends to provide greater revenue stability over the long term and even better predictability for a well- developed industry.
There certainly still is a very attractive potential demand to drive new investment, as ship repair and maintenance, represents an important source of revenue globally and should be a key source of income for yards in Brazil. It is also important to highlight that with the continued development and growth of local ports, which are also attracting foreign investors, more ships will be navigating in Brazilian waters, these being potential additional repair and maintenance clients for local yards.
Ship section cut-off during ship repair operations Visit:
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Seatrade Maritime Review • Quarterly Issue 2 • June 2017 21
PHOTO: SALV REPAROS NAVAIS
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