Brazil maritime industries and ports

Brazil: Maritime Industries and Ports

Mikael Virkki

Brazil

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8 Million Square Kilometers.

7.491 Km of Coastline.

8.500 km of Rivers (Cargo)

200 million people

Brazil vs. Europe

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Number of Workers in Brazilian Shipyards (2000 – June 2015) Source: Sinaval

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19103976

6493 7465

1265114442

19600

29125

33277

40500

5611259167

62036

78136

82472

68000

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 June2015

Number of Workers in Brazilian Shipyards - 2000 - June 2015

Operation Car Wash

Pre-salt Oil

Shipyards and Shipbuilding Centers

• Pará and Amazonas Shipbuilding Centers

• Pernambuco Shipbuilding Center

• Bahia Shipbuilding Center

• Espírito Santo Shipbuilding Center

• Rio de Janeiro Shipbuilding Center

• Santa Catarina Shipbuilding Center

• Rio Grande do Sul Shipbuilding Center

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Map of Shipyards Source: Sinaval

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53 Associates

Distribution of Workers per States (2015)Source: Sinaval

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• Rio de Janeiro concentrates 38% of the workers in the maritime industries;• Pernambuco 27%;• Amazonas 15%;• Rio Grande do Sul 9%• Santa Catarina 6%• São Paulo 2%

Main Drivers of the Maritime Industry• The end in 1997 of the Monopoly granted to Petrobras since the creation of the

company in 1953;

• The PROMINP (Mobilization Program of the National Oil and Natural Gas Industry), created in 2003, and coordinated by the Ministry of Mines and Energy and Petrobras. This program was inspired in the Local Content Requirements that, since 1999, is associated with the Concession of Oil Fields to Companies. Theserequirements and the certification system, created in 2007, are regulated by theANP (the Petroleum Regulatory Agency), implemented in 1998;

• Oil Price;

• China;

• FMM (the Merchant Marine Fund), since 2004, provided resources to thedevelopment of the maritime industries;

• Ports (tugboats);

• Agribusiness (Pushers and bargers).

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Petrobras: the locomotive until today in the O&G IndustriesPetrobras is still the main contractor and locomotive of the maritime industry.

– Why? Oil is located into the deep sea and far from the coastline.

• Since 1999, Petrobras has two programs to support their operations:

– PROMEF (Transpetro) – Program for the Modernization and Expansion of the Fleet:

• Oil Tankers, Suezmax, Aframax, Bunker, Gas, Products.

– PROREFAM (Petrobras) – Program for the Renewal of the Maritime Support Vessels Fleet:

• Maritime & Offshore support vessels fleet.

• In 2006, with the pre-salt discovery, these programs gained more attention from Petrobras and became the main drivers of the shipbuilding industry.

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Petrobras’ Strategic Plan: 2015-2019(Source: Petrobras)

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Exploration and Production: Petrobras• From the point of view of Petrobras: It took 60 years to produce 2 millions barrels per day;

• In 2020, Petrobras is expected to produce 2,8 million bpd.

• Today 90% of the oil come from fields operated by Petrobras.

• With the pre-salt oil, Shell, Total, Statoil, CNPC and CNOOC will increase their participation.

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Exploration and Production: Pre-salt

• In 2014, pre-salt oil represents 22% of the production of Petrobras.

• In 2013, it represented 7%.

• In 2020, it is expected to represent 53%.

•Where is the Pre-salt Oil?

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Pre-salt Oil: Where is it?

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Pre-salt Oil200-300 km

6.000 –7.000 m

200 km

800 km

USA

Asia

Demand will beleaded by Asia

ES, RJ, SP

© Finpro13

SC

ES

So…

• WHAT THIS MEANS? More platforms, more supply vessels, more business in the maritime and oil & gas industries.

• But port operations and agribusiness are also important drivers of the industry in the current scenario.

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Summary of Shipyards Order Books: 2014 vs. First Half of 2015

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2014 1st Half of 2015

Order book by Shipyards and Type of Vessels: 1st half of 2015

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Order book – World Scene: 1st half of 2015

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Main building countries:China (2.397)Japan (918)South Korea (840)Brazil (167)

South Korean leadership in drill ships, FPSOs and LNG Floating units.

European shipyards = cruise liners, special ships and specialized offshorevessels

Order book – World Scene: Defense

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O&G Industries Demand is Attracting International Investments

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O&G Industries Demand is Attracting International Supliers: Long term and Growing Demand

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Açu – Rio de Janeiro

Reflections on the Local Content

• How much of this investments are related to Local Content?

• Is Local Content a barrier to trade?

• Who should opened a subsidiary in Brazil?

• Local Content could be revised in near future?

• Let´s have a look at some of the suppliers to the oil & gas industry.

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Local Content: Level & Institutions

• Local Content level is between 45% and 70% (2014);

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Local Content: Main Suppliers vs. Local Unit

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PORTS in Brazil

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• In a study made by the World Bank (IBRD) on logistics and the efficiency of thetransportation system in 160 countries, Brazil is the 65th.

• World Economic Forum: 135th between 144 countries, when comparing ports efficiency.

• 97% of Brazilian Exports go through ports in Brazil, according to AEB (Brazilian Foreign Trade Association).

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Ports: New Law in 2013

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• RENOVATION OF THE PORTS LAW (2013): Flexibilization of the Law, Multi-useterminals, Private and Public. More competition to reduce freight cost, bureaucracyand faster clearance of goods. Terminal + Shipyard. Revision of Ports Concessions to increase competitivity.

• New criteria to explore and leasing to private companies of terminals in publicorganized ports.

• Private Terminals can operate and handle third-party cargo. This will increase theoffer of port services.

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Map of Public Ports in Brazil (2014)

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New Private Terminals in Brazil (2015)

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• Since the new Ports Law34 new private terminalswere authorized by SEP (Secretariat of Ports)

• Private Terminalshandled 146,2 milliontons of cargo in the firstquarter of 2015.

Investor Website

AMAGGI Exp e Imp Ltda http://amaggi.com.br/

Amazongás Distribuidora de Gás http://www.amazongas.com.br/

BAMIN - Bahia Mineracão http://www.bahiamineracao.com/

Caramuru Alimentos http://www.caramuru.com/

Chibatão Navegacão e Comércio http://www.grupochibatao.com.br/

Cia. Norte de Navegacão e Portos - CIANPORT http://www.fiagril.com.br/

CMPC Celulose Riograndense http://www.celuloseriograndense.com.br/

Ecoporto Praia Norte http://www.ecoportopraianorte.com.br/

Estaleiro Brasa http://www.estaleiro-brasa.com.br/

Estaleiro Enseada do Paraguacu http://www.enseada.com/

Estaleiro Jurong Aracruz http://www.jurong.com.br/

Flexibras - TUP Technip http://www.technip.com/pt-br/entities/brasil

Fundacão Municipal Porto Belo http://www.portobelo.sc.gov.br/

Hermasa Navegacão da Amazônia http://amaggi.com.br/

Hidrovias do Brasil http://hbsa.com.br/

Intermoor do Brasil http://www.intermoor.com/pt/

Ipiranga Produtos de Petróleo http://www.ipiranga.com.br/

Itapoá Terminais Portuários http://www.teconsc.com.br/

LLX Acu Operacões Portuárias http://www.prumologistica.com.br/

Louis Dreyfus Commodities Brasil http://www.ldcom.com.br/

Manabi Logística http://www.manabi.com/

Mineracão Buritirama http://www.mineracaoburitirama.com.br/

NOV Flexibles Equipamentos e Servicos http://www.nov.com/ContactUs/Locations.aspx?q=Brazil

Porto Sul http://www.ba.gov.br/

RioTuria Servicos Logísticos - TERFRON http://www.bunge.com.br/

RONAV http://www.ronav.com.br/

Saipem do Brasil http://www.saipem.com/

SS Naval Comércio & Servicos No Website

TGSC - Terminais de Granéis de Santa Catarina http://www.logzbr.com.br/

Transporte Bertolini http://www.tbl.com.br/

Ultrafértil http://www.valefertilizantes.com/

Zemax Log Solucões Marítima http://www.zemaxlog.com.br/

Type of Navigation

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72,6% - Long-range

23,4% - Cabotage

3,6% - Interior

0,2% - Maritime Support

0,2% - Port Support

Main Destinations (X):

China

Netherlands

Japan

USA

South Korea

Philippines

Main Products: Iron, Soy, Sugar, Corn, Fuels and Mineral Oils.

Main Countries of Origin (M):

USA

China

Nigeria

Argentina

Australia

Canada

Main Products: Fuels and Mineral Oils, Fertilizers and Manures, Mineral Coal, Petroleum Coke.

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Investments in Ports

Estimated Investments of USD 24 billions in Ports until 2017.

Why?

• 90% of Brazil´s Imports and Exports depend on the ports.

• Current capacity is unable to fulfil the growing demand and the economic development. The recession was providential to the ports capacity to handle exports and imports.

• New Ports Law opened opportunities to New Private Operators of Terminals in Rivers, Lakes and along the coastline.

• What happens in China affects Brazil. Main destination of the Brazilian exports:Commodities.

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Ports: Main Drivers

• EXPORTS:

• Agribusiness: Granary of the World.

• China is very important and main importer of Iron Ore and Soy (beans, bran and oil).

• What happens in China affects Brazil.

• IMPORTS:

• Fertilizers and manures: Agribusiness.

• Industrial Park modernization.

• Increasing of the CABOTAGE: the right to operate sea, air, or other transport services within a particular territory.

• Opening of the economy to foreign competition.

• Infrastructure Modernization in general (Private and Public Investments).

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Ports: Examples of Finnish Companies in Brazil -MODEL OF OPERATION IN BRAZIL

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• Kalmar / Cargotec:

• Own subsidiary in Santos –SP, Brazil;

• Own agent (Grupo F&F);

• Together with Terex, most sold Reach Stacker. RTG also has been sold.

• Konecranes:

• Own factory of industrial cranes in Sorocaba. Shipyards have been their best customers.

• Linde is responsible for the distribution of Reach Stackers and Forklifts.

• Container Handling Equipments (STS, RTG, etc.): own agent (JT & Partners).

• TCP Paranaguá utilizes these equipments.

• Mantsinen:

• Own director in Brazil responsible for the networking with local port operators.

• Comissioned agent (JT & Partners).

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http://www.gshydro.fi/GSH/gshweb.nsf/start

http://www.gshydro.fi/GSH/gshweb.nsf/start

Conclusions & Key Words for Both Sectors

• “CUSTO BRASIL”

• Bureaucracy

• Political Intervention

• Environmental Limitations

• Productivity

• Labor force: Educational Level

• Taxation

• Import Duties and Procedures

• Local Content

• Logistics

• Price Level

• Subcontractors

• Monetary and Financial Transactions

• Timing

• Short-run oriented

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Recommendations “Brasilia ei ole Suomi”

• Market Study:

• Where? Where is the best suitable place to be in Brazil?

• What? What model is more attractive to your business?

• How?

• Partner?

• Subsidiary?

• Agent and Representatives?

• “Time and Money” vs. “Corruption and False Promises”.

• Problem Solver, Partner (”Amigo”), customize your product to theneeds of the Brazilian customers.

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Expectations – Maritime Industry

• Revision of the Local Content: Timing (Petrobras) vs. Learning Curve (Industries);

• Definition of New Bidding Rounds for the exploration of hydrocarbons: predictability of the rules – clear schedules of next bids.

• With more predictability of the demand of vessels: maritime and offshoreindustry could invest in innovation, qualification and also in better practicesof management and planning.

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Expectations – Ports

• Investments in new private terminals;

• Shipyard + Port Model: flexibility;

• More capacity;

• Decrease in State Intervention in the sector: Efficiency oriented.

• Logistics integration;

• Multimodal transport development.

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Contact Information

• Mikael Virkki, Advisor

• Contacts:

– E-mail: [email protected]

– Office Phone: +55 21 3550 9522

– Mobile Phone: +55 21 99 741 6858

– Direct Phone: +358 20 469 5820

• Address:

– Finpro Rio de Janeiro. Avenida Presidente Antônio Carlos, 58 / 5⁰ andar. Centro – Rio de Janeiro – RJ. CEP 22221-090. Brazil.

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mailto:[email protected]

Thank You

Brazil maritime industries and ports

Business

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