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Rio de Janeiro`s Federation of Industries take on the oil and gas industry at OTC Brasil

BY DAYSE ABRANTES

RIO DE JANEIRO -- For the Federation of Rio de Janeiro Industries (Firjan) that represents 9,805 firms from the goods and services industry, OTC Brasil 2013 is an excellent opportunity to present and discuss the main challenges and opportunities for the offshore oil and gas sector, said Firjan`s V.P. Raul Sanson.

Petrobras’ expenditure for the period 2013-2017 in exploration and production totals $91.5 billion and represents the possibility of supplying equipments for needed infrastructure to reach production planning targets planned to double by 2020 said the executive.

This includes pumps, valves, compressors, capital goods, etc. for the production and drilling rigs, ships, supply boats and subsea equipment.

Each stage of the link in engineering until the final installation of a mega project requires concept design, basic design, project details, bidding, purchasing, construction and operation.

So, it is necessary to understand that the lesser the participation in basic design in the productive chain the lesser will be the chance to sell or supply equipments and services by the local industry.

Also, the resumption of bids by the National Petroleum Agency ANP translate into new opportunities for oil and gas for upstream and downstream and is an natural expansion of the oil and gas market in Brazil.

For each awarded concession the local content signifies an opportunity or increase in industrial capacity and diversification by substitution of goods. This process brings to the industry a larger coordination between players, resulting in: larger financial values, larger aggregation of technologies, an increase of productivity and requires better management between the links of the productive chain. For example, a tubular package covers tubes, valves, fillings as well as welding.

Tax and labor regime are among the classical persistent challenges because of the complexity and difficulty in interpretation and the constant changes in legislation.

Another challenge is exchange rate due to constant fluctuations that impact directly the industrial activity, thus, the risk in implementing projects. Also important is the lack of adequate infrastructure to support industrial operations. These are the threats that make up the famous "Brazil cost"

Regarding the local content it is important to understand the other side of local content policy. If it is not well monitored it can be transformed in one more difficulty.

Lastly, I would like to emphasize the non-compliance of the dates indicated in the projects/ investments will result in the capacity of the industry to respond to their needs.

If the real previsibility of investments cannot be trusted the investment of professional and industrial capacity will be delayed and will prevent the reduction in cost of scale of production, the reduction in delivery time between the supply chain links, lastly impedes a greater implementation in new technology, whether be in the product or the industrial process.

Finally, how do we overcome these challenges? Brazil has an industrial basis capable of supporting the growth necessities in the sector and attend future demand.

There needs to be a better coordination of action that can produce a better industrial policy that is dedicated to the oil and gas sector. We need to join government, industries, investors and the academic sector involved so that we can discuss together and overcome all these challenges; said Sanson. Without politically long term stable rules, it is impossible to reach an excellence in competitiveness in local markets; he concluded.

Photo credit: Michael Tidd, hbm.

10/31/2013

 

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