Brazil is open for US business at OTC, but Petrobras eyes local suppliers

By Katharine Frase
May 2, 2011 4:58 PM

With Petrobras planning to invest $224 billion between 2010-2014 in Brazil’s upstream and downstream oil and gas sector, plenty of US companies want to get a handle on how to get a piece of that. And US officials on hand at the Offshore Technology Conference in Houston want to lend a hand, including two who are visiting the meeting from the US consulate in Rio de Janeiro.

The key for foreign companies in Brazil may be raising your Brazilian profile, according to a panel of Petrobras and US officials at OTC. While Petrobras will buy goods originating elsewhere, it does place a preference on local sources and foreign companies are encouraged to build equipment in Brazil (this is known as the local content policy).

That is not to say Petrobras will not buy foreign-built equipment. Joao Henrique Rittershaussen, general manager of strategic market development in Petrobras’ procurement department, gave a slide show that included an extensive list of equipment that it is in the market for, including pumps, cranes, compressors, structure steel, flares, power generators, tanks, processing towers, reactors, wet Christmas trees, offshore wellheads, manifolds, umbilicals, tubing, flexible pipes, risers and turbines. He also went over the types of representatives that companies can retain in Brazil; the criteria for being selected, such as meeting certain industry standards; and did a quick walk-through of where to find more about the company’s procurement on its website.

Not all of it is for pre-salt oil exploration and production, and a lot is for refineries, the Petrobras official noted, saying that the boost in downstream is “huge.” As for sourcing, Petrobras’ objective is to see more companies hiring and building out in Brazil because the “idea here is to maximize local content,” but it will still buy foreign goods, Rittershaussen said.

After his presentation, he told a reporter that there are “more opportunities for companies” that set up shop in Brazil. Also, companies with a local presence usually provide “faster and friendlier” after-sales service and response than a foreign company; at least that’s what a slide in one of the presentations said. In essence, there is a sliding scale upon which “if the product can be made in Brazil,” the proportion of local content used will be higher, he told the OTC audience.

“We recommend that you find a Brazilian partner,” Alan Long, principal commercial officer with the US Commercial Service at the US Consulate in Rio, said. “We can help you find potential partners,” he added, noting “we can do customized market research and then move forward with company to company introductions.”

Just as Petrobras, a publicly traded company controlled by the Brazilian government, would like to see more Brazilian companies land its investments, the US wants to maximize the amount of Petrobras spending that could flow to American companies, according to Joseph Ringer, the senior export finance manager for the Export-Import Bank of the United States‘ southwest region. The Ex-Im Bank has “open account terms” with Petrobras to speed loan guarantees for US companies wanting to do business with it, he added.

Houston-based Ringer gave an overview of the types of credit programs accessible through his agency and offered to sit down with would-be US exporters to Brazil. “We make house calls. We actually come out to visit you.”

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Posted on May 2, 2011, in AMERICAS, Brazil, Drilling, GEOPOLITICS, Oil & Gas - offshore, Service, United States and tagged , , , , , , , , , , , , , , , . Bookmark the permalink. Comments Off.

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