To reduce unemployment, investment is required, but to attract investment, you need a sustainable and organised market that allows investors to make profits.

Marcus CIRIO General Manager ESTALEIRO BRASA

A very capable Brazilian market

August 9, 2018

Marcus Cirio, general manager of Estaleiro Brasa, talks to TOGY about the company’s recent investments, service and product quality in Brazil, the outlook for post-election policy changes and how local businesses can maintain global competitiveness. Founded in 2012, Estaleiro Brasa is a 65,000-square-metre shipyard located in Niterói, Rio de Janeiro.

• On improvements: “Brazilian businessmen and workers are aware that we need to be more competitive globally, and work smarter. We are working hard to align our prices with international markets by cutting our costs and improving our productivity. Brasa has achieved some key milestones in that way, though there are still improvements to be done.”

• On opportunities: “Brazil has a lot of other opportunities besides topside fabrication. We have a very large, and under-occupied equipment industry. We can supply pressure vessels, rotating equipment and electrical equipment, amongst other items for the oil and gas industry. That is without talking about renewables, in which there is another long list of opportunities.”

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What is the capacity of Estaleiro Brasa’s new assembly yard?
We can produce a maximum of 14 topsides at the same time, with weights averaging 1,000-1,700 metric tonnes each. As Brasa also has a barge crane that provides heavy lifting services for FPSOs, it is optimal for us to stay below the 1,700 metric tonnes, utilising our equipment and offering a more complete solution for our clients.
Our construction area has been fully refurbished and developed to bear up to 50 metric tonnes per square metre, allowing for a very diverse module footprint, and more than enough to build the type of topsides that we do.
We have also invested in tools and equipment over the past years, and a large variety of cranes, trucks and forklifts are available at Brasa to support our projects, without the inconvenience of mobilisation time or market availability.
Brasa also has a large quayside, suitable to receive VLCCs. It has a length of 350 metres, with a draught of 9 metres. We have successfully integrated all three projects at this quayside, which remains fully operational to berth our clients’ vessels.
In total, Brasa spent BRL 100 million [USD 26.4 million] in investments to upgrade the yard to a state-of-the-art site, including new facilities, tools, cranes, dredging, a welding school and training.

 

How is Estaleiro Brasa maintaining business during the activity downturn?
We are diversifying our portfolio to stay in the game. Since we have spent a lot of time and money on training and developing our staff, we were able to find opportunities in maintenance services. Our highly qualified manpower can offer clients solutions that go from onshore fabrication to offshore installation.
Another new business line that Brasa is currently developing is logistics support for offshore operations. We are located in Guanabara Bay’s sheltered waters, in the heart of the Rio de Janeiro oil and gas market, with easy access via both truck or barge, and only 60 minutes away from Rio de Janeiro’s main airports. Our facilities are unique and we can accommodate up to four PSVs [platform supply vessels] simultaneously.

Why should investors be interested in the Brazilian oil and gas market?
Brazil has been tested, and has a track record of supplying topsides for FPSOs. Brasa has successfully delivered more than 25 topside modules on time and with the highest standards of safety and quality, and we are not alone. In the country, there are good competitors, which will bring clients options to better evaluate the cost-benefit equation, considering that we also have a local content policy.
We are now in an election year, and local content has been a very hot topic throughout all layers of Brazilian society, and among oil and gas stakeholders. We strongly believe that based on the Brazilian industry’s track record on topsides – and Brasa is proud to have contributed to those successful numbers – there is a way to find good local content, aligned with investors’ perspectives and targets, do business and develop long-term winning relationships.
Brazil has a lot of other opportunities besides topside fabrication. We have a very large, and under-occupied equipment industry. We can supply pressure vessels, rotating equipment and electrical equipment, amongst other items for the oil and gas industry. That is without talking about renewables, in which there is another long list of opportunities.
Brazilian businessmen and workers are aware that we need to be more competitive globally, and work smarter. We are working hard to align our prices with international markets by cutting our costs and improving our productivity. Brasa has achieved some key milestones in that way, though there are still improvements to be done.

Will local content regulations be affected by the October 2018 general elections?
We have independent regulators to prevent that from happening, but it will depend on who wins the election. Every candidate has a different opinion about how the Brazilian energy sector needs to be handled, and that includes the oil and gas sector.
Brazil currently has more than 12 million unemployed people, and we believe that this will be the main focus of all the campaigns. One action that will surely boost employment is higher local content. It will be a difficult to communicate the idea that to reduce unemployment, investment is required, but to attract investment, you need a sustainable and organised market that allows investors to make profits. This is a very sensitive time of transition for Brazil.
However, this pressure is making suppliers more aware of our costs and the fact that we need to be globally competitive. We are seeking ways to be as productive as Asia, because we know that Asia is more productive than we are right now. Asia had a problem with quality, but that’s been changing a lot. We have constant reports about the services that have been executed in China and Singapore, and you can see that they’ve done their homework. They are fast and cheap, and now they have quality.

Where should efforts be directed to reduce production costs in Brazil?
Brazil has a very long tax chain and there is a long process that must be done to make the country cheaper. That doesn’t rest solely on companies; there must also be a heavy governmental influence.
On the company side, Brasa was able to reduce production costs by 15%. We invested in productivity and quality, and as a consequence, we used almost 30% less manpower in our last project than in the previous one. This is the result of having better organisation and processes and effectively training personnel.
If we don’t succeed by beating the international market in terms of price, at least when it comes to quality, safety and schedule compliance, then we stay at the same level. That’s where local content will help. Investors will pay a bit more to comply with regulations because they are mandatory, but they know they are getting what they are looking for.

For more information on the Brazilian oil and gas industry, see our business intelligence platform, TOGYiN.
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