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By Lise Alves, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – To attract investments and manufacturers of subsea (offshore, underwater) equipment the government of Rio de Janeiro launched last week a project, dubbed the “Cluster de Subsea”, to guarantee supply of local demand and the gradual substitution of imported equipment by those to be manufactured in Brazil.

off-shore, subsea equipment incentive project
With the ‘Cluster de Subsea’ project the government hopes to reduce the imports of equipment to off-shore drilling sites like this one , photo by Petrobras/Abr.

The project, a partnership between the state government, ONIP (Brazil’s National Petroleum Industry Organization) and Brazil’s Ministry of Development, Industry and Trade (MDIC), hopes to bring together foreign suppliers already operating in Brazil and new manufacturers interested in installing factories in the state.

“The great virtue of creating a project for the subsea cluster is the possibility of creating an institutional scenario which will allow us to identify the opportunities and gaps in Rio de Janeiro,” noted the state’s Economic Development, Energy, Industry and Services secretary, Julio Bueno.

Today, 35 companies operating in the segment are installed in the state, including FMC Technologies, GE Wellstream and National Oilwell Varco (NOV), Halliburton, Schlumberger and Baker Hughes. The project is expected to be concluded in eighteen months and according to Brazil’s official news agency, Agencia Brasil, the MDIC will invest R$800,000 while ONIP is expected to invest R$320,000.

“The Ministry sees the opportunities present in Brazil in the area of oil and gas as an opportunity of industrial policy and the development of the national industry, as a supplier of goods, engineering and services,” said Heloisa Menezes, secretary of Production Development at MDIC.

oil platform for sub-salt layer
Brazil seeking to develop its national off-shore equipment manufacturing industry and become less dependent on imports, photo courtesy of Petrobras.

The focus on Rio de Janeiro is understandable. The state is responsible for more than eighty percent of Brazil’s oil and natural gas production. With thirteen shipyards the state concentrates the greatest volume of orders for the segment in the country and has one of the largest technologies centers for deep-water exploration and production of petroleum in the world.

According to Federation of Industries of the State of Rio de Janeiro (FIRJAN) the state will receive nearly R$143 billion in private investments for the exploration and production of oil and gas until 2016 and the state estimates that the number of companies operating in the oil and gas exploration and production supply chain within Rio will double in the next five years.

Brazil is the tenth largest producer of energy in the world with more than half (55 percent) of its energy source coming from oil and other liquid fuels and natural gas. According to the World Energy Outlook Report 2013, released by the U.S.’s Energy Information Agency (EIA), Brazil “plays a central role in meeting the world’s oil needs, accounting for one-third of the net growth in global supply” and the country will become the sixth-largest oil producer by 2035.

The EIA report also forecasts that by 2035 Brazil will account for almost sixty percent of all deep-water production in the world. Today, close to 92.4 percent of all oil production and a little over 73 percent of all natural gas extracted in Brazil comes from offshore oil fields.

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7 COMMENTS

  1. This is another very backward step for BRAZIL. It is ridiculous to try and force foreign manufacturers of oil and gas parts to manufacture in Brazil and take on a Brazilian partner.
    It is simply driving away oil companies from Brazil.
    Its like something out of the Soviet Union era.
    Yet another backward step for Brazil.

  2. Dear Phil, your comment is strange and manipulative. There is no obligation for a foreign manufacturers to take a partner in Brazil. And it’s not a backward to attract international companies to produce locally. Actually, if you carefully read the article you would notice this part “Today, 35 companies operating in the segment are installed in the state, including FMC Technologies, GE Wellstream and National Oilwell Varco (NOV), Halliburton, Schlumberger and Baker Hughes.”. Sounds that these companies are not all coming from the new USSR or China…

  3. Good points Phil.
    To Sofiane, in addition to Phil’s solid points, you’ll note that the Crude Oil’s market price is now below the estimated cost of discovery & production of most Brazilian oil and even more so of Pre-Salt oil.
    So all the talk of “Royalities” and local content is now officially dead.
    Add yet another nail to Petrobras’ coffin.

  4. Phil Martin:

    Local priorities and local partners are how many/most developing/second world countries move up in the economic world. How do you think China industrialized? Korea? Serving only as a branch plant for multinationals may seem “efficient” in the short term, but….

    As for petroleum prices, once the fracking delusion is shown to be the ponzi scheme that is and once Saudi Arabia stops engaging in a price war, the price of oil will inevitably rise.

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