Deputy Minister attends Abran seminar in Rio de Janeiro
- Norway is dedicated to the development of the Brazilian offshore industry, Deputy Minister Kåre Fostervold stated in address during Rio seminar.
The Norwegian Deputy Minister of Petroleum and Energy, Mr. Kåre Fostervold was one of the many high profiled keynote speakers at a seminar hosted by Abran and FGV Law School Rio, on September 16, 2014.
- Norway has the most advanced offshore fleet in the world, and after more than 40 years of experience, we have developed a world-class, competitive offshore service industry. This is Norway´s largest export industry after the sales of the oil itself, with revenues of 76 billion USD a year. 40 percent of these revenues come from international markets like South Korea, UK and Brazil, Mr. Fostervold said in his address. On behalf on Norwegian stakeholders he expressed dedication to the development of the Brazilian offshore industry.
- Brazil is a key offshore market to us, and I hope Norway can be a good partner to you. We are committed to our cooperation. Together we can develop tomorrow´s technology, Mr. Fostervold said.
The deputy minister also explained that Norway has been a shipping nation for centuries and how this gave the Norwegian oil industry a kick-start, as the shipping industry underwent a deep crisis in the early 1970-s.
- As a consequence, the shipping industry turned the attention to the oil and gas industry and started to build rigs. We had seafarers and we had yards and the stage was set for an interesting overlap. Our continental shelf has always been open to foreign companies. We believe this assures diversity and competition. I think today´s seminar underscores this point, Mr. Fostervold said to the many representatives from the Brazilian shipping and maritime industry present.
A new era
More than 80 people attended the seminar in the FGV building in Botafogo, on the growth of the Brazilian oil and gas industry and the challenges on the regulations of the maritime and offshore support shipping industry.
In the opening remarks at the event, dean Joaquim Falcão at the FGV Law School, referred to Norway as an example and point of reference in the exploration of natural resources. The Norwegian Consul General Helle Klem gave a short introduction on Norwegian interests in the Brazilian maritime sector. About 30 percent of the advanced offshore support vessel fleet in Brazilian waters are Norwegian.
As the first speaker of the first panel, Mr. Ronaldo Dias, general manager of logistics services and E&P of Petrobras, talked about the huge implications of the pre-salt discoveries.
- The pre-salt discoveries is a gift from nature, enabling us to double our production within 4-6 years. But to do so, we need technology and investments, and opportunities are plentiful. Since 2006, more than 20 oil fields have been discovered in pre-salt layers. A new era of petroleum production in Brazil has started, and in eight years, production already exceeds 400.000 barrels of oil per day (bpd). Peak production of pre-salt reached 580.000 bpd in August 2014. It took 16 years to reach the same production in the Campos Basin, Mr. Dias said.
But despite the potential, there are obvious obstacles. The lack of skilled labor, the lack of maintenance yards, poor infrastructure, complicated regulations, local content and productivity were some of the challenges described by Ronaldo Dias.
- We can turn the game using experiences from abroad, but we have a long way to go, he said.
The Norwegian perspective
Njaal Sævik, the CEO of Havila Group and chairman of the OSV group of the Norwegian Shipowners´ Association (NSA) shared some important numbers about the Norwegian fleet and its activities in Brazil.
- Norway is the 5th largest fleet in the world by market value in 2014, and we experienced growth even during the financial crisis. It is a highly specialized fleet, involved in all phases of the oil industry, from seismic and drilling to field development and offshore service and support. The harsh environment in the North Sea forced us to develop new technology and build specialized competence. But we have a tradition for sharing, and are open to share our technology and expertise. This might be why 1/4 of the offshore support vessel fleet in Brazil today is Norwegian. All the easy oil around the world has now been found. More challenging environments require more specialized competence, and I am sure that Norwegian oil service companies can be a part of this. It is something we are really good at, and Norwegian shipowners have high expectations to Brazil, Mr Sævik said.
The challenges of current regulations and how to overcome these challenges, was a topic addressed by several of the keynote speakers.
- I have been told to call them challenges and not problems, Felipe Meira, from Farstad Shipping do Brasil, said. Farstad has 30 percent of its fleet in operation in Brazil.
- Brazil has a very complex tax system, and the degree of legal uncertainty increases the risk for the company. Laws and regulations are also subject to personal interpretations. I do however believe in an increased demand in the offshore marked. Brazil is an interesting, but challenging market to be in, he said.
Celso Costa, CEO of Siem Offshore and director of Abeam, shared experiences from the Abeam associates, 41 Brazilian shipping companies.
- A number of uncertainties bring hidden costs. Heavy onshore support is necessary, due to paperwork and bureaucracy. The risk of penalties from various regulatory bodies can bring unexpected losses, the dry-docking cost is much higher in Brazil than abroad.
Long term charters and the priority given to Brazilian flag vessels are however among the benefits in the Brazilian market that the speakers mentioned.
Laws and regulations
During the second seminar panel, Mr. Godofredo Mendes Vianna, lawyer and FGV Law School lecturer, talked about the legal framework for the Brazilian maritime and offshore support activities, and gave a historic overview of the contractual structures used in the Brazilian industry. He also discussed how deduction of tax has become a great concern to the sector
Mr. Rômulo Castelo Branco Gomes de Araújo, Charter Manager at Antaq, outlined the role of Antaq as regulatory body and the different technical, financial, fiscal and judicial requirements for the sector.
Kristine Pedersen, Senior Adviser of the Norwegian Ministry of Trade, Industry and Fisheries, talked about maritime and offshore regulations in Norway and how Norway has managed to develop a successful supply industry.
- The Norwegian maritime industry is high on agenda for Norwegian authorities and we continue the development of new technology for a sustainable industry. We are currently also working on a maritime strategy, she said.
In the closing remarks at the event, Alfredo Renault, professor at COPPE-UFRJ, argued that Brazil is a market worth considering, despite difficulties.
- We have a lot to learn from Norway, and to me there are two words, or two pillars, for the Norwegian experience that we need to focus on: Cooperation and planning. We need to cooperate to overcome our difficulties, and the best way to go forward, is to learn from those who did it right, Mr. Renault said.
The Brazilian Association of Norwegian Shipowners, ABRAN, was established in 2013 as the first international division of Norwegian Shipowners´Association. The main objective is to foster coordination among Norwegian shipowners in Brazil and contribute to a sustainable and profitable business environment in the country.
By Runa Hestmann