BRAZIL: ‘POTENTIAL IS MASSIVE’

Logistics professionals speaking to Breakbulk were bullish about Brazil’s oil & gas prospects.

Marcelo Franceschetti, chief commercial officer at CET Logistics, a Rio de Janeiro-headquartered firm that focusses on oil and gas, said the country’s Potencializa E&P Programme was a “great development” that would generate employment in one of the country’s more impoverished regions.

Ana Josephina, commercial director at Salvador-based logistics firm Logtrade, added that breakbulkhandling ports in the northeast such as Suape in Pernambuco state and Mucuripe in Ceara state were wellequipped to support the buildout of offshore hydrocarbons.

Marcelo Urbano, Houston-based chartering director at UAL America, part of global shipping line Universal Africa Lines, said Brazil was “top of the company’s list” in Latin America. Urbano, who has three decades of experience working in shipping and logistics in Brazil, is heading UAL’s expansion into South America.

UAL already regularly operates vessels to Guyana, carrying breakbulk and container cargo mainly for the oil

Potencializa E&P program will put the current administration back on track in attracting investments.” and gas industry. The carrier, which owns 10 vessels, operates another eight or nine and is planning to build another five, is in talks to set up regular contracts with clients in Brazil.

Another major challenge for developers is complying with Brazil’s strict environmental laws.

In May, Brazil’s environmental regulator Ibama blocked Petrobras’ request to drill a deepwater well in the Amazon Basin, citing ecological concerns. Reuters quoted Petrobras as saying in a securities filing that it had fulfilled “every technical requirement from Ibama” for the project to be approved and was ready to refile its request.

“Brazil, Guyana and Suriname followed by Mexico are our main destinations,” he said, pointing to Brazil’s oil and gas recovery after the Car Wash scandal that nearly brought Petrobras to its knees. “For us in shipping, there was a lot of business as companies pulled out of the country. Two or three years of demobilizing rigs and all the equipment they normally use. But it was negative for the country. I see now demand for equipment to be repositioned back to Brazil, and we’re receiving already an increase for drilling rigs – that tells me that (the sector) is back.”

The challenges are still there, Urbano said, citing the high taxation rates that Brazil would do well to address, as well as soaring logistical costs of operating in the Amazon basin, where prices for pilots, tugs, port services and other shipping services were “way above inflation.” But, he said, if Brazil can overcome those obstacles, “then the potential is massive.”

“It’s a huge problem – the operators need these licenses to be able to drill and confirm what seismic studies say. Without that, it’s simply money spent for no good reason,” Feres said.

“People in the market think the equatorial basin has the same type of geological plays that have been discovered in Guyana and Suriname. But we can only confirm once those drilling licenses are granted by Ibama, and up to now they’ve been denied. That’s the main hurdle that we face.”

Colombia-based Simon West is senior reporter for Breakbulk.