T&B Petroleum 28

The Brazilian TECHNOLOGY and BUSINESS Magazine of Oil, Gas, Petrochemical and Biofuels

opinion

Year XI • Issue 28 • May 2010 • www.tbpetroleum.com.br

An idealogical debate in the Brazilian petroleum industry, of José Carlos Ribeiro Filho, consultant for Oil, Natural Gas and Biofuels at Vieira, Rezende, Barbosa e Guerreiro Advogados – VRBG

An optimistic Brazil OTC 2010: Brazil has arrived FMC: submerged in production Forship: regulatory management

SPECIAL: SEISMIC TECHNOLOGY

Brazil: unexplored territory The offshore market: rig market fundamentals,

by Sven Ziegler and Eric Stole Karlsen Offshore telecommunications, by Colin Foster In the troubled waters of service tax, by André L. P. Teixeira, Bianca de S. Lanzarin and Tiago Guerra Machado Pre-salt: “strategic areas”, by Alexandre R. Chequer and Bruno Triani Belchior ILDS - an innovative approach for pipeline leak detection,

by Marcio Bergh and Jairo A. Prezzi Local content in Brazilian oil industry, by Heller Redo Barroso and Marcos Macedo Anti-ship immobilisation – anti-pollution for the sea: an available and affordable technology, by Gilles Longuève

Special interview

Paulo Mendonça, general director of OGX

The x in oil & gas

contents

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issue # 28 may 2010

Special interview with Paulo Mendonรงa, general director of OGX

The x in oil & gas 15 An interview with Reinaldo Belotti, director of the production development for OGX

In anticipation of the LDT

18

Seismic technology

Brazil:

unexplored territory

21 Polarcus: Betting on Brazil

26

30

Perspectives

An optimistic Brazil OTC 2010: Brazil has arrived

34 FMC: submerged in production

Leadership in Offshore Class and Related Services e-mail: absrio@eagle.org • Phone: + 55 21 2276-3535

EDITORIAL ADVISORY BOARD

36 Forship: regulatory management

articles 50 The offshore market: rig market fundamentals, by Sven Ziegler and Eric Stole Karlsen

52 Offshore telecommunications, by Colin Foster 57 Pre-salt: “strategic areas”, by Alexandre R. Chequer and

affonso Vianna Junior alexandre castanhola gurgel andré gustavo garcia goulart antonio ricardo Pimentel de oliveira Bruno Musso colin foster david Zylbersztajn eduardo Mezzalira eraldo Montenegro flávio franceschetti francisco Sedeño gary a. logsdon geor Thomas erhart gilberto israel ivan leão Jean-Paul Terra Prates João carlos S. Pacheco João luiz de deus fernandes José fantine Josué rocha luiz B. rêgo luiz eduardo Braga xavier Marcelo costa Márcio giannini Márcio rocha Melo Marcius ferrari Marco aurélio latgé Maria das graças Silva Mário Jorge c. dos Santos Maurício B. figueiredo nathan Medeiros roberto alfradique V. de Macedo roberto fainstein ronaldo J. alves ronaldo Schubert Sampaio rubens langer Samuel Barbosa

Bruno Triani Belchior

59 In the troubled waters of service tax, by André L. P. Teixeira, Bianca de S. Lanzarin and Tiago Guerra Machado

Year XI • Issue 28 • May 2010 Photo: Agency Petrobras

62 ILDS - an innovative approach for pipeline leak detection, by Marcio Bergh and Jairo A. Prezzi

64 Local content in Brazilian oil industry, by Heller Redo Barroso and Marcos Macedo

69 Anti-ship immobilisation – anti-pollution for the sea: an available and affordable technology, by Gilles Longuève

sections 03 04 40 44

editorial hot news professional profile products and services

72 coffee break 74 meeting 75 opinion

T&B Petroleum # 28

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editorial

Rua do Rosário, 99/7º andar Centro – CEP 20041-004 Rio de Janeiro – RJ – Brasil Tel/fax: 55 21 3221-7500 www.tnpetroleo.com.br tnpetroleo@tnpetroleo.com.br MANAGING EDITOR Benício Biz beniciobiz@tnpetroleo.com.br NEW BUSINESSES DIRECTOR lia Medeiros (55 21 9781-3110) liamedeiros@tnpetroleo.com.br EDITORS Beatriz cardoso (55 21 9617-2360) beatrizcardoso@tnpetroleo.com.br ART and CULTURE EDITOR orlando Santos (55 21 9491-5468) REPORTER cassiano Viana (55 21 9187-7801) cassiano@tnpetroleo.com.br célio albuquerque (55 21 8129-6647) celio@tnpetroleo.com.br fernanda romero (55 21 9161-8744) fernanda@tnpetroleo.com.br rodrigo Miguez (55 21 9389-9059) rodrigo@tnpetroleo.com.br INTERNATIONAL AFFAIRS luiz felipe Pinaud (55 21 9841-9638) lfelipe@tnpetroleo.com.br GRAPHIC DESIGN Benício Biz (55 21 3221-7500) beniciobiz@tnpetroleo.com.br PRODUCTION GRAPHIC and WEBMASTER laércio lourenço (55 21 3221-7506) webmaster-tn@tnpetroleo.com.br Marcos Salvador (55 21 3221-7510) marcossalvador@tnpetroleo.com.br TRANSLATION rick Toledano (55 21 9880-9905) COMERCIAL José arteiro (55 21 9163-4344) josearteiro@tnpetroleo.com.br cristina Pavan (55 21 9408-4897) cristinapavan@tnpetroleo.com.br lorraine Mendes (5521 8311-2053) lorraine@tnpetroleo.com.br Bruna guiso (5521 7682-7074 bruna@tnpetroleo.com.br SUBSCRIPTIONS aldecir oliveira (55 21 3221-7509) assinaturas@tnpetroleo.com.br PRINT Walprint gráfica DISTRIBUTION Benício Biz editores associados The articles are the responsibility of the authors, not necessarily representing the opinion of the editors. T&B Petroleum is directed to engineers, geologists, technicians, researchers and buyers in the oil industry.

SEND RELEASES Suggestions of themes or articles should be sent via fax: 55 21 3221-7511 or e-mail: tnpetroleo@tnpetroleo.com.br Member of

Rev up the motors

A

fter a year in critical condition as a result of the global financial crisis that started at the end of 2008, Brazil has already had unmistakable signs of economic resuscitation, after closing 2009 with only a fall of 0.2% in gdP. True that a fall in gdP is bad for any country. But the fact is that Brazil had the best reaction to the crisis, better than most of the western countries due to a better performance than the economies in the northern hemisphere, where falls of more than 2% in gdP occurred (10 times higher than in Brazil).

Brazil stayed in 6th place in the results for the g20, behind china, india, indonesia, australia and South korea. one indicator demonstrating the acceleration of the Brazilian economy is a 2% growth in gdP in the last quarter of 2009 – meaning a high of 8.4% in annualized terms, which explains the optimistic forecast from economists and analysts from several international economic and financial institutions of growth from 4.5% to 7% this year.

Betting on these figures in none other than goldman Sachs, which has announced it should revise the growth outlook for the Brazilian economy for 2010 – from the current rate of 5.8% to 6.4%. The Minister of finance, guido Mantega, has reiterated that the economy is recuperating and the country has the capacity to expand significantly in 2010, reaching growth of 8%.

There will be no lack of fuel for growth. The Brazilian oil and gas industry, even during the crisis in 2009, had a high demand for both foreign and domestic goods and services to leverage its exploration and production activities – which have had good results in terms of discoveries and increasing production.

The performance of Petrobras and the newest Brazilian oil company,

ogx, in 2009 assured Brazil of its spotlighted position in the world ranking of Pfc energy. Petrobras is the fourth largest listed energy company in the world, behind Petrochina, exxon and BhP Billiton. Petrobras shares increased 103%, while ogx, appearing for the first time, is in 33rd place with an increased value of 336%, pulled up by several discoveries made in the 2nd semester of 2009.

The accelerated expansion of the Brazilian oil industry is only being refrained by the congressional discussion of a new regulatory framework for the pre-salt oil, causing conflicts of interest due to the sharing of royalties between states and the federal government.

But not even this discussion will stop the industry. Today, Petrobras alone produces almost 2.5m barrels/ day and is projected to reach 5.3m barrels/day by 2020 due to the presalt oil – representing a growth of 7.5% per year. Therefore, the company has increased its investments.

This year’s budget is r$ 88.5bn (almost uS$ 50bn), of which 42% will go to exploration and production (e&P) and 38% to refinery. of the r$ 250bn (around uS$ 140bn) budgeted for the 2011-2014 period, r$ 153.6bn (almost uS$85bn) will be directed to e&P, while refinery will take up r$ 79bn (almost uS$ 44bn). for the 2010-2014 period, total Petrobras investments will be uS$ 190 bn – nothing less than uS$ 15bn more than the last company Business Plan. founded a little less than three years ago, ogx, which has not extracted their own oil yet, guarantees it will start production in the first semester of next year – yet another indication that the industry is full steam ahead.

So rev up your motors, we are now only waiting for the starting gun for the next bid round!

Benício Biz executive director

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hot news

Photo: Courtesy EISA

Transpetro, Estaleiro Eisa and BNDES sign financing contract for four more vessels

New well confirms light oil potential at Tupi The drilling of yet another well in the Tupi area has confirmed the light oil potential of the pre-salt reserves located in the Tupi field, in the ultra-deep waters of the Santos basin. The new well, denominated 3-BRSA-795-RJS (3-RJS-666), and informally known as Tupi OW, is located at a depth of 2,131 meters, almost 270 km offshore of Rio de Janeiro and 12.5 km northeast of the discovery well 1-RJS-628 (1-BRSA-369).

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vessels is forecast to create 4,000 new direct jobs.

This is the third shipyard to effectively sign its contract, permitting the release of financed resources. The Estaleiro Atlântico Sul (Suape, state of Pernambuco) reached this stage with 15 contracted vessels with Transpetro and Mauá (Niterói, state of Rio de Janeiro) in four years.

Signing the contract happened during the same week that President of Brazil, Luiz Inácio Lula da Silva, released the second phase of the Growth Acceleration Plan (PAC), in order to prioritize financial resources for the assembly and Photo: Petrobras Agency

Transpetro, Estaleiro Eisa and the National Economic and Social Development Bank (BNDES) signed the financing contracts for constructing four more Panamax vessels within the Fleet Modernization and Expansion Program (Promef) in March. Upon signing the R$ 856m contract, the Eisa shipyard will begin work to construct the four vessels next week.

The first Panamax (70,000 dead weight tons and a 500,000 barrel cargo capacity) should be delivered by the end of 2012. The remaining vessels are to be delivered during 2013. Construction of the

The discovery, which was communicated to the National Petroleum Agency (ANP), was proven by light oil samples (almost 250° API) tested from reserves located at depths much greater than those of well previously drilled.

modernization of vessels, as well as the construction and expansion of national shipyards.

The fundamental principals of Promef are the manufacturing of vessels in Brazil with a national content level of at least 65% (first phase) and 70% (second phase) and international shipyard competitiveness, after the learning curve.

Promef – which revitalized the Brazilian maritime industry – ahs created 15,000 direct jobs within the country, and expected to reach 40,000. Initiated in 2004, the program includes the construction of 49 vessels, aggregating 4m dead weight tons to maritime transport.

Thirty-three contracts have been signed for the construction of vessels, with a value of US$ 3.9bn.

The two first Promef vessels will be completed in this first semester: a Suezmax from the Atlântico Sul shipyard and the other, a products vessel, from the Mauá shipyard.

Due to the Transpetro program, Brazil already has the world’s 5th largest order book for oil tankers.

Promef attracted new investments in the maritime industry, stimulating the parts industry, as well as the construction of repair shipyards around the country.

The convergence of information from this and other wells drilled reinforced the estimates of an oil potential between 5 to 8bn barrels of recoverable light oil and natural gas from the pre-salt Tupi region.

The exploration consortium for BM-S-11, comprised of Petrobras (65% - Operator), BG Group (25%) and Galp Energy (10%), will continue with activities and investments as forecast in the Evaluation Plan, which had been approved by the ANP for drilling other wells before declaring it commercially viable, scheduled for December 2010.

Global Industries announces new CEO At the end of last February, Global Industries announced John Reed as the new CEO of the company.

With more than thirty years’ experience in the offshore industry, Reed has also been the CEO of Heerema Marine and of Intec Engineering, a company specialized in subsea engineering. The former CEO of the company, John Clerico, shall remain as the chairman of the board.

Reed has also been a member of the board of directors of the National Ocean Industries Association, president of the International Pipeline and Marine Contractors Association, and chairman of the American division of the International Marine Contractors Association.

Clerico praised the new CEO of Global for his experience and proven capacity for leadership. “John is the ideal candidate. He has the vision and talent necessary to lead the company and consolidate our position in the offshore services industry”, he stated.

With almost three years in Brazil, Global has already participated in projects such as Camarupim and Mexilhão, as well as doing the maintenance of pipelines in Campos, Santos and Espírito Santo.

In March, the company won the bid to manufacture and supply subsea equipment, as well as install the pipelines from the natural gas field of Ubarana to the gasoline unit of Guamaré in the Portiguar basin for Petrobras.

Petrobras will increase biodiesel production capacity 33% by August Upon concluding the expansion of the Candeias Biodiesel Mill in the state of Bahia, Petrobras will increase production capacity 33%

by August from its three units: Montes Claros (MG), Quixadá (CE) and Candeias.

The total production capacity of the three mills will surpass the current 326m liters to reach 434m liters per year by the end of 2010, after concluding the expansion project in Bahia. The other two mills produce 108m liters annually.

Petrobras’ Strategic Plan already foresees the construction of a large scale Mill in the North of Brazil by 2012, able to process 120m liters of biodiesel per year – doubling the company’s production capacity in the next three years. Therefore, Petrobras will convert one of its two experimental units in Guamaré, state of Rio Grande do Norte, into an industrial mill.

Petrobras has already approved an investment of R$ 1bn over the next five years for the development of biofuel Technologies to the implemented by the company’s Research Center, located in Ilha do Fundão, as well as by other research institutions.

The object of the company is to become one of the world’s five biggest producers of biodiesel, explaining the recent acquisition of 50% of the Marialva mill in Maringá, state of Paraná, from the BSBios group – the first transaction in partnership with a private sector company for production.

Initial production is scheduled for the second semester of 2010 with 120m liters per year. This volume represents 60% of the current demand in the state of Paraná, which is currently 200m liters per year.

Petrobras biodiesel production in 2009 saved emitting 320,000 tons of carbon dioxide gas into the atmosphere.

Tyco acquires Grupo Hiter and Crosby Valve Tyco announced in December the acquisition, by its business unit Flow Control, of one of the two main Brazilian companies in manufacturing valves, Grupo Hiter and Crosby Valves. Together, the two companies presented in 2008 revenues of approximately US$ 66m. The strategy of Tyco is to expand products and services in Brazil and South America.

With more than 300 units worldwide, Tyco Flow Control (TFC) is one of the main manufacturers and distributors of valves and controls, hydraulic and environmental systems, as well as temperature control systems for vital base industries, such as energy, electricity, sanitation, mining, chemicals, food and beverage, and construction.

Grupo Hiter started operations in São Paulo in 1965 with a small outfit dedicated to needs of the sugar market. The company gradually increased its activities to include a wide array of industrial segments, including the oil and gas, food and beverage, chemical and petrochemical markets.

The two companies had been collaborating for decades. “Brazil is a strategic market for Tyco. We are making investments and developing innovative solutions to exceed our customer’s needs. We have a large installed base in Brazil and it is being increased year by year due to our local presence and investments”, says Victor Venancio Dias, Tyco International Global Strategic Account Manager. “We are making these investments as part of our commitment with Petrobras to offer a total support and increase local content in Brazil.

We trust the Brazilian market represents a great opportunity for all Tyco divisions and Petrobras is a key piece on this market. We are committed to establishing a long-term relationship not only with Petrobras, but with all Brazilian customers requiring products, systems, solutions and services with a high quality and Global expertise like Tyco International”.

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hot news

BP announced in march a transaction that will deliver a material exploration position in the deepwater offshore Brazil and significantly enhance its position in core strategic areas.

In a broad-ranging deal, BP will pay Devon Energy $7.0 billion in cash for assets in Brazil, Azerbaijan and the US deepwater Gulf of Mexico. These include interests in ten exploration blocks in Brazil, including seven in the prolific Campos basin; a major portfolio of deepwater exploration acreage and prospects in the US Gulf of Mexico; and an interest in the BPoperated Azeri-Chirag-Gunashli (ACG) development in the Caspian Sea, Azerbaijan.

In addition, BP will sell to Devon Energy a 50 per cent stake in BP’s Kirby oil sands interests in Alberta, Canada, for $500 million.

The parties have agreed to form a 50/50 joint venture, operated by Devon, to pursue the development of the interest. Devon will commit to fund an additional $150 million of capital costs on BP’s behalf.

“This strategic opportunity fits well with BP’s operating strengths and key interests around the world, offering us significant additional long-term growth potential with an emphasis on high-margin oil,” said BP group chief executive

Photo: Courtesy

BP enters deepwater Brazil and strengthens core portfolio

Tony Hayward. “As well as giving us a broad portfolio of assets in the exciting Brazilian deepwater, it will strengthen our position in the Gulf of Mexico, enhance our interests in Azerbaijan and enable us to progress the development of Canadian assets.”

Andy Inglis, BP’s chief executive of Exploration and Production, said: “Through our entry into Brazil, BP will add a major position in

another attractive deepwater basin.

Together with the additional new access in the Gulf of Mexico, it further underlines our global position as the leading deepwater international oil company.”

The deal will give BP a diverse and broad deepwater exploration acreage position offshore Brazil with interests in eight licence blocks in the Campos and CamamuAlmada basins, in water depths ranging from 330 to 9,100 feet (100-2,780 metres), as well as two onshore licences in the Parnaiba basin. The Campos basin blocks include three discoveries – Xerelete, pre-salt Wahoo and Itaipu – and the producing Polvo field.

On completion of the transaction, Devon’s employees in Brazil are expected to join BP.

Petrosynergy announces a new oil discovery at Recôncavo Petrosynergy notified the National Petroleum, Natural Gas and Biofuels Agency (ANP) of an oil discovery at well 1PSY18BA in block REC-T-153 of the Catu regions in the Recôncavo basin at the beginning of April. The block had been acquired in the ANP’s 9th Bid Round, held in 2008.

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Petrosynergy holds 12 blocks, acquired form the 2nd, 3rd, 5th, 6th, 7th and 9th ANP Bid Round: six in Recôncavo and six in the Potiguar basin. With daily production around 800 barrels/ day and annual revenues at around R$ 25m, Petrosynergy has drilled 25 wells with a success rate of 60%.

In Bahia, the company acquired the Uirapuru field in 2005, located in the municipality of Catu, with total daily production of 108.3 boe (42.1 b/d of oil and 66.2 boe/d of natural gas). Also in Catu, Petrosynergy has the Canário field with total daily production of 189.4 boe (177.0 b/d of oil and 12.4 boe/d of gas).

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special interview Paulo Mendonça, general director of OGX

The x in Oil & Gas In mathematics, the x is a variable that can take the place of any changeable value in an equation or inequation; it is the wild card of the equation. In the real world, OGX, from entrepreneur Eike Batista stands for the equation of success that has been formulated from this company that started as the x in the Brazilian oil and gas industry and may be the unknown variable of great value.

In less than six months of drilling, the company made discoveries in each of the seven wells it drilled, one in the Santos basin and the other six in the Campos basin. Five wells already have estimated reserves of 2.1bn to 4.7bn barrels of oil.

In order to get these results, OGX has put together a team of heavyweights, led by geologist Paulo Mendonça, one of the stars of Petrobras that OGX managed to ‘extract’, along with forty other highly qualified personnel, including the company’s director of Production Development, Reinaldo Belotti.

In this exclusive double interview for TB Petroleum, the two executives, each with more than 30 years of Petrobras, talk about the expectations and preparations for OGX, youngest oil and gas company in the nation, which, at the beginning of 2011, celebrated only 4 years in the industry.

TB Petroleum – During the five years you were at the head of exploration at Petrobras, there was a growing 8 T&B Petroleum # 28

by Beatriz Cardoso

curve of discoveries and incorporated reserves, including the pre-salt, the focus for much investment and expectations. Since then in OGX, you have invested heavily in the Campos basin, where you have made several discoveries. Does this mean that the basin still has a big potential to be explored?

Paulo Mendonça – Without a doubt. The Campos basin has a very interesting history, mainly since the search began in deep Waters, with high success rates – much less it is true between 1998 and 2002, due to the focus on the central part of the Campos basin. When it was decided to head a bit north, trying other models, such as the one in Roncador (discovered in 1996), we arrived at Parque das Baleias. The discovery of Jubarte (2001) only demonstrated the business was drill, discover and tie the loose ends up, because it became quite clear that there was much more than had been imagined, including the pre-salt.

Hence the saying from one of the old

explorers: ‘Oil is where you find it’— and where you find it is exactly where you’ll find more.

That is what OGX has been demonstrating with its strategy to intensify its exploration activities and invest heavily in seismic analysis.

The achievements obtained in such a short time is obviously the result of a highly qualified team – yourself alone has 35 years of Petrobras – or are these results those of a more daring business model?

There are several factors that must be taken into consideration.

Firstly, it is important to point out that we are talking about the history of a company that started in just two and a half years. We began in July 2007 when I left Petrobras (end of June), we started a company and went to the market, afterwards we went to the 9th Bid Round and acquired the first 21 exploration blocks (in the basins of Santos, Campos, Pará-Maranhão and Espírito Santo),

it is important to point out that we are talking about the history of a company that started in just two and a half years. we started a company and went to the market, afterwards we went to the 9th Bid Round and acquired the first 21 exploration blocks.

paying a total of R$1,479,723,282.00 in signature bonus. We did the IPO, which at the time was the biggest ever in the history of the Brazilian stock market (raising R$6.7bn in capital). We acquired the environmental licensing and we did all the seismic analysis, contracting rig teams at a time when we were told it was impossible: we now have five contracted rigs. We started drilling; we discovered oil; and we still have US$ 4bn in cash.

That means you still have resources to continue the fast pace…

It’s fantastic, without a doubt. But if it weren’t for a man named Eike Batista, I’d say none of this would have been possible. Petrobras is a company that commands respect: it has made great achievements, mainly in the exploration area; it is highly innovative, which allowed the company to consolidate its state-of-the-art technological basis to discover great reserves, reaching the pre-salt. I am proud to have worked there for 35 years. The question of speed is quite different when talking about a private enterprise. Eike is much more than the main shareholder: he is the force that pushes us, takes

care of the business, and he knows everything about it. First, he banked the company at the beginning with his own resources, investing US$ 400m initially, and then another US$ 400m, until reaching US$ 1bn. Who in Brazil can do that? No one. Second, he talked to me, frankly, and believed in me and all the team we brought here – this is what has made the difference.

The same goes for the market and the investors, right?

When we arrived, there was nothing. Eike Batista banked everything – and not just financially. I remember T&B Petroleum # 28

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special interview

when we went to canada and the uS on the first round, Marcelo [Marcelo faber Torres, director of investor relations] and i: had we gone alone, no one would have listened to us. With eike, we were well-received and listened to what we had to say about the project. in other words, he gave credibility to the project, and not just with money; he holds great credibility together with the shareholders around the world. it was something i had never seen before. Without him, ogx would not be here today. it may seem to have been easy, but it wasn’t. it was easy with him. now it is a daring and demanding business: deadlines, with eike, have got to be met. Preferably beforehand. all these factors helped us to get to where we are now in just two and a half years.

What is the next step?

Produce! This is where we are at the moment. Were we lucky? no! We made the right choices. We paid a high price: we did high quality seismic 3d imaging; the world’s best specialists analyzing the data; we used stateof-the-art technology. There is no doubt in my mind that we have only just begun discoveries in the campos basin. and so not even tell me that we only found oil for being right next to Petrobras areas: we went far beyond. for four months i’ve said that all the 10 T&B Petroleum # 28

WiTh eike, We Were Well-receiVed and liSTened To WhaT We had To Say aBouT The ProJecT. in oTher WordS, he gaVe crediBiliTy To The ProJecT, and noT JuST WiTh Money; he holdS greaT crediBiliTy TogeTher WiTh The ShareholderS around The World.

elements we encountered in the center of the campos basin were present in the shallow waters to the south. The discoveries prove this: the oil reserves are at a depth of 2,000 m, 2,100 m, but in shallow waters of 130 m, and less than 80 km off the coast. The oil is heavy, but with very low viscosity, allowing for high flow transfer.

What is the estimated volume of reserves until now?

The first discovery, at the well ogx-1 (Vesúvio prospect) in block BM-c-43 (campos basin), has been estimated between 500m and 1.5bn barrels of oil equivalent (boe). in well ogx-2a (Pipeline prospect) in block BM-c-41 (also in the campos basin) there have been five indications in different sections, totaling a volume between 1bn and 2bn barrels. at ogx3 (Waimea prospect), the expectation is for volumes between 500m and 900m barrels. at ogx-4 (kilawea), between 100m and 200bn. at ogx-5 (krakatoa) there were between 30m and 90m barrels in just one of the three reservoirs discovered. all together,

we have around 2.1bn to 4.7bn. The numbers of the first discovery (ogx1) are conservative, since that is our culture. But we have reservoirs that extend 14km with 500-meter columns of oil. Thus, we can expect nothing less than a billion barrels of oil from a field this size. regarding the second discovery, we must point out that we only announced the indicators – even this we did with caution. When we announce a discovery, it is because we have seen the oil and the flow of this oil. Therefore we continue drilling, going further, since the expectations are great.

You mentioned heavy oil. What is the API? Something between 17 º and 18º aPi, with gor around 50, with a fantastic viscosity between 5 and 30 centipoises – heavy oils usually have around 400, 300 centipoises. it is a very high permeability – from 1 to 3 darcy. We are looking forward to a fantastic business.

The plan was to start production in 2011. Has that been moved up?

The chronogram has been anticipated to the beginning of 2011.

You increased the exploration campaign from 51 to 79 wells. Why? We have got about uS$ 4bn in cash to finance all the exploration capex, first production, new farm-ins or acquisitions. The seismic analysis has helped to improve out numbers: we’ve gone from 4.8bn boe of potential reserves to 6.7bn boe (and 212m in contingent reserves), according to the two latest reports of degolyer & Macnaughton (the american consulting firm for certifying reserves of the oil and gas industry, which has given an average success rate of 34.5% to ogx operations). The new numbers require a different exploration campaign, because the will be a different production curve. it will certainly

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T&B Petroleum # 28

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special interview

be necessary to contract more rigs, more seismic study. The five rigs were enough for the previous project. We are now assessing how many will be necessary. One thing is for sure: we will need a rig for the basins of ParáMaranhão (offshore) and Parnaíba (onshore).

3D seismic imagery is a major differential? How much have you spent on it?

More than one hundred million dollars.

How much has been spent in total investments, including acquisitions and exploration, since OGX was created in 2007?

The numbers are impressive: between US$ 1.1 to 1.6bn. Here is where the ingeniousness enters: we raised US$ 4.6 to 4.7bn in the IPO, and then the dollar took off and caused the economic crisis with everyone wanting to hedge. Eike said we were going to wait, that we should believe in our own currency. Happily, we still have US$ 4bn in cash, despite all the expenses, especially the seismic assessment. It was the right bet. Last year, whoever decided not to invest in the real and invest in dollars lost 40% of their money.

Of course we must always to aware of eventual changes, but when dealing with oil, you cannot play games.

Are new acquisitions part of your strategy? Are there players selling assets?

Most certainly, but there is one thing: when we buy a company or a block, we must be certain we see something there. We do not just aggregate quantity, only quality. We analyze everything that is happening in the market.

Are you also analyzing opportunities abroad?

This is a topic we discuss internally a lot. Firstly, there are political factors 12 T&B Petroleum # 28

What is important is to discover opportunities and comply with the rules. The company most concerned with all the changes is Petrobras.

to be considered. In Brazil, we have political and economic stability. Upon analyzing any investment abroad, the political and economic stability must be analyzed, as well as the exploratory potential, looking at each opportunity with another set of eyes. I’ve been taking this reading for 37 years and I know how important it is to look at things with a different perspective: the view from inside is quite different form the view from outside. It is important not to be afraid. And we have the resources available to do business. But do not expect OGX to go running after a field of 500,000 barrels, 1m barrels. It is not among our activities. We want bigger things.

If the block is onshore, were the risk is palatable and there are opportunities for discovering big things, we will most certainly be there – whether onshore or offshore.

Considering all your experience, do you believe that the Brazilian basins are being poorly explored?

I’m sure of it. It is not that they are being poorly explored. Actually, they have been well-explored. It is just that, for decades, Petrobras has been the only player in this area. And even recently, the foreign companies

that have come to Brazil have often ended up in partnerships with Petrobras. It was just ‘one head’ with ‘one management’ thinking about the subject. OGX has put another ‘head’ with another way of managing projects to think about things. Brazil has gained a lot from this. And I am quite sure that there will be many more discoveries in these basins. Another four more enterprises are needed to really explore these basins.

I regulation a concern/ does it create instability?

What is important is to discover opportunities and comply with the rules.

The company most concerned with all the changes is Petrobras. I, just like Petrobras, would not like to be obliged to have 30% of all the pre-salt blocks and also be the operator. Were this offered to us, we would have to tell the main shareholder that it is simply impossible. I want the freedom to choose where I go, whether winning or losing. The masterminds that thought they were helping Petrobras are not helping the company. This could do more harm than good to Petrobras, since it forces the company to concentrate on pre-salt, and ignore areas that the company considered, at least from a philosophical standpoint, priorities. Petrobras will have to focus on pre-salt. We have to analyze what will be approved and in light of that decision, reach some conclusions on whether it is worth going for pre-salt or not. Pre-salt is not the only thing out there. There are shallow waters, deep waters and the equatorial margin.

Unfortunately, entrepreneurs like Eike, who are not afraid of risk, are few and far between.

Is it too early for the company to enter into other segments along the oil and gas production chain, such as refinery?

Rest assured that OGX is an exploration and production company.

Reinaldo Belotti, the director of the production development for OGX

In anticipation of the LDT As the director of production development for OGX, engineer Reinaldo Belotti has got everything planned for OGX to begin production at the beginning of 2011.

“Eike Batista’s sense of urgency is contagious”, reveals the executive who had occupied several positions in more than 30 years of Petrobras, including the executive manager of both E&P Services and Production in Campos Basin, besides having been the president of Petrobras America Inc. and the director of the Service Station Network for Petrobras Distribution.

Further to their ahead-of-schedule targets, he reveals that all the development projects in the fields discovered to date will be done with dry completion, avoiding the dependence on fixed rigs.

The Long Duration Test (LDT) and wet completion may be used to test reserves if it facilitates first production.

T&B Petroleum – You’ve amplified the exploration campaign, increasing the number of wells to be drilled from 51 to 79 by 2013. What exactly does that represent?

Reinaldo Belotti – Firstly, it represents the possibility of having much more oil and gas in our blocks than previously thought. We are only doing this because the reserves and indicators have shown that we have more chances of new discoveries. This is the productive part of the business. It also reflects the sense of urgency of our CEO, Eike Batista, which is, in fact, contagious.

You’ve already contracted five rigs: how many more are you planning on?

Actually, we only needed four rigs for the 51 wells foreseen at the beginning. The fifth rig was anticipated, since we began to notice we would need additional wells. We have got a serious of possibilities. We could simply use the contracted rigs to drill more wells and get ahead once again by bringing in more equipment. Everything is still open.

We are analyzing all the possibilities.

The industry’s main service providers have solicited us, impressed with the extraordinary speed with which we have reached each step, without problems.

In just a bit more than two years, the company was created, rigs were contracted, the first exploration program was done, and we drilled and discovered oil.

They have noticed the great business opportunity and the sense of urgency from the directory.

Do these discoveries prove you have made the right choices in both acquiring assets and operational and technological decision-making?

Yes, it does... it couldn’t be any other way. We’ve got a team that knows these basins like the back of their hands, with the best professionals in the E&P industry. And we have chosen the best partners: among OGX’s 15 main suppliers of goods and services, all are top of the line throughout the world. We are using the best in human resources and technology, since we are not bound by the lowest prices and we basically work in shallow

waters with proven technology. There was no reason not to be successful.

Considering this accelerated pace, have you already defined the model to be used in the development of these fields? Any novelty or innovation?

The models we are going to use were already developed, tested and proven.

We’ll be using horizontal wells, since we have the best drilling engineers and all the expertise and technology at hand to do so. We know exactly how to do it.

And our production system will be based on dry completion. We’ll avoid submarine completion, which maybe used in anticipation production, to test some reservoir. In general, the final production development will be with dry completion with a high level of local content, since we already have highly-qualified suppliers here in Brazil. Even when we go to deep waters, we are going to try to maintain this model in order to avoid being dependent on the fixed rigs necessary for operational maintenance.

You mentioned anticipating production... can we expect the LDTs, largely used by Petrobras, to also be used by OGX? We are analyzing this possibility.

T&B Petroleum # 28

13

special interview

Regarding the target to produce first oil in the beginning of 2011: have you anticipated it by some months?

Yes. One of the possibilities we are analyzing is doing a LDT. Naturally, we need the authorization of the National Petroleum Agency. The LDT is a way of getting to know the reservoir better and do the final development for production that is safer.

With all that accumulated experience, you haven’t thought about testing some new or applying a different solution?

As far as technology is concerned, we are not going to use anything innovative. Most important is our management model: selecting people, partners, outsourcing, and our sense of urgency.

One characteristic of this company is the velocity at which it implements its business. We are not looking to innovate, but work with speed and safety. If you look at all the phases our company has already completed and compare it with any other company in the world of the same size, operating in the offshore industry, you will see, for sure, that we are using several shortcuts, but with safety.

You have emphasized the time factor...

How many days did it take you to drill the first well?

A little more than forty days... and with all the tests that needed to be done!

Remember that we contracted four rigs in just two months, like all the partners, to do the wellheads, casing etc.

The results indicate that the Campos Basin is about to be rediscovered?

What happened was, as time passed and experience in this basin accumulated, the knowledge base broadened. The seismic studies we did in the southern area of the Campos Basin – which is difficult to visualize due to submarine volcanoes – allowed us to reinterpret the data. The results obtained from the first wells we drilled showed that our exploration staff was completely right.

Thus, we have got before us a smooth exploratory campaign: of the 71 wells OGX will drill by 2013, 40 are located in this basin.

14 T&B Petroleum # 28

We are using the best in human resources and technology, since we are not bound by the lowest prices and we basically work in shallow waters with proven technology.

Is Campos strategic?

It is the best known basin, so the risk is much smaller. And we need this opportunity to test of team and procedures.

But we will soon be doing the same in the Santos and Maranhão Basins.

Oil or gas: which is the priority for OGX? What comes first is the supply. From then on, the business opportunities are made. We want oil, but gas will be very welcome, since we’re aligned with MPX for energy generation.

there are other aspects that must be considered, such as environmental licensing, distance offshore, etc. At any rate, there are many parameters that must be analyzed.

Which are the major challenges: public tender, environmental licensing, contracting equipment? Where is headway being made in the operations?

I would say that, today, the main challenge is government regulation – but this is not our only challenge. We need to know what lies in store for us. As far as public tender is concerned, after the 9th Bid Round, no further auctions have been held, which represents a challenge, but we have been able to solve this problem via areas that had already been tendered, such as Parnaíba.

Has there not been a challenge in contracting equipment?

That is much easier. The challenge is really in getting local content. This is a subject that everyone has been studying more. The team has been preparing for this. OSX was created to guarantee local content offered in the 9th Bid Round by constructing offshore units in its Santa Catarina shipyard. We are preparing to go to the market so solicit the necessary bids. OSX will be doing all of this now in 2010.

How many platforms does OGX expect to have by 2015?

We haven’t discussed it yet.

You are in Parnaíba because of the thermoelectric plant located there?

MPX is our partner there. And we have our team that most understands natural gas in the country there – José Brito de Oliveira, the engineer onboard the Enchova platform for the first oil in the Campos basin.

When do you plan on ramping up the exploration plan for Santos basin? I believe you are expecting to drill 18 wells by 2013...

We are all set to go. In this first semester we’ll be going to Santos. By 2013, we are planning on drilling 7 wells in the Espírito Santo basin and 7 in Parnaíba (7).

If natural gas is discovered, what transfer model will be used: subsea gas pipeline or liquefaction?

We are still analyzing the options, and they are many. We believe that there are more chances of having gas in the Santos and Espírito Santo basins, where

Are there any plans for reaching deeper waters? The pre-salt maybe?

We plan on exploring our blocks in their totality. We’ll explore whatever is there. We’ve got a team that has already drilled in the pre-salt and know much about the area.

bosch rexroth

T&B Petroleum # 28

15

seismic technology

Brazil is a country of continental dimensions: it is the 5th largest country in area, just behind Russia, Canada, China and the USA. Brazil has 30 sedimentary basins from the most diverse eras and geological characteristics both onshore and offshore, totaling an area of 7.5m km².

Brazil: unexplored territory

by Cassiano Viana

T

aking into consideration all the territorial potential for oil and gas exploration and production (5m km² onshore, 2.5m km² offshore), and the fact that just 6% is known and 5% in exploration, the figures demonstrate the urgent need to do geological and geophysical research to increase reserves and production.

16 T&B Petroleum # 28

The seismic industry is playing an important role in both the exploration and production of petroleum. new techniques have brought new discoveries, if not a better understanding of the oil fields already discovered. after the 2009 economic crisis, the industry is on the rise again. new companies are popping up and new vessels are being set to sea. There has also been advance-

ment in new techniques for seismic studies, such as high, wide and multi-azimuth acquisitions, that have given the seismic market a new frontier of activities. “in Brazil, as all over the world, the seismic industry has evolved. here, the data processing area has progressed with more modern CpDs and also with seismic acquisitions, bringing new data onshore basins, sponsored by the

Knowledge of basins by area (%) Total: 7,3 million km²

75 (5,475,000 km²) Poorly known

16 (1,168,000 km²)

Intermediary knowledge

6

(438,000 km²) Known

national petroleum, natural Gas and Biofuels agency (anp), and in offshore basins where petrobras and other operators have invested in seismic data acquisition” states Eduardo Lopes de Faria, president of the Brazilian Geophysics society (sBGf).

“Today we are witnessing a major technological evolution in seismic acquisition” he affirms. according to the president of the sBGf, honorable mention must be given to azimuth acquisition, multi-component data using sensors positioned on the sea floor.

“Techniques such as acquisitions via simultaneous sources, although still in the research phase, may be the next great advancement in seismic data acquisition in the near future”, he assesses.

For onshore data acquisition, wireless technology deserves attention. “in data processing, techniques such as special wave equation migration especial and reverse Time Migration (rTM) have brought high-quality imagery to complex geological regions”, he explains. “it is also important to mention the advancement in seismic data inversion methods, which have made more precise estimates of rock and fluid contained in basins”, he says.

“The acquisition instruments have advanced much. although the instruments’ dynamics have

3 (219,000 km²) Unknown

been good for years now, only now have we advanced software technology, and today the focus is on new post-stack seismic technology, where new knowledge can be acquired using techniques to delineate, highlight and extract geological information from clear seismic 3D imagery, both rapidly and with great detail. The results can be integrated into any seismic interpretation work flow, 3D modeling or well planning”, evaluates Marcos de Almeida, president of GeoQuasar energy solutions, a company providing services to all areas of the oil and gas industry, including exploration and production, onshore & offshore acquisition, processing, geophysical data interpretation and integration.

The company has strategic partnerships operating in argentina, Brazil, Colombia, ecuador, peru, Mexico and Venezuela. “it is technology especially designed for geoscientist and T&B Petroleum # 28

17

Illustration: ANP

seismic technology

engineers in order to point out, highlight and acquire geological characteristics in seismic 3D data imagery”, he states.

“Our vision of seismic evolution is of utilizing advanced applied geophysical methods, high-density 3D data acquisition, especially wide azimuth, 4D and permanent monitoring systems for reserves”, he explains. “Therefore, we believe that enterprises will use state-ofthe-art methods, for example, gradiometry, in order to optimize the costs and reduce environmental impact, and aero data acquisition”, he states. “The importance of seismic technology is comparable to that of the Hubble telescope with the frontiers of space, where we have gained much knowledge about new and modern techniques, as well as

18 T&B Petroleum # 28

integrated work flows, such as ffA, one of the companies we represent in Latin America with new seismic 3D analysis that increases knowledge while lowering risks”.

According to Luiz Neves, partner of Gaia, seismic technology has advanced with higher resolution from vessels with more cables and receptors with higher resolution, such as the Ramform class S (Sovereign, Steerling) of PGS, ships that can take up to 20 Wide Azimuth technology cables, improving the imaging of areas with complex structures, and also with the Geostreamer technology (PGS), allowing the cables to operate in unfavor-

able climatic and oceanographic conditions. The use of speed and pressure sensors allow for deeper penetration and data resolution.

Gaia represents PGS (seismic data acquisition) and SMT (seismic data interpretation software). Besides its role in data interpretation and acquisition, the Seismic Data Library gives support to its portfolio of services. Gaia has approximately 17,000 km² of 3D seismic imagery on the Campos basin production field and 200,000 km of 2D seismic imagery of the Brazilian offshore basins.

According to Neves, among the new technology that is worth mentioning is the oil field monitoring system (4D conventional, permanent installment...), Geostreamer (adverse sea conditions) and the wide azimuth (imaging for complex areas).

Photo: Courtesy Polarcus

brazil: unexplored territory

Betting on Brazil Polarcus, a company specialized in offshore seismic surveying, celebrated the beginning of its operations in Brazil at an event held at the Industrial Federation of Rio de Janeiro (Firjan) on January 14th. Headquartered in Dubai, Polarcus will be represented domestically by Bratexco, the company from geologists Cosme Peruzzolo and Andy Phipps.

The CEO of Polarcus, Rolf Ronningen; the vice-president, Christian Fenwick; the Marketing vice-president, Richard Price; and Andy Phipps and Cosme Peruzzolo, geologists who have worked for some of the biggest names in the industry, such

as Geco, PGS, Veritas and Schlumberger.

“We believe Polarcus will be a new generation seismic analysis company, highly qualified in marine 3D and 4D seismic surveying, preoccupied with causing minimal environmental impact”, commented Rolf Ronningen.

“We have four vessels under construction at a shipyard in Dubai. One of them, the Polarcus Nadia, was concluded in December and has a capacity of up to 12 streamers”,

stated Cosme Peruzzolo during his presentation. According to the geologist, the Polarcus Naila (with the same capacity as Nadia) will be ready in February and the Asima and Samur vessels will be ready by the end of the year (both with capacity for six streamers).

“Furthermore, we have two more ships planned and under construction. They are optional vessels that we have not decided yet whether to turn then into seismic vessels or support ships”, commented Andy Phipps. “Everything depends on the demand for the services we supply. We have until July to decide”.

A highlight of these vessels is their IMO (International Maritime Organization, a UN agency to regulate safety and environmental impact of marine vessels) certification, the Green Passport. “These ships are the first of their kind in the world to receive this certification”, explains Phipps, meaning that the company even had to plan the eventual disassembly of the vessels after they have expired their 25year lifespan.

Founded in 2008, Polarcus already has two international contracts, one with TGS-Nopec and the other with Noble Energy.

Photo: Courtesy CGGVeritas

seismic technology

New seismic technologies are driving exploration and production in Brazil CGGVeritas, the international geophysical services provider, has been active in Brazil since 1961.

Committed to providing seismic data of the highest quality in this high-potential region, the company is using the latest acquisition, processing and imaging technologies to ensure clients in Brazil have the best tools at their disposal to find and produce hydrocarbons both onshore and offshore.

Among the seismic acquisition methods highlighted by Patrick Postal, Country Manager for CGGVeritas in Brazil since September of last year, are the company’s proprietary High-Productivity Vibroseis Acquisition (HPVA) and SeisMovie 4D monitoring technologies. “We are launching the first SeisMovie project here in Brazil, in the onshore Bahia basin. This is the first project in the country to monitor the injection of CO2 in a hydrocarbon reservoir to 20 T&B Petroleum # 28

enhance production and for carbon sequestration,” comments Postal.

For offshore acquisition, Postal points out that, besides the Sercel Nautilus steered Sentinel solid streamers, which provide the highest quality data and are already in operation on two CGGVeritas vessels and will be available on more vessels by the end of 2010, wide-azimuth is another advanced technology that is very effective, particularly for the pre-salt stratigraphy. “We have had excellent results visualizing the presalt in the Gulf of Mexico,” he states.

“We expect considerable interest in the application of this technology in Brazil, particularly as the pre-salt fields are developed. Although it is more expensive than traditional narrow-azimuth 3D surveying, it provides information that was not available with older techniques and a much clearer image to facilitate a more accurate interpretation of the reservoirs in this complex salt environment”.

As well as being the first company to acquire wide-azimuth data and continuing to strengthen its reputation as being experts in this field, there are many other innovations,

especially in the field of data processing, where CGGVeritas also is the proven leader.

According to Patrick Postal, data processing has undergone a crucial and significant transformation.

“The available computing power has grown exponentially, along with our expertise and our advanced imaging technology. There is a great potential to bring new life to vintage data by reprocessing it with this new technology, such as our unique TiltedTransverse Isotropy Reverse Time Migration (TTI RTM). It is very satisfying work with a great return for our clients,” he explains. “This vintage data is still highly valuable and the enhancements brought by modern processing technologies introduce even greater potential to define new prospects. Reprocessing of our multiclient data with advanced imaging technology such as TTI RTM over the Tupi discovery is a good example of the benefits.”

CGGVeritas in Brazil has acquired approximately 94,000 km2 of 3D data, with one vessel currently shooting an additional 16,000 Km2, as well as 36,800 km of 2D data. Most of the work developed has been for multi-client surveys. “This has been the most common business model,” he states.

According to Postal, this is a time of great discoveries in Brazil.

“We continue to play our part in the discovery of the giant pre-salt fields offshore Brazil. This is the joy of seismic and advanced technology. The images are beautiful, unlike what was previously obtainable. Historically we rarely got such clear images of such deep and thick layers.”

“Tupi, for example, is a challenge for acquisition and processing. It is a deep and complex carbonate reservoir obscured by underlying salt requiring specific processing expertise and imaging technology,” explains the vice president of Processing

Photo: Bia Cardoso

brazil: unexplored territory

Services for CGGVeritas in Brazil, Julio Perea. “The big wild card in understanding pre-salt – in terms of seismic technology – is defining which type of seismic survey should be used to get the best image of the reserves.”

“We have started this phase.

Who knows, maybe we will use techniques such as multi-azimuth or wide-azimuth, which have already been very successful in the Gulf of Mexico for similar challenges. The need to best quantify and increase reserves means that exploration and subsequent delineation will continue

in very deep areas; this is the case in the Gulf of Mexico, where there are objectives at depths of over 10,000 meters,” states Julio Perea, referring to the Tiber discovery, announced in September of last year – one of the deepest wells ever drilled by the oil and gas industry.

“Back in Brazil our Viking Vantage vessel will complete its acquisition of our high-quality Cluster Extension 3D multi-client survey of the pre-salt in the prolific Santos Basin this year,” states Postal. “The data will be processed directly into depth using high-end technologies such as Controlled Beam Migration PSDM, Kirchhoff PSDM and Reverse Time Migration PSDM. This type of initiative reflects our aim to be the high-

est quality seismic service provider in Brazil. There is much work to be done even outside the Espírito Santo, Santos and Campos basins.”

Still much to discover In the 29 main sedimentary basins of oil and gas potential in Brazil, just six are well-known; eleven have an intermediary grade of knowledge; the other 12 are either little or unknown.

Among the little known basins are the Paleozoic era basins, which are excellent producers of oil and gas all over the world. Brazil has the largest number of non-productive Paleozoic basins.

“With the exceptions of the Potiguar, Sergipe-Alagoas and Recôn-

cavo basins, the other areas are still almost unknown, from an oil exploration point of view. In order to get a better idea, the Paraná basin alone, with more than 1,000,000 km², has only 100 wells drilled”, comments Eduardo Lopes de Faria, president of the Brazilian Society of Geophysics (SBGf), “That is very little”.

The offshore sedimentary basins, mainly located between Espírito Santo and Santos are relatively well-known. Nevertheless, there is still a lot to discover in these basins.

“There is obviously an enormous knowledge gap regarding the real petroleum potential of our basins, mainly the onshore ones”, he concludes.

According to Luiz Neves of Gaia, if taking into consideration the size of the country, much more investment in mapping the sedimentary basins is needed.

CGGVeritas sets up technology center in Brazil CGGVeritas is opening three centers in Brazil: two 4D multicomponent dedicated processing centers in Macaé and Rio de Janeiro this April; also a Technology Center will be opened in Rio de Janeiro this year.

“The model of a Technology Center implies technological collaboration with operators, as well as with the leading universities in the country,” explains Patrick Postal. “CGGVeritas will bring together our experts and experience gained from around the world, but the participation of local specialists is paramount for consolidating knowledge and our own operational and technical experience to address the specific challenges of Brazil.”

22 T&B Petroleum # 28

Photo: Jônio Machado, Petrobras Agency

seismic technology

“Mainly in the new frontier areas, new medium- and long-term auctions would be needed so that the data acquisition companies would have a chance to survey and gather data on the areas up for auction, thus giving access to operators”, he states. “This would do much to reduce the risks and increase the interest of enterprises”.

Since 2007, The Pluri-annual plan for Geological and Geophysical Studies (PPA) of the National Petroleum, Natural Gas and Biofuels Agency (ANP) forecasts investments of around R$ 1bn by 2012.

Focusing on 24 basins, the PPA prioritizes the acquisition of data on onshore or relatively unknown sedimentary basins for which there is little available information. Among the research planned are 2D seismic data, data processing and interpretation, petroleum system studies, aero-geophysical studies, geochemical studies, stratigraphic well drilling, and integrated geological and geochemical studies.

The basin to be researched under the Plan are: Amazonas, São Francisco, Paraná, Pantanal, Solimões, Parnaíba, Tacutu, Marajó, São Luís-Bragança-Vizeu, Parecis, Acre-Madre de Dios, Bananal, Ceará, Irecê-Lençóis, Foz do Amazonas, Jacuípe, PernambucoParaíba, Pelotas, Pará-Maranhão, Cumuruxatiba, Araripe, Jatobá, Alto Tapajós and Barreirinhas.

A history of Brazilian data acquisition The activities of the Brazilian seismic industry began at the end of the 1950s with analogical equipment. In the middle of the 60s and the advent of the digital revolution, the seismic reflection method became a fundamental tool for petroleum exploration. At the end of that very decade and with the help of seismic assessment, the first oil field was discovered on the Brazilian continental shelf. It would not be until the 1970s that the great oil region of Campos was discovered, using 2D seismic data.

Seismic 3D imaging was an important advancement in the 1980s. With the enactment of Law nº 9.478 of August 6, 1997, the National Petroleum, Natural Gas and Biofuels Agency (ANP) was created, and seismic data acquisition intensified with the participation of companies specialized in data acquisition. There were 128,500 km² of 3D data produce between 1998 and 2001.

Another important hallmark, which happened in the first few years of the new century, was the acquisition of what at the time had been largest seismic data survey in the world: approximately 20,000 km² of the Santos basin. It was this survey that made the great discoveries in the pre-salt layers of the Santos basin possible.

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23

positive perspective

One year after the deepest economic crisis since the Great Depression, the global economy appears to be in a recuperation phase.

by Cassiano Viana

FPSO Cidade de S達o Vicente, on Tupi Field, Santos Basin

Brazil

24 T&B Petroleum # 28

Photo: Petrobras Agency

An optimistic

Photo: Stéferson Faria, Petrobras

“B

razil has shown itself to be on the right path with professional and trustworthy economic and monetary policy, leading us to a positive outlook for 2010”, evaluates Bernardo Moreira, partner responsible for the oil and gas industry for KPMG in Brazil.

“This positive outlook primarily comes from the internal economy, which is has become less dependent on foreign trade and has been strengthened in the last few years, as well as from the financial and economic indicators that remain stable” he added.

According to Mr. Moreira, the investments underway by the major Brazilian companies and by the government will be left as a legacy to future generations. “They will also contribute to constant growth, capable of making Brazil a global economic reference, as it was with Brazil’s performance during the recent global economic crisis”, he evaluates.

In the eyes of Rodrigo Ventura, consultant of Macroplan, Brazil faced the economic crisis very well. According to this economist, the performance of the Brazilian internal market was the main reason behind why the country was the last one in and the first one out of the crisis.

“Throughout 2009, the aggregate demand of the Brazilian economy stayed active, preserving the real income of families with reduced inflation and improved conditions in the credit market”, he estimates. “Despite the crisis, more than one million new formal jobs were created in 2009, after considering lay-offs – hence the positive forecast for 2010”, he concluded.

The main projects include major investment in the pre-salt in the next few years, including resources to develop the infrastructure necessary for exploration of the reserves. Furthermore, investments will be made in increasing and modernizing the refineries, developing petrochemical and fertilizer projects, and ethanol pipelines and expanding the natural gas pipeline network, as well as invest-

Petrobras Business Plan foresees investments of US$ 220bn In spite of the 12% fall in net profits in 2009 (R$ 28.982bn in 2009, a drop of 12% compared to 2008), Petrobras announced in March an increase in its investment plan for the 2010-2014 period.

The resources allocated for the upcoming years are between US$ 200bn and US$ 220bn, compared to US$ 174.4bn forecasted until 2013.

“The basis for the investment plan is the growing Brent and also considers a capitalization, which should occur by the end of July”, states the financial director of Petrobras, Almir Barbassa. “We will maintain the company with a sound capital structure. This is one of the conditions for our plan.”

T&B Petroleum # 28

25

positive perspective

Photo: Bia Cardoso

in costs, increased confidence in the industry, and more available long-term finance”, the study highlights.

“There is a favorable scenario with factors such as the performance during the international financial crisis, the uptake of company investments, increased credit and the expansion that has already begun in the machines and equipment segments, which should lead the dynamism of the year” commented ments in liquefied natural gas. The company busithe CNI economist, Flávio Castelo Branco. “Indusness plan also includes new energy projects. try will most certainly lead ecoThe division of Exploration and Production will nomic growth in 2010”, he states. receive R$ 163.6bn; Supply, R$ 80.5bn; R$ 20.2bn The Industrial Business Confor Gas and Energy; and R$ 430m for Petrobras fidence Index (ICEI), released in Biofuels.

January by CNI, demonstrated This year alone, Petrobras plans on investing R$ that optimism in Brazilian in88.547bn, which is 25% more than the resources industry is at an 11-year high. The vested in 2009 (R$ 70.757bn) – a company record. index reached 68.7 points in January, 2.8 points higher than October and 21.3 points The most optimistic in recent years higher than January of last year, when hit by the According to the National Industrial Confedinternational crisis, business confidence fell to 47.9 eration (CNI), Brazil began 2010 with accelerated points. The survey included 1,431 companies. growth. “The growth expected for 2010 should In another survey released in December, the make industrial production surpass the level in Industrial Federation of Rio de Janeiro (Firjan) the first semester of the year before the crisis”, demonstrated that the industry of Rio is indeed estimate the CNI technicians in a study released optimistic about 2010. More than 92% of the 225 in December. industries surveyed, representing 43,336 workAfter receding 10.8% last year, the investments ers, finished the year with revenues equal to that should increase 14% in 2010, more than double the of 2008. pace expected or the economy. “The factors that Compared to the pre-crisis period, 64.9% of have contributed to this projection include the high companies have already recuperated production level of installed industrial capacity, the reduction levels or are already operating at Brazil, the world’s 5th major economy in 2013 a higher level. Almost 1/3 of the surveyed companies stated that In a study released by Pricewaterhouse-Coopers at the beginning of the the negative impacts of the crisis year, Brazil has been placed as the fifth world economy by 2013. China, in have already come to pass, and turn, will become the world’s first. The economic prognostics indicate that 64.8% believe the worst is over. by 2020 the Gross Domestic Product (GDP) of the group of seven major Among the entrepreneurs that emergent economies – the so-called E-7, comprised of China, India, Brazil, are still under the negative efRussia, Mexico, Indonesia and Turkey – will be more than that of the G-7. Five fects of the crisis, 71.8% believe of these tem major economies will be made up of what are today emergent they will recover in just the first economies by 2030. semester of 2010.

26 T&B Petroleum # 28

Installation contractor for offshore industry Services Modec International LLC: installation contractor for the projects FPSO Cidade do Rio de Janeiro, FSO Cidade de Macaé, FPSO Cidade de Niterói and FPSO Cidade de Santos – mooring and risers installations; procedures; logistics and materials specifications; anchors installation surveyor.

Prosafe: FPSO Polvo – Mooring Masters for towing and positioning.

Petrobras: four more Pelikelos (350 ton) to perform torpedo lauching.

Avenida Nilo Peçanha, 26, grupo 904, Centro • CEP 20020-100 • Rio de Janeiro • RJ • Brazil Phone: + 55 21 2524-0296 • Fax: + 55 21 2532-4671 • mcs@mcsengenharia.com • www.mcsengenharia.com T&B Petroleum # 28 27

brazilian pavilion BRAZILIAN PAVILION Booth # 1117 PETROBRAS Booth # 1317

Photo: Courtesy Google Maps

Brazil has arrived For more than ten years, the Brazilian stands of the Brazil Pavilion are visited by entrepreneurs from all over the world, looking to do business with Brazil.

by Cassiano Viana

OTC 2009

The 2009 exhibition was the second largest in oTc’s 40-year history exhibition area: 557,000 square feet (ft²) Visitors: 66,000 companies: 2,500 contries: 38

28 T&B Petroleum # 28

F

or the 11th consecutive year, the Brazil pavilion, organized by the Brazilian petroleum, Gas and Biofuels institute (iBp) and the by national organization for the petroleum industry (onip) will be present at the offshore Technology Conference (oTC).

The unfolding of the Brazilian supply oil & Gas, fruit of the partnership between onip and apex Brasil (the Brazilian export and investment promotion agency), The Brazil pavilion, which in 2009 occupied 350 m², is now bigger and changed its location. in 2010, the pavilion grew 40% (550 m²), and is now at number 1117, at the entrance of the reliant Center.

There will be 37 companies taking part in the pavilion from the most diverse segments of the Brazilian petroleum production chain,

Organizations anP iBP

cTduT oniP

Participating Companies

besides the iBp, onip and the national petroleum, natural Gas and Biofuels agency (anp).

“The increased number of companies in the pavilion demonstrates the export potential of Brazilian suppliers and the interests of buyers and foreign partners awakened by Brazil, which is currently a world offshore oil and gas reference”, states the executive secretary of the iBp, Álvaro Teixeira.

Brazilian Technology “The market is already at a great pace to do business”, says Melquisedec Santos, director of subsin, the company whose strategy it is to consolidate as a Brazilian enterprise capable of competing in the field of subsea projects this year with foreign players already established in Brazil.

“Given the heavy investments by petrobras in the near future on the horizon, we already feel the great number of foreign operators planning to set up operations in Brazil”, assesses santos.

“We wish to take advantage of this moment to establish cooperation agreements with foreign partners, looking to our domestic market”.

The main service item to be presented is a robot for inspecting risers, developed by subsin. The robot is a multi-sensor platform which moves along the length of the riser, using its structure as a guide.

“This equipment has a high potential for Gulf of Mexico operations, given the problems faced in the region due to hurricanes”, he explains. “oTC 2009 was a bit jeopardized by the economic crisis and swine flu, but everyone is quite optimistic about the 2010 event, since there has clearly been a repressed demand for oil and gas equipment”, states Zenon Meireles, technical of stemac, manufacturer of generator groups with a 65% market share for energy in Brazil. “Besides presenting our new line of generator groups for diesel and natural gas, we plan on showing our new line of gas, liquid and water filters”.

“The market is heating up all over the world again, even with

• Altona • Altus • Arteche • Brasil Energia • Chemtech • Coester • Columbia • Deeptec • Flexomarine • Grupo IFM • Grupo GP • Jaraguá • Keppel Fels • Kromav • LabOceano • Lupatech • MCS • Metroval • Multialloy • Nuclep

• Oceânica • Orteng • PHDsoft • Poland • Protubo • Rio Engenharia • Sacor • Stemac • Subsin • Tecnofink • T&B Petroleum Magazine • Tomé Engennharia • Usiminas • Vanasa • Vescon • WBS • WEG

the fall in the price of oil”, says Duperron Marangon, Ceo of phDsoft, a 100% Brazilian enterprise that produces simulation and engineering software for integrating major structures. The company’s C4D structural integration software is used by petrobras, Transpetro, shell, Modec and the national laboratory for scientific Computation. phDsoft has representatives in the Usa and europe and has signed several partnerships in order to consolidate the company as a Brazilian hub of software for the oil and gas industry, aggregating more value for clients with more products that complement the C4D software.

“This is a great opportunity for phDsoft to show that the best T&B Petroleum # 28

29

brazilian pavilion

software-technology for offshore structure’s integrity and maintenance management is produced by a strong company that easily passed through the worst world economic crisis and thus will be available to support customers’ needs during the full life of their assets”, says Marangon. “We will present phDC4D® 2010 featured with many tools tailored for Fpso’s”.

“Despite the crisis, oTC 2009 did bring some positive results, although not enough to maintain the level of exports at around 30% of revenues, as had been in previous years”, evaluates Marcos Cueva, director of oceânica. “in 2010, we believe we will retake this height. Due to

the heating external market, the company is even better prepared from a technical and commercial point of view, and ready to take on international competitors”.

Besides the traditional offshore engineering services, such as hydrodynamic and structural calculations, oceânica will present two new service lines at the oTC: analysis of subsea operations and port and terminal operations simulations. The latter uses fast time simulators that run in personal computers as real time simulators, allowing the very pilots who practice the operations in an environment that reproduces the command bridge of ships. “in the second semester we will already be operating with the oceânica simulator in Brazil, the result of a partnership with Marin of holland”, points out Cueva.

CTDUT launches WikiPipeline The PiPeline Technology center (cTduT) launches, at Pipeline Pigging & integrity Management conference and exhibition (february 15-18, in houston, uSa), WikiPipeline, the english version of Wikidutos. The project has as intention to organize information and definitions used for the pipeline community in the form of a collaborative web-based glossary web. The address of the site is http://www.wikidutos.org.

The initial version of the website was launched with more than 400 entries and a reasonable number of links, 30 T&B Petroleum # 28

taking into account the web philosophy of connecting the matters to other documents and sites. “all the people who act in the area of ducts are invited to visit the site and to contribute with the insertion of new terms and commentaries on the existing definitions”, says the executive chairman of the board of cTduT, raimar van den Bylaardt. “With this initiative, cTduT expects to give an important contribution towards the systematization of the sector knowledge, generating content and promoting the exchange of experiences among sound professionals, on

“The expectations for oTC 2010 are most certainly good and the atmosphere of will be one of optimism and back-to-business for lupatech. Therefore things are looking good for our products, which are primarily focused on energy and industry”, says Adhemar Freire, sales Manager for oil & Gas services / oil Tools for the lupatech Group. lupatech will participate in the oTC with an array of products and solutions in energy, focusing on anchoring cables for oil production platforms and Fpsos, valves, tools for oil and gas production wells, completion, injections, onshore and offshore, monitoring systems with fiber optic technology, natural top of democratizing knowledge for students, researchers and other professionals”, says. in two months the website received more over 3000 page views. Wikidutos, the original Portuguese version, was visited by almost 30 thousand people worldwide in 8 months. first glossary on-line of technical terms for the sector of ducts, in the molds of the Wikipedia, Wikidutos (http://www.wikidutos.org.br) was launched during the river Pipeline 2009, last September and counts on the contribution of professionals of the most diverse sectors of the pipeline community – Petrobras, Transpetro, iBP (Brazilian Petroleum, gas and Biofuels institute), anP (Brazilian oil, natural gas and Biofuels national agency) and inmetro (national Metrology institute of Brazil), amongst others –, responsible for the evaluation, revision of the terms of the Web glossary, as well as for the identification of new terms for inclusion.

September 13-16

Riocentro - Rio de Janeiro - Brazil

For more information, contact IBP:

03.10

Be a part of the biggest oil & gas event in Latin America

Realization/Organization:

Av. Almirante Barroso, 52 / 26º andar 20031-000 • Rio de Janeiro • RJ • Brasil Phone.: (+55 21) 2112-9000 • Fax: (+55 21) 2220-1596 E-mail: congressos@ibp.org.br

www.riooilgas.com.br

T&B Petroleum # 28

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brazilian pavilion

gas compressors, as well as a portfolio of other specialized services. “after the 2009 crisis, the industrial market as a whole, and especially in oil and gas, have shown strong indications of recovery, including oil prices returning to more attractive levels in order to produce and replace stocks that have declined in the last few months”, evaluates the executive. according to Mr. Freire, there is still a major emphasis on investment in the international arena for the increased use of natural gas for energy. even in countries such as the Usa, which had not given much importance to this fossil fuel in its energy supply, has now been paying much attention to natural gas.

“This scenario is much more optimistic than 2009, although things have still not reached the levels of 2007/2008, but it is enough to demonstrate that 32 T&B Petroleum # 28

the market will be getting even stronger by 2012”. according to Mario Jorge Coutinho, of MCs engenharia, there will still be the strong market trend of previous years, looking for cheap oil to explore and sell. “Brazil will need partners

to explore the pre-salt, which we already know will be in need of new technology, new materials for developing tools and machines, as well as a real analysis of costs of exploration”, he assesses.

“We hope to have concluded the approval process, together with aBs, for the pelikelo tool for use as part of the anchoring line that allows installed platforms to disconnect and get out of the way of hurricanes and icebergs’, he states. “in order to solve the problem of platforms being dragged or destroyed by storms, the designers have been studying alternatives to increase the anchoring elements (ties and anchors, etc.) and increase the number of anchoring lines. This tool allows for maintaining the current dimensions for anchoring platforms”.

Research and development – in this scenario of recovery, reheating and returning to

Brazilian Pavilion: a hallmark of internationalization The BraZilian PreSence at the offshore Technology conference (oTc) has been guaranteed for eleven years. it was in 2000 that the first Brazil Pavilion was organized, and it was the first time the Brazilians participated in an organized fashion for an event outside the country, and especially for the grandiose and important event that is the oTc. at that first time, it was just 60 Brazilian entrepreneurs at the stand, which was just 150m², but nonetheless, it demonstrated that Brazil had

arrived as one of the world’s more attractive markets. after 2006, onip and apex Brasil signed a very successful agreement to raise the resources necessary to guarantee a Brazilian Pavilion at the offshore Technology conference (oTc) and at other events around the world.

brazil has arrived

investments and contracting, the forecast is also positive for the Brazilian research and development segments that will participate officially for the first time in the Brazil pavilion at oTC. For the pipeline Technology Center, the focus will be to present the 14” loop and the Wikipipeline (see Box), recently released in the Usa and will be publicized at the Fair.

“We hope to increase our contacts with equipment suppliers and service renders interested in running tests on a real scale with their products or pipeline recuperation methods, mainly at the structural integrity laboratory – where tubes can be broken with pressure of up to 1,000 bar – and in the 14” loop with programmed defects for tests with instrumented pigs”, highlights the president of the executive Council of the pipeline Technology Center (CTDUT), Raimar van den Bylaardt. another institution that will participate for the first time at

oTC is the oceanic Technology laboratory (laboceano) of the instituto alberto luiz Coimbra of engineering post-graduation studies and research (Coppe), of the Federal University of rio de Janeiro (UFrJ). in operation since april of 2003, laboceano was designed to test structure and equipment models used in offshore oil and gas exploration and production activities, which are quickly advancing into regions up to 3000m deep.

With a 15m depth and a central well with another 10m, it is the world’s deepest tank, and represents Brazil’s leadership in the development of deep water technology.

With sophisticated systems to generate multi-directional waves – soon to include current and wind generators - laboceano is capable of a realistic simulation of the main ocean environment characteristics, meeting the needs of the very demanding offshore industry.

Other Brazilian delegations at OTC BeSideS The BraZil PaVilion, the department of uS commerce at the american consulate, with support from the american chamber of commerce (amcham) of rio de Janeiro, oniP and the iBP, have organized a delegation to visit the offshore Technology conference for the second consecutive year.

“The oTc has become more and more strategic for the energy industry. Therefore, we are once again participating, taking an even bigger group of associates of the

american chamber of commerce”, says robson g. Barreto, president of amcham (rJ/eS).

The delegation has 251 professionals from 120 Brazilian companies of the most varied segments imaginable in the oil and gas production chain. “Besides the synergy between the Brazilian enterprises themselves, who are growing in number at each event, the contact with the international energy market is becoming more and more strategic”, he states.

subsea equipment

Submerged

in production

by Beatriz Cardoso

With 28 manifolds and more than 300 christmas trees in the offshore operations of Brazil, FMC Technologies consolidates its position as a strategic partner of the Brazilian offshore oil & gas industry

W

hen the Mexilhão platform (PMXL-1) starts production in the Santos basin in May or June of this year, FMC Technologies do Brasil will once again have another success story to claim in the offshore industry, but not without a special chapter: it was the first time Petrobras acquired a complete submarine system from one, sole supplier.

FMC supplied all the equipment for the development project of the Mexilhão field – two submarine manifolds, seven wet christmas trees (WCT), two Pipe Line End Terminators (PLET), and five spools, as well as the control systems and risers – located 160 km off the coast of São Paulo, where there will be the biggest fixed oil and gas platform on the continent at a water depth of 320m to 550m.

“Just three more to go to make a total of seven christmas trees”, happily states José Mauro Ferreira, Sales and Marketing director of FMC Technologies do

34 T&B Petroleum # 28

Brasil, a company firmly placed in the Brazilian market (with the acquisition of CBV Indústria Mecânica in 1998, a company that had already had a robust portfolio of projects with Petrobras).

Two manifolds for Mexilhão were delivered in the middle of January, and the company is running like clockwork to meet the other orders. Less than three weeks later on February 6th, the rest of the equipment left the Rio de Janeiro factory.

It was the second submarine manifold delivered to Petrobras for the purposes of Plangás, the Natural Gas Anticipated Production Plan, to be installed in the Roncador field in the Campos basin, located in the proximity of the other manifold that had been delivered in February.

An underwater display These are just some of the items in the company’s extensive underwater portfolio

on the Brazilian coast. Since 1996, FMC has supplied nothing less than 28 submarine manifolds (19 for Petrobras and 9 for Shell), eleven of which have been supplied in the last five years.

FMC’s christmas tree harvest has grown well at the bottom of the sea: the company celebrated its 300th tree in November and now has a total of 318 produced since 1978 – most of which have been for Petrobras (268). Chevron has 19 of these FMC equipment units in Frade (17 have already been delivered); Shell has 12 units; BG and BHP have seven each. Another seven wet christmas trees have gone to other operators.

The production line will be non-stop for the upcoming months, since FMC has got a full order book. According to the agreements signed with Petrobras, FMC will supply a complete submarine system for Tambaú (also in the Santos basin), besides the production system for the P-55 (11 wet christmas trees and four manifolds, besides other equipment).

Photo: Courtesy FMC

The Petrobras orders include GLL9 christmas trees for pressure conditions of up to 5,000 psi. “The entire scope encompasses 29 trees; we’ve delivered 12, and there are another 17 on the way”, states José Mauro Ferreira. The company also holds a 4-year Frame Agreement worth US$ 400m to supply wet christmas trees for depths of 2,000 meters.

FMC also has a technology cooperation agreement with Petrobras to supply the world’s first submarine oil-water separator to be used for the heavy oil in deep waters, which will be implemented in the Marlim field, and another agreement for horizontal pumping in the Espadarte field.

The oil-water separator will significantly reduce the amount of water that reaches the platform, increasing the oil processing capacity, and consequently, the oil recuperation from the field.

A double dosage FMC had started in 1880 in California and is headquartered today in Texas. The company

has 25 production units in 15 countries, and has consolidated its position by winning two contracts to supply two complete submarine systems. “The Mexilhão project is the first for Petrobras in Brazil, which includes submarine christmas trees and High Pressure, High Temperature manifolds for, 10,000 psi and 300F (150º C)”, highlights the Sales & Marketing director of FMC Technologies do Brasil.

The agreements include a multiplex-controlled submarine system with thermal insulation; Multi Phase Meters (MPM) and a High Integrity Pipeline Protection System (HIPPS), a highintegrity tube protection system; as well as hard pipe jumpers to connect manifolds with PLETs. “The HIPPS is a submarine automation system that automatically identifies high-pressure and closes valves of the christmas trees and manifolds, protecting the submarine gas pipeline”, explains José Mauro Ferreira.

Tambaú will have a similar project to that of Mexilhão, composed of four christmas trees

with Subsea Control Modules, two manifolds, four PLETs, with hard pipe jumpers, HIPPS, a set of tools and spares, besides the Topside Master Control Station equipment.

“The submarine system for Tambaú, 160 km off the coast of the state of São Paulo and in waters of 1.500 m deep, are also HPHT of 10,000 psi and 300F, which requires advanced technological solutions equal to Mexilhão”, explains the executive, stating that some of the equipment, such as the PLETs, have already been delivered. “Next will be the wet christmas trees and manifolds.”

With such a full order book, FMC is investing in increasing its local capacity. “Due to the pre-salt, the trend will be to increase investments even more to anticipate the demand of the market. These investments are not concentrated in manufacturing resources, but mainly in creating job posts and the technical training of our professionals”, concludes José Mauro Ferreira.

T&B Petroleum # 28

35

regulatory support

Regulatory management With strategic partnerships and industry specialists, Forship increases its portfolio of solutions, offering services to support multinational companies looking to operate in the Brazilian oil and gas industry. by Beatriz Cardoso

T

echnical and bureaucratic red-tape – especially regarding regulations – are one of the main problems foreign companies in the oil and gas, shipbuilding, and petrochemical industries confront when both setting up facilities and operating within Brazil.

These are no small obstacles: they can have a major impact on both the timeline and prices, affecting their competitiveness on the Brazilian market, which is bounding with activities in shipyards and offshore basins due to new projects in exploration and production of oil and gas: especially in the Santos basin, where the great new pre-salt discoveries are located, besides the other Brazilian basins that have been attracting investments and foreign companies to the country in the last few years with new ventures.

Most of these international players are familiar with Forship Engenharia, a Brazilian com-

36 T&B Petroleum # 28

Custom-made The scope of regulatory services at Forship, developed by highlyqualified managers, engineers, technicians: • issue regulatory directives, procedures and technical reports; • translate and interpret laws and local regulations; • review of project and regulatory documentation; • answer technical questions and recommend preventative and correction measures; • translate specifications, reports and design projects; • inspect facilities; • Repetro inventory and as built inspections; • technical support for interface with Brazilian authorities; • supply specific labor force. pany with a strong presence in the petroleum and shipbuilding industries, with renowned expertise in offshore commissions anywhere in the world. Forship acts wherever their services are needed, from the Americas to Europe, Africa and Asia.

In the last few years, what had begun as just a complimentary service became a new line of business. When participating in the commissioned projects for Petrobras and other oil companies, Forship ended up rendering diverse regulatory services in order to offer a complete service to clients.

Complementary service “The Regulatory Support Area was created during the actual process of commissioning major projects implemented by Forship, in which we ended up having to get involved in different regulatory questions”, observes Antonio João Prates, director of Engineering. “It was a consequence, a subproduct of four portfolio. But the increasing demand for integrated solutions led us to consolidate the regulatory support area with specialized consulting

Photo: Courtesy Forship

of high-aggregate value, which was compatible with the strategic goals of Forship”, he states.

Backed by knowledge of the Brazilian market and its portfolio of services for complex industrial projects, Forship started to offer regulatory support services to international companies seeking to comply with requirements of the Labor, Environmental, Customs, Maritime and Petroleum authorities, among others.

To consolidate this new line of products, Forship looked for a professional with experience in this field.

Today, the regulatory support services are coordinated by project manager Cristiane da Costa Guimarães, who reports to the engineering

director with support from Forship International and strategic partners – specialized tax and regulation consultancies.

“There is a group of specialized companies that compose distinct parts of this work. Generally, the foreign players turn to these consultancies, whether with labor, environmental or customs concerns. The fact that we offer a complete package, with just a few subcontracts to consultancies, is no small relief ”, observes Prates. “The clients are very satisfied. And the demand has increased in this area”, added Cristiane.

Box of surprises Partnerships are fundamental, since major endeavors encounter multiple regulatory aspects. “The Forship differential is essential the fact that it is multidisci-

plinary. We handle any complex industrial project, whether on land or offshore (petrochemical, energy projects, mining, etc.)” notes Antonio Prates.

“Regulatory aspects come in a box of surprises. Anything can happen: from a labor problem to a technical question, and onwards to an environmental requirement, etc. To meet this demand, we have mobilized internal resources, specialized professionals that work directly on projects and that can be allocated to do an investigation in the regulatory area, or, in some cases, we can contract specific consultants”, the executive points out.

The idea took off on the occasion when a consortium executing a project for Petrobras, some years ago, solicited a regulatory study that Forship completed T&B Petroleum # 28

37

Photo: Forship Image Bank

regulatory support

Jeffrey Macasero, naval engineer; Yoshiyuki Ohara, mechanical engineer and coordinator and Christina Pascual eletrical engineer.

complementarily to its commissioning project. It did not take long for other clients with highly complex demands started to request regulatory support for Forship projects.

The director of engineering confirms that the sheer mass of regulations always scares companies. “Every country has regulatory authorities, but Brazil has really gone all out”, jokes the executive. “The main concern is the quantity of regulations and how to interpret each one.” According to him, it is important to evaluate two paths. “Solution a is the least risky, but is extremely cumbersome and implies changing the project, etc. And then there is solution b. We reduce risk. We prepare the technical report this way. It is a question of managing costs and risks”.

New consolidated area At the beginning of 2008, the first contract specifically for this kind of support service was signed between P&M DI BV, a consortium between Petrobras 38 T&B Petroleum # 28

and the Japanese group, Mitsui.

“P&M is responsible for the construction of the two drilling rigs to operate in Petrobras’ projects abroad. With the bubbling market for drilling activities in Brazilian oil and gas fields, however, P&M decided to analyze the possibility of adapting these rigs for operations in Brazilian waters”, points out Antonio Prates.

Forship was contracted to develop an impact study for this decision of the project and construction of the vessels. The work took one month to complete and the final document summarized the directives to comply with the demands the authorities of the MTE, DPC, Anatel, ANP, RFB, and of course, Conama and Ibama – the agencies of the Ministry of Environment.

Thereafter, Forship began services for a broader project with Hydro Brasil. A Brazilian company giving regulatory support to the development project for the Peregrino field, a consortium of Norway’s Hydro and Anadarko from the USA, which

jointly operate this asset in the south Campos basin. The following year, Statoil Hydro, result of the merge between Statoil and Hydro, assumed control of this asset.

The products and services foreseen in this contract with Forship encompass complying with the norms of the Maritime Authority, the TEM and the ANP, including the developing directives and operational procedures to comply with Brazilian regulations, analysis of project and supply documentation, translation of regulations and attending clients’ technical questions.

The scope of one of Forship’s most complete contracts in the regulatory support area was signed in May 2008 with Maersk of Denmark for regulatory consulting services and the supply of a specialized labor force for the FPSO Peregrino project. The FPSO, which will be installed in the field of the same name (operated by StatoilHydro) with a production capacity of 100,000 barrels per day, is being constructed by Dalian, in China, by integrating modules constructed in Singapore at the Keppels shipyard. Maersk is not only responsible for the construction of the platform, but also for its operations and maintenance in Brazilian Waters.

The forecast for the Peregrino production system is for two fixed platforms and one FPSO. The jackets were constructed by Kiewit Offshore, in the Estados Unidos, and the FPSO was shipped by Maersk. The development plan of the Peregrino field includes 30 production and seven injector wells.

The Forship contract foresees compliance with a battery of

regulatory management

requirements from Ministry of Labor (MTE), the Department of Ports and Coasts (DPC) and Internal Revenue (RFB), as well as the National Telecommunications Agency (Anatel) and the National Oil, Gas and Biofuels Agency (ANP).

“The project involves the allocation of specialists from Forship Rio and Forship Asia in Singapore, especially when the platform reaches the sail way for Brazil, the coordination of NR-10 and NR-13 activities and the verification of fiscal measurements, according to ANP criteria”, points out Cristiane Guimarães.

The current Forship portfolio includes, besides commissioning, operations and maintenance services, construction and assembly, as well as technical consulting.

Regulatory services consolidated

a new line of services in Forship.

According to Antonio Prates, “for a long time the buzz word at Forship was ‘commissioning’; now it is ‘operability’.”

Positive outlook According to Antonio Prates, this new line of services will have many clients, due to the booming oil and gas industry. “I see this segment has a growing and constant demand”, he states – growing because of the compliance needs of foreign players setting up in Brazil. “[Foreign companies] need to adapt to Brazilian regulation, to understand it, to interpret it, to comply with it in all their activities as demanded by the regulators” points out the executive.

“It is constant work because the regulations change: many are still being drafted and organized;

there are changes from time to time. We have to continually update this information.”

The new regulatory regime for the pre-salt will impact this service. Antonio Prates and Cristiane Guimarães state that at the moment there has been no demand for regulatory support regarding the pre-salt. “The market is worried, waiting to see what will be the new rules for the game. Naturally, this will have technical implications. The change in regulatory regime will have consequences and detailing. The technical regulations will be altered”, assesses Antonio Prates, stating that, at the moment, this support area pays much more attention to another regulatory aspect in great demand: local content. Therefore, big business awaits this new area at Forship.

professional profile

Rosângela Nucara

humility Success with

With more than 20 years’ experience in the petroleum market, and some stays with companies in other industries, Rosângela Nucara, Global Industries’ communications and marketing manager for Latin America is a global professional. She joined the petroleum industry on the occasion of the 17th World Petroleum Congress in Brazil in 2002. by Cassiano Viana

“I WAS BORN IN RIO DE JANEIRO, and like most Italian immigrants, in Santa Teresa. I have dual nationality, but I am very proud to be Brazilian, and that is not because Brazil is in fashion”, states this carioca, who today lives in Leblon. “I have always lived in Rio, although I have travelled a lot for work and to study.”

Rosângela is the eldest of three children: Rosanna, the youngest, is a systems analyst, and Francesco is a manager of Baker. “He didn’t enter the oil and gas industry on account of me, and he has no regrets”, states the proud sister.

Her first degree was in literature. She studied in the Universidade Federal do Rio de Janeiro (UFRJ) and the Universidade Estadual do Rio de Janeiro (Uerj). “My passion has always been languages, and I speak five of them, including Portuguese. My fascination with other cultures always led me to study languages.”

In 1998, she did her MBA in Marketing at the Getúlio Vargas Foundation (FGV). Working with communications over the years, she participated in several specialization courses. “Although I am not a journalist, I have always been fascinated with our own language. I love writing and I admire the journalism profession”, she comments.

“Communication is so broad and powerful that it can transform many situations if used properly. Unfortunately, many neither recognize nor know how to use this resource.”

Rosângela points out that not all of her career has been in the petroleum market. Her first job was in the Norwegian company, Unitor Ships Services, where she spent three years in the commercial department. “Afterwards, I went to a holding company of three enterprises: Delba Marítima, Delba Baiana and Aeróleo. I stayed there many years, working in several different areas, until I had my first 40 T&B Petroleum # 28

child, when I decided to take a break and pursue some personal projects.”

Two years later, she was back in the marketplace, with a company of the group Telecom Itália.

Three years later, she had the opportunity to work in the organization of the World Petroleum Congress (WPC) in Brazil and left her job for the two-year project.

Petroleum school “The WPC was my school”, she points out. The 17th edition of the WPC was the biggest event of its kind ever held in Brazil. Rio de Janeiro had won the bid to hold the event in 2002, coordinated by the Brazilian Oil, Gas and Biofuels Institute (IBP).

“Thus, in the beginning of 2000, a group was formed to manage the project for two years, for which I had been invited for the position of manager of communications and marketing.”

Rosângela remembers being interviewed for the position by the project manager at the time, Milton Costa Filho, today at Petrobras in Mexico. “When he interviewed me, he asked me if I was prepared to completely dedicate myself for two years”, she recalls. “At the time, my friends thought that I must have been crazy to give up a fixed job for a mere two year project that would be extremely fast-paced and demanding. But I was enamored by learning opportunities the position would bring me.”

According to Rosângela, the WPC project in Brazil included developing all the communications and marketing tools imaginable: from press releases to crisis management, media trainings, digital communications resources, publicity, and much travel and organization of events abroad.

“Wherever there was an oil and gas event in the world, there we went to publicize ours, looking for partnerships, building alliances”, she recounts. “The backup from the IBP was fundamental, because the event happened in parallel with Rio Oil & Gas”, she states. “Our team was well-prepared, which was paramount to the success of the event. We were all decommissioned upon con-

cluding the project, but we keep in contact today and I made great friends from that team.”

“After the WPC, I participated in another very interesting project from the Ministry of Science and Technology, via the Gênesis Incubator at PUC”, she recalls.

The Ministry, via incentive funds, had a partnership with PUC to give support to new companies in the oil and gas industry that were spin-offs of university projects.

The Gênesis Institute gave support by supplying consultants, the corporate entity, market study, positioning, publicity, business planning and legal advice “I worked for three years on that project, mostly giving support to Pipeway, preparing it to go to market. Today I am very happy to see that the company already has clients abroad.”

New paths Afterwards came Gaia, a company that had no communi-

cations department and whose main concern at the time was developing and implementing its Customer Relationship Management (CRM). “Actually, everything had to be developed: the website, institutional communications, etc. There I had to return to the commercial area and I decided it was time to take up new paths. That was when Global invited me”, she recalls.

Since June 2009, she has been the manager of communications and marketing for Global Industries Latin America.

Besides managing the offices here in Brazil, she also manages the area in Mexico, where Global has an operational base and two offices, one in Mexico City and the other in Carmen.

“Since the Latin American division is new in the group, and there is an integration strategy for the region, there is a lot of work ahead” she explains. “The teams are very good and the marketing vice-president is very active and filled with ideas, but there are still many challenges.

These are two different peoples, two different cultures, and the petroleum industry also has its own culture.”

According to Rosângela, it is fundamental to plan her work form the very beginning to integrate the external and internal communications while maintaining the specific characteristics of each country. “Furthermore, although we do not have offices in other Latin American countries, we have all the infrastructure and capacity to take on projects in any of these countries. That is why we monitor and research these markets, which involves a lot of work from the marketing areas”, she points out.

“This alone is much work, since T&B Petroleum # 28

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professional profile

it involves so much planning, analysis. it is not just ready.” speaking of which, the offices in Brazil are also new. Global industries has been present in the Brazilian market for only two years, although the company has been international for more than 35 years. “When i was invited to develop the communications area for the company here in Brazil, i was quite motivated, since i already knew the company and knew there would be much work ahead – generally i am not interested when things have already been set up and it is just a question of following up”, she admits. after two years at the head of her area, it is now possible to reap the benefits of some seeds that had been sewn. “The company is being recognized in the market and, much more than it advertising campaigns, it has been due to its dedication to client satisfaction”, she states.

“This is truly a value for the company. and in order to make it happen, the areas must work together, such as hr, Quality, and of course, the Communications area, with the support of the upper management of the company”, she observes. “We aim to be agents for transformation so that the operational people bring this value more and more to their day-to-day: ‘everyday i do my best.’ This is one of our values”.

Intangible assets according to this executive the real difference between

companies is not in their tangible assets. “Many may have vessels, technology, but their differential lies with its people are the companies that have the best chances of getting ahead in the market. i am quite sure that the professionals at Global are always giving the best of themselves, but we still have to work on time management, because projects can get crazy, things can happen suddenly.” her day can be a hurricane.

Besides all her other responsibilities, rosângela still has to dedicate special attention to the tasks that are inherent to her area: institutional relations, press agents, developing marketing actions items, internal communications, organizing events, etc. “i am the institutional representative of Global industries before the market institutions, such as the iBp and the national organization for the petroleum industry. Besides this, i am part of the consulting committee of rio Voluntário.” a hint for anyone entering the business? “When starting a career, you really have

to study, specialize, be good in exactly that which you do. But once that is done, i think it is more important to be humble, friendly and sincere. always be the same person, treat everyone equally, regardless of their position. What comes around, goes around, and one day you might be on top, the next day on the bottom”, she advises. “maybe that is why i have great friends in the market, of all ages and in various positions. i treat everyone with the same respect; it is a shame there is so little time to meet with everyone. life is always on the run. There were some examples of people that inspired me: great executives in the oil industry that were humble and successful. i think that is the great secret.

That said, sometimes short courses with experts can be much more valuable than many MBas and degree programs. “... what you learn form your elders, also. The oil industry is becoming more and more saturated with young professionals with master’s degrees and doctorates, but nothing compares to the experience of those who started this industry here in Brazil and in the world. i learned a lot from these people.”

Free time? “What i most like to do with my free time is be with my family, at home, or on nature trips.

Walking on the beach, climbing the rock at arpoador... i also love reading, seeing films, being with friends – although i don’t see them as much as i’d like.”

T&B Petroleum Newsletter

Every week, on your computer screen, the news from the shipbuilding and offshore industry. Subscribe at www.tbpetroleum.com.br 42 T&B Petroleum # 28

Call for papers starts April 2010.

Visit www.world-petroleum.org for more information.

T&B Petroleum # 28

43

products and services

Lupatech

Lupatech sets up company for oil field activities

The result of the union of Lupatech and Penta Oilfield Services, this petroleum services company has brought together professionals from the industry from companies such as Schlumberger, BP, Petrobras and Repsol – including Cesar Paolini (ex-vice president of Schlumberger Latin America), Carlos Portela (ex-chief operating officer of BP Colombia), and João Carlos de Luca (ex-director of Petrobras, ex-president of Repsol and current president of the Brazilian Institute of Petroleum, Natural Gas and Biofuels - IBP).

The new company plans on being an important regional player in the services segment of the Latin American oil and gas industry.

Lupatech holds an 85% stake of the new company. Penta holds the remaining 15%. The company’s business plan includes initial activities in Brazil, Colombia and Mexico. “These

44 T&B Petroleum # 28

markets were chosen for their expanding growth horizons”, explained Cesar Paolini, company CEO. “Lupatech already has a wide array of equipment and is a major player in services not related to well intervention.

Now the company will have access to new markets”, assesses De Luca.

Lupatech Oilfield Services will start operations in Colombia, where had acquired the operations of the Colombian company, Hidrocarbon Services (HS), which had net revenues of US$ 11.7m and IBITDA of US$ 2.25m in 2009.

“The creation of Lupatech Oilfield Services represents a new phase for the Latin American industry, since it now may count on a regional player in the specialized oil and gas services segment “, stated the Lupatech CEO, Nestor Perini.

According to Perini, among the competitive advantages the company

offers is a project aligned with an industry need to comply with local content, and the new company will offer services with speed, quality and competitive costs.

The new company will receive initial investment capital of US$ 16m in acquisitions. “Future investments will be made according to the market opportunities that the company identifies within its strategy”, commented the financial director of investor relations for Lupatech, Thiago Alonso de Oliveira.

With activities in three business segments – Energy Products, Flow Control and Metallurgy – Lupatech was founded in 1980 upon the creation of Microinox, a company specialized in the precision casting process (micro casting) for manufacture of cast components for valves. In the last few years, the group has grown substantially and has increased its participation in the oil and gas industry.

Last week, the company signed an agreement with Petrobras to supply special internal casing to protect against corrosion in steel tubes.

The contract, which also includes oil well services and technical assistance, is valued at R$ 150m, and is renewable for another three years.

Photo: Keystone Image Bank

Photo: Petrobras Agency

Lupatech has announced the opening of Lupatech Oilfield Services, a subsidiary to render intervention services for oil wells.

Asel-Tech

Asel-Tech has been moving ahead with its internationalization plan. After signing its first contracts for exporting its Leak Detection System for pipelines in Ecuador and Chile, the company has been preparing to fly even higher. For the past year, the company has been investing to qualify its own technology together with Saudi Aramco of Saudi Arabia.

As part of the process, a technical committee in the engineering area for Saudi pipelines visited the company headquarters in São Carlos (SP), as well as the real system facilities.

“The Asel-Tech plan for the Middle East is to create a company with headquarters in Saudi Arabia, the region’s main producer, in association with a local company in order to comply with local content and support in the “king-

dom” of Saudi Aramco”, explains Julio Alonso, founder and CEO of AselTech. According to Alonso, besides panel manufacturing and applied engineering, commissioning and post-sales technical assistance will also be done from Saudi Arabia, and expanding to other countries of the Middle East.

A testing loop of 1.4km is currently in the final phase of construction in the city of Dammam. The loop has similar characteristics to those Asel-Tech already has in Brazil, which will serve as a demonstration platform, for tests, commissioning and training operators.

Photo: Courtesy

Flying higher

Swire Oilfield Services

Pre-salt attracts investment from Swire Oilfield Services Swire Oilfield Services, the world’s largest supplier of specialist offshore cargo carrying units to the global energy industry and is a leading specialist in helicopter fuel systems and chemical handling services , has more than 45,000 units around the world, and has landed in Brazil this March with its eye on the pre-salt market. Strategically located in the main oil & gas production markets, Swire Oilfield Services plans on participating in the growing South American market, due to the discovery of the pre-salt layers.

The pre-salt will create new business opportunities in the supply chain segment, such as supplying containers, baskets and offshore tanks for transporting chemical products. This service is paramount to the perfect functioning of the supply chain in the industry. Since Brazil plans on adopting strict norms and procedures for Health, Environment, and

Safety (HES) policy, the strategy of Swire Oilfield Services is precisely to offer units certified by Norma DNV 2.7-1, globally recognized as offering total integrity in transport equipment and complete safety for their operators.

“Exploration in the pre-salt will require even more effort from the supply chain segment, including the supply of containers, baskets and offshore tanks constructed within much stricter norms, which is an advantage Swire Oilfield Services already possesses. These norms are already used in all oil producing nations, except in Latin America, which has been more flexible, and therefore, the local units have been less robust and demand more maintenance”, explains

Marcelo Nacif, Business Development of Swire Brazil.

The group plans on manufacturing equipment in Brazil in compliance with national rules regarding local content. The goal is to produce 6,000 offshore container units by 2015. Swire Oilfield Services is mostly present in Northern Europe, where it operates eight established bases, four of which are in the UK and Norway, and has partners in Denmark and the Netherlands.

The company also has operations in Australia, Nigeria, Angola, Russia, the USA, and Trinidad and Tobago.

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45

produtos e serviços

Açotubo

Over the crisis Açotubo betting on increased demand for steel bars and tubes ally do their preventative maintenance in the months of December and January. Due to the global financial crisis last year, many of these investments were postponed and maintenance fell, with the exception of extreme cases that could not be avoided. “For 2009, we estimate that the volume of products sold will be much higher, pushed by booming sugar exports from Brazil to cover the demand of the international market on the occasion of the failed sugar harvest in India”.

Of the new order for the sugar and ethanol industry, it is estimated that 70% are from mills that are already in operation, while new mills are responsible for the other 30%. In order to meet the demand, the companies of the Group: Açotubo, Incotep and Artex, have high stocks of specific products.

Founded in 1974, Açotubo has just completed 36 years of service of the best technical and operational structure in the industry. A traditional player in this market, the company holds a high Photo: Courtesy

After having survived the worst part of the financial crisis, Açotubo, one of the domestic market’s largest distributors of steel bars and tubes, is betting on the growing demand for its products and services in 2010, especially from the sugar and ethanol market, considering maintenance activities in sugar and ethanol mills.

Due to global concern regarding environmental questions, there is growing demand worldwide for biofuel alternatives that are less aggressive on the environment. Thus, Brazilian ethanol mills are today a socio-economic development factor that is at the center of a change in the world’s energy paradigm. With annual production at almost 25bn liters of ethanol, the National Fuel and Lubricant Distributors Union (Sindicom) estimates ethanol’s return to lead fuels at Brazilian service stations, due to higher oil prices on the world market.

A significant increase in demand for carbon steel bars, slabs and tubes will accompany the recuperation of the ethanol market. According to Açotubo, the sugar and ethanol mills will make the larger investments in the maintenance of their facilities and machine construction this year, now that the worst of the financial crisis is over.

The marketing manager of Group Açotubo, José Carlos Palopoli, explains that the sugar and ethanol mills gener-

level of administrative and strategic principles that have made it a business and leadership case study with its streamlined and high level services that are its differential. Its commitment to the quality of its products is certified

by Det Norske Veritas (DNV), with the Inmetro seal in ISO9001, as well as its commitment to social responsibility which is also certified by DNV with the SA8000 - making it the first company in the steel products industry to have obtained such certifications.

Aker Solutions

Risers for the Gold Star rig Aker Solutions delivers a new set of risers, made-in-Brazil, to the Rio das Ostras plant, founded in June 2008 The rig, Gold Star, contracted by the Queiroz Galvão company, received 95 sets of 75ft risers, 5 pup joints and a connector fill-up valve from Aker Solution, all of which are approved by DNV. Besides these connectors which are the Brazilian scope of the project, tools for moving and

46 T&B Petroleum # 28

manipulating had also been delivered, which are part of the Norwegian scope of the project.

“In August of last year we delivered the Olinda Star project, the first with Aker Solutions technology to be manufactured in Brazil and entirely approved by a certi-

fier. Now, after delivering this project, we are working to finish the production of two more orders - the Lone and Alpha Star rigs - that are already under construction in our factory”, states Jonas Marquesini, vice-president of Drilling Risers of Aker Solutions Brasil.

The risers for the Gold Star rigs are more than 2,000 meters deep and should start operations in this first quarter.

MAN Diesel

MAN Diesel to equip thermoelectric plants of the Bertin Group An important international conglomerate on the international scene, Grupo Bertin ordered electromechanical equipment for six thermoelectric plants from MAN Diesel, including 120 large motors and generators brought from Augsburg, Germany, which together will form the core of the installations. The value of the MAN Diesel order is the largest ever from a South American client at €300m (R$ 770m).

MAN Diesel will supply the GenSets, sets of large diesel motors, 18V32/40, together with the respective generators and components for power mills. The six thermoelectric mills will generate a total of 1,000 MW of energy from a location near the city of Salvador (BA), which will come online by 2011. The Bertin group is already MAN Diesel’s the largest South American client and its biggest truck fleet in Latin America, with 1,500 vehicles manu-

factured by the commercial vehicles division.

Georg Pachta-Reyhofen, CEO of the MAN Group, considers the companies strategy regarding power mills: “Power plant business development, as well as the shipbuilding industry, are strategic business fields for MAN Diesel”, he pointed out. “Latin America is not only important as a market for MAN Diesel, but as a strategic project from which the entire MAN can grow”.

Klaus Stahlmann, CEO of MAN Diesel SE, commented on the success of sales. “An order of this size is much more than welcome, and, especially in the context of the global economic crisis, it is extremely important to keep up our capabilities and thus the utilization of our Augsburg factory”, he says.

“We are now reaping the benefits of the investments we made in modernizing our integrated production.”

This concession contract opens up the possibilities for MAN Diesel to fulfill other orders, such as the construction of other power plants for the Bertin Group, due to the shear dimension and importance of this project. The possibility of supplying them with Man Turbo steam turbines is already being studied, since they can be powered by the heat coming from other motors, optimizing installations. Here, the newly-founded company, MAN Diesel & Turbo may apply its integrated technology in plants run on diesel Diesel Combined Cycle turbines.

Supplier of large diesel Motors for marine vessels and power plants, MAN Diesel has developed two- and fourtime Motors, auxiliary Motors, regulating helixes and complete propulsion systems, produced by the MAN Diesel Group and its dealers, which generate between 47 to 97,300 kW of power.

Emerson

Petrobras is acquiring two city-gates from Daniel/Emerson for the Gasbel II natural gas pipeline. The city-gates will be installed for the cities of São Brás do Suaçuí and Betim (both in the state of Minas Gerais). The move consolidates Daniel’s position as one of the main suppliers of this kind of equipment for Petrobras.

The contract as signed with Petrobras encompasses the supply of project materials and services, construction, assembly, tests, conditioning, inspections, training, pre-operation and op-

Photo: Courtesy

Daniel supplies city-gates for Gasbel

erational assistance for the city-gates, which will manufactured in modules.

Assembly will include all the civil and mechanical construction, tubes

Rosemount Radar is now Wireless Rosemount Tank Radar has just released its new wireless option for the Rex and Pro lines of radars. The meter radars, whether new or in-use, can be configured with an antenna to communicate data within a wireless network – thus making it possible to monitor tanks in remote or difficult access locations, increasing the safety at a lower cost.

The network uses the same Emerson wireless technology already approved for other locations in both Brazil and abroad. The mesh net-

connecting the filtering module to the branch valve, besides all the electric, automation and instrumental work necessary to integrate the system.

The Gasbel II gas pipeline will duplicate the flow of Gasbel I and meet the demand of Gasmig, and especially the Steel Valley and greater Belo Horizonte metropolitan region. The 270km pipeline will connect the city of Volta Redonda (RJ) to Queluzito (MG). The 18” nominal diameter pipeline will have a transport capacity of 5m m³/day with pressure of 100.0 kgf/cm².

work reaches great distances safely, regardless of the environmental conditions or other interference.

The instruments can read data such as level, fluctuation rate, temperature, pressure, as well as several alarms, via the wireless network. This information can be incorporated into a management system for configurations and diagnostic tests.

The wireless network is yet another option available from the line of radar meters of Rosemount TankRadar. Rosemount is a company of the Emerson Group, represented in Brazil by Fluxo Soluções Integradas.

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produtos e serviços

Despite the global financial crisis, Wärtsilä, supplier of energy solutions for the shipbuilding and power generator industries, closed 2009 with some impressive figures. The Finnish company’s net sales reached €5.260m, a growth of 14% compared to the previous year, while operational profit hit an alltime high of € 638m, 12.1% of sales.

“Wärtsilä was quite successful in 2009 in many ways. Net revenues of the Group grew 14%, together with operational profit on the rise”, states Ole Johansson, president and CEO of the multinational.

“The demand from power plants continues at a healthy level, as well as our Services division. The global outlook sees the need for flexible and environmentally-friendly energy, as well better energy efficiency and safety, which is an inspiration to the work of Wärtsilä”, he observes.

The recovery of the financial market has pushed orders in the last quarter.

The situation for the services market remained steady. In some market segments, fuel conversion, modernization

The operational profit of Wärtsilä is at its all-time high

and other larger investments have been postponed, while clients have focused on essential maintenance and repairs.

The demand for electric power services remained stable.

In Brazil, the business of Wärtsilä is at full steam. In 2009, three new plants were constructed, and the operations and maintenance contracts for Viana (ES) and Geramar I and II, located in Miranda do Norte (MA) also went to the company. These two power plants will together generate a total of 320 MW of electric power for the national grid, whereas Viana will contribute with 174 MW, enough energy to supply 400,000 residences. Wärtsilä will supply all the needs of the Geramar I and II plants under the 5-year Operations & Maintenance agreement (O&M).

As a result of the stable environment of the Services segment, the company

Photos: Courtesy Wärtsilä

On track

Wärtsilä

foresees a great demand for power plants and capacity adaptation in 2010, and an operational profit between 9% and 10%, well within the company’s long-term goal.

Company operates three new power plants in Brazil Upon operations of the Viana, Geramar I and Geramar II power plants in January, the multinational will surpass the 1.0 GW mark for installed capacity within its Brazilian operations.

Besides constructing three new plants, the operations and maintenance of the , Viana plant, located in Viana (ES), and the plants of Geramar I and II, located in Miranda do Norte (MA) also went to Wärtsilä, a global leader in supplying energy solutions for the shipbuilding and power generator industries.

The 1.0 GW Mark for installed capacity is a major step, considering the Finnish company will be celebrating 20

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years of providing made-to-order solutions for the thermoelectric and ESCA (engineering, supply, construction and assembly) segments.

The Geramar I and II plants will together produce a total of 320 MW of electric power for the national grid, whereas Viana will contribute with 174 MW, enough energy to supply 400,000 residences. Wärtsilä will supply all the needs of the Geramar I and II plants

under the 5-year Operations & Maintenance agreement (O&M).

The Wärtsilä’s O&M contracts are adapted to the needs of its clients, aggregating the value of its solutions. The program is to cover all the management and operational needs of the plants, including the O&M planning, day-to-day operations, maintenance, administration, human resources, technical support, and logistic and safety management. This global program allows the plant owner to focus on the core business, while Wärtsilä guarantees the complete cycle of the power plant for as long as it is operating.

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market

The offshore market Rig market fundamentals

The “great recession” hit the Mobile Offshore Drilling Unit (MODU) hard in 2009. Our records show that new rig commitments were cut in half in 2009 to just below 400 rig years.

A

Eric Stole Karlsen is Managing Director or RS Platou Brasil Ltda and a graduate from Erasmus University in Rotterdam, the Netherlands. Karlsen has previous experience from marine operations from the Norwegian Navy.

Sven Ziegler is head of RS Platou Offshore Research and has 14 years experience at RS Platou as analyst in the shipping and offshore sectors. He holds a Msc. from Cass Business School in London, UK.

50 T&B Petroleum # 28

further breakdown of activity shows that the floater sector was the hardest hit and new rig commitments were reduced by as much as 80 percent in 2009. It may seem counter-intuitive that the more rapidly growing deepwater sector was the hardest hit. However, the extensive backlog “forced” upon operators over the last cycle may have given them more breathing room in 2009 than otherwise. Also, it should be noted that 50 percent of all fixtures in 2009 in the floater segment were made by one company: Petrobras.

The absence of new rig commitments led to repercussions through all the MODU sectors. The jackup segment saw utilisation levels not seen since 1998 and day rates fell on average in 2009 compared to 2008 by close to 40 percent. By the end of 2009, nearly 140 jackups were inoperative and cold stacking was still increasing rapidly. We observed the development of a two-tier market between newer 375ft units and older 70-80s-built 300ft units, where newer units achieved both better day rates and easier access to new work. Whether this earnings gap is permanent or not is uncertain as a cyclical component is also driving this trend. In view of the increasing costs to upgrade and class the older jackups, it will be interesting to see how many of the older units will return to the marketed fleet.

The floater market also suffered, but to a lesser extent, as a result of the extensive backlog built up over the previous cycle. The average backlog per deepwater rig is still above three years, while the average backlog for midwater units is two years. The backlogs mirror the partially divergent paths of the deepwater and midwater sectors. Fleet utilisation rates for the deepwater sector remained at 100 percent throughout 2009, while midwater utilisation rates dropped towards the end of the year and ended at 91 percent. Day rates for the deepwater segment fell on average 15 percent, while the midwater day rates fell 30 percent, on average, in 2009 compared to 2008.

Future prospects for the industry are linked to the increasing difficulty in raising oil production levels. At the same time, the world economy is accelerating and is likely to increase its demand for energy. One recurring observation is that new offshore oil production onstream is substantially lower than what was predicted; implying the likelihood of relatively higher

oil prices could be underestimated. It follows that we expect higher fixture activity as we move through 2010 and 2011. Utilisations are expected to bottom out and day rates, especially for floaters, could reclaim some lost ground towards the end of 2010.

In line with exploration and production spending cuts and a weaker drilling rig market, the offshore support vessel (OSV) market has been in decline since about January 2009 when we first noted a decrease in term charter rates for all segments of tonnage worldwide. This was the first major decrease in rates registered since the OSV market started rallying in autumn 2004. The decrease in term charter rates for supply tonnage from peak levels at the end of 2008 has been approximately 40-50 percent, so far, as owners fight to secure work for their vessels. While newbuilding and sale and purchase activity was markedly still in 2009, the newbuilding delivery pace reached record high levels in 2009 as the tidal wave of newbuildings began to hit the market. According to our records, the anchor handling tug supply (AHTS) fleet is scheduled to expand from 1,400 ships to close to 1,800 ships by the end of 2012. Similarly, the platform supply vessel (PSV) fleet will increase from about 1,000 ships to about 1,200 ships in the same timeframe. Finally, the high end construction fleet is projected to grow from about 240 ships to 340 ships. To sum up: about 700 newbuilding deliveries in the next three years.

After a rally that began in autumn 2004, the term chartering market started to decline in January 2009.

Term charter rates have declined on average 40-50 percent for contracts with about a one-year firm period.

At the same time, spot rates in the North Sea were on average 65 percent lower than the previous year. The main factors for the decrease in rates are fewer requirements issued by oil companies, drilling rig operators that have been cancelling and delaying offshore development programs combined with a rapidly increasing fleet.

Overall, ship owners have been vigorously competing to keep their vessels on charter in the short term and this has contributed to pushing rates down.

On the worldwide market, we estimate that demand for AHTS and PSV decreased about 3 percent in 2009 in the wake of the financial crisis. Despite last year’s dip, demand for supply vessels in 2010 is expected to increase. Drilling support will be the main driver for supply tonnage demand in 2010. Assuming the jack up utilization picks up in 2010, we can expect demand in the supply market to increase up to 15 percent over the course of 2010. On the other hand, the supply

Photo: Keystone Image Bank

The offshore support vessel market

fleet expanded 14 percent in 2009 and is expected to grow an additional 18 percent in 2010. Considering the expanding supply figures in the context of lagging demand, rates in 2010 are expected to remain relatively depressed and possibly even deteriorate more with a possible start to recovery in 2011. Despite the current challenging market conditions for owners, the long term demand for OSV seems intact. According to the latest reference scenario of IEA, oil demand is expected to grow from about 85 million barrels in 2009 to over 100 million barrels per day by 2030. The portion of offshore oil production is also steadily increasing relative to onshore oil production and it is projected to grow to about one third of total production by 2020. These trends together represent a long term requirement for all types of offshore support vessels (OSV) but particularly in rapidly expanding areas such as Brazil.

Rs platou: adding value in brazil RS Platou is an investment-, ship and offshore brokering company established in 1936 in Oslo, Norway.

Our company has steadily increased the capacity and worldwide coverage, now most recently with regional office in Rio de Janeiro, Brazil. Having supported Brazilian shipping industry since the 1970s, primarily on dry cargo and forestry products, Platou have now established an office to serve the emerging offshore industry of South America and Brazil in particular.

Our company knowledge and experience in the offshore, as well as worldwide network of investors and shipyards, will be merged with local knowledge to further support an industry in rapid growth. As Brazil is taking on the forefront of deepwater drilling and production, we look forward to supporting oil companies, service companies, vessel owners and yards in the challenges – and opportunities – ahead.

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telecommunications

Offshore

telecommunications Technolocigal advances accompany the move into deeper waters and the pre-salt

T

Colin Foster, has 39 years of experience in the Offshore Oilfield area. Graduated in Mechanical Engineering from Imperial College, University of London, he spent several years working offshore in the North Sea, West and North Africa and Brazil. Worked for British Petroleum, Schlumberger and Petrobras. For the last 25 years has been running the C.Foster Group of companies.

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he technological advances in drilling of offshore production wells, progressively deeper and further from shore, have been pioneered

by Petrobras – as demonstrated by the Pre-Salt. This scenario has created a major challenge for the companies specialized in this field, where reliable telecommunications with ever more advanced characteristics have become paramount. The distances involved generally mean that communication by radio is impracticable and satellite transmission has generally become the main way to link the platform to shore, or even to other platforms or supply vessels.

The days have long passed when satellite communication was a luxury.

Today it is an undeniable necessity for platforms, FPSOs and all types of service and support vessels. In this scenario, many new demands have arisen. Some examples include the use of management programs such as CRM, Lotus Notes, ERP and also specific programs for on-board processes and equipment. There is a growing need to communicate remotely with sophisticated equipment on the platforms, for remote trouble-shooting or to install software or firmware upgrades. Today’s wireline and log-while-you-drill applications need to transmit data in real time to onshore data rooms. Remote monitoring and telemetry control are applications that are used frequently, as well as fleet and equipment tracking. Even individual containers can be fitted with satellite tracking modems.

Signals transmitted by satellites tend to be at a low level, as they are designed to cover a large geographical area with the same beam. Applications that need large amounts of bandwidth, such as broadband data transfer, almost always require stabilized tracking antennas. The use of smaller, omni-directional antennas tends to be restricted to low data-rate applications such as satellite phones and fleet tracking. One limiting factor in all satellite applications is the need to have an unobstructed line-of-sight view of the satellite at all times.

Satellite transmissions have a relatively high cost, which is directly proportional to the bandwidth used. For this reason, the users normally artificially limit the use of bandwidth onboard, creating an unsatisfied demand. In other words, if satellite bandwidth became freely available at a significantly lower price, the users would move towards using more sophisticated programs onboard platforms.

The table below shows some of the technological advances that have occurred over the relatively short period since commercial satellite transmissions went mainstream. These advances generally increased the amount of data that could be transmitted for the same cost.

Geo-stationary satellites Communications satellites that we could label as conventional are orbiting earth in a ring called the Clark Belt and which is at an average height of 35,786km above the Earth’s surface and exactly above the line of the Equator.

An international organization called the ITU (International Telecommunications Union) is responsible for

the distribution of the satellites in the Clark Belt. Initially, the distribution was made with a spacing of 5 degrees, meaning a total of 72 orbital positions were made available. This spacing was chosen, based on the interference caused on adjacent satellites by equipment transmitting spurious emissions out of the main beam.

The distribution of orbital positions by country is a high-level diplomatic matter. Generally, countries are

Technological advances that improved satellite use efficiencies Reed Solomon/Viterbi – encoding developed for vídeo transmissions from space-craft in the ‘60’s and later adapted for satellite modems DAMA – Demand-Assigned Multiple Access is not a new Idea, but its application in large scale to satellite transmissions was a significant mark in the improvement in the efficient use of space segment. A pool, or cloud, of satellite bandwidth is made available to a group of users, Who can apply for use of all or part of it in a sequential mode.

TURBO CODEC – probabilistic processing applied in satellite modems dramatically increased the troughput TDMA – Time Division Multiple Access and other types of multiple Access, such as CDMA, FDMA, SDMA and WDMA came to market at different time points. All of them allow significant increases in satellite useage, basically dividing the transmissions into tiny time intervals (time slots, in the case of TDMA) measured in milli-seconds and interlacing the data packets from different applications or users in the same space segment MPEG-2, MPEG-4 – the compacting of data or vídeo streams using these norms allows a major increase in data transmission capacity.

QPSK, 8PSK, 16APSK, 32APSK – greater sophistication in satellite modems hás allowed the use of more efficient modulation methods. The increase in throughput as one moves towards the 16APSK and 32APSK modulations is great, but when used on their own, the stability of the satellite links reduces and negates part of the advantages they bring to the table. Other technologies help maintain stable transmissions at high modulations. One method is to automatically reduce the modulation and/or FEC on a terminal that is suffering from atmospheric interference. In this case, the link remains stable, but the data throughput drops until the interference lessens.

TCP/IP Acceleration – a specific problem of transmitting IP data via satellite is that the return signal has to travel over 64.000km and takes nearly a second to do so. The encoder takes this to mean that the data packets are being lost and retransmits them. This can happen several times before the “OK” signal comes back. This results in extremely slow data transmissions.

Practically all IP data sent over a satellite these days uses IP acceleration to overcome this problem.

Carrier-in-Carrier – researchers discovered that, under the right conditions, it is possible to concatenate the transmission and reception signals of a satellite link in the same bandwidth. It would seem that this would double the amount of data sent, but that is not the case, as a significant overhead is created, due to the need to send instructions back and forth between the controllers. Logically, the same applies to the majority of the processes listed here DVB-S2 – this new norm for vídeo and data transmission includes a number of different technoloogies under the same norm.

This makes it extremely efficient and the use of DVB-S2 can halve the bandwidth required for broadcasting a TV channel ACM Flex-ACM Adaptive – Adaptive Code Modulation is one of the Technologies used in the DVB-S2 norm. It works well in networks with 100 or more VSAT’s and allows individual stations to automatically reduce the modulation when there is atmospheric interference. This means that the whole network does not sufer because o fone part. Flex-ACM and adaptive ACM use a pool of bandwidth that individual earth stations can draw on, and spread the loss evenly over the network. These methods allow the link budget to be run with a much lower safety factor Group QOS – is a new concept, where the service supplier sells to the customer a packet which is made up of multiple small pieces. Each piece corresponds to exactly what a specific program or application requires. A customer could ask for a service that would allow him 10 positions with Lotus Notes, 5 with CRP, 3 with ERP, as well as 20 voice lines anda n occasional-use vídeo-conference channel and internet for 20 users. The service supplier does not sell a package o X kbps, but a package where He guarantees that all of the customers’ applicaitons will works whenever He requires them. This increases the efficiency of the use of the TDMA hub and allows the customer to pay a lower price, as he will not be charged for times that applications do not operate. And above all, the service reliability for the end-user will be greater.

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Photo: T&B Petroleum Image Bank

telecommunications

•Africa is developing rapidly, culturally and technologically. The lack of terrestrial infrastructure means that the need for satellite is growing rapidly Lack of Available Frequencies •Satellites use radio waves and consequently end up in a dispute with all the other forms of radio transmission. The quantity of data a satellite can transmit is directly proportional to the available frequency spectrum. Today, in several areas, there are not any new frequencies available to increase available capacity.

Presently 4 main frequency bands are used for satellite transmissions and a further 2 are starting to be used. The table shows the bands and their frequency ranges.

Mobile satellite systems

allotted positions that are close to their geographical position.

In the 90s, worldwide demand obliged the ITU to perform a new study, based on which the orbital spacing was reduced to 2 degrees, increasing the number of available positions to 180.

This change required much stricter control of spurious emissions, and RF equipment manufacturers had to improve their manufacturing methods to meet these new requirements. Antennas needed to be a more perfect parabaloid shape and they need to be more rigid, so that gusts of wind do not deform them.

The situation today is that there are some orbital positions available, but at the same time there is a lack of space segment availability in some areas. The table explains the reasons: Why is there a lack of satellite bandwidth?

Demand in specific areas •The Iraq was is consuming bandwidth at a rate never seen before 54 T&B Petroleum # 28

For mobile applications at sea and on land, there a series of specifically designed satellite systems, allowing small antennas and equipment. However, this area is being challenged more and more by the “traditional” satellite services, because of the advances in robotic stabilized tracking antennas. Today these antennas allow reliable broadband services to operate in moving vehicles, ships, trains and planes.

The systems that were specifically developed for mobility applications include: Inmarsat – was founded in 1979, in the early days of the use of satellites for commercial communications – as a non-profit organization representing the interests of the majority of the major countries – to provide a reliable method of communicating to and from vessels on the high seas, anywhere on the World’s oceans.

The initial Inmarsat services were only telephone services, but when fax became popular, they introduced facsimile transmission. The rate, however, was only 2.4kbps, while the regular fax speed was 9.6kbps. The organization grew, moved through several generations of more capable satellites, and today offers a wide range of services from a hand-held sat-phone to a full-up mobile communications centre the size of a laptop computer. These systems can handle multiple simultaneous voice calls, broadband internet and real-time video streaming. These units are in constant use by the reporters covering the Iraq war. Inmarsat coverage is practically worldwide, with the notable exception of the polar regions.

Iridium, Globalstar and Thuraya – These 3 systems operate constellations of LEO (Low Earth Orbit) satellites. These satellites do not stay stationary in relation to the Earth’s surface and cross the skies at high velocity, in different directions at a typical height of 700km. Each system has to operate a large number of

Radio frequency bands L band – 1 to 2 GHz Inmarsat, GPS, Iridium, GSM Virtually immune to rain fade. L-band transmissions tend to be very stable, but there is only a small amount of spectrum in the band, so this band tends to concentrate S at-phone and other low-bandwidth applications

Photo: Stéferson Faria, Petrobras Agency

offshore telecommunications

S band – 2 to 4 GHz Used for Radars C band 4 to 8 GHz Most traditional satellite frequencies Large antennas. Rain fade is minimal. Good geographical coverage X band – 8 to 12 GHz Mainly for Military Use Ku band – 12 to 18 GHz Very popular satellite band.

Used by the majority of VSAT hubs.

Smaller antennas. More powerful beams, but with smaller geographical coverage. Rain fade is significant K band – 18 to 26.5 GHz Ka band – 26.5 to 40 GHz The future of satellite communications Very small antennas and beams. Very high power in beam. Large amount of bandwidth available (13.5Ghz).

Civil and military use. Rain fade a major issue but beam power can be increased to minimize this as a problem.

Q band – 30 to 50 GHz State of the art for satellite communications Everything said about Ka band applies with more force. 20Ghz of bandwidth is an incentive to overcome the limitations of this frequency band U band – 40 to 60 GHz V band – 50 to 75 GHz E band – 60 to 90 GHz W band – 75 to 110 GHz F band – 90 to 140 GHz D band – 110 to 170 GHz satellites in order to have 24 x 7 global coverage. And they do cover 100% of the Earth’s surface, including the polar regions.

The need to hand-off the signal from one satellite to another, without losing the signal, has proved to be the major limiting factor for these systems. The problem is only partially resolved, and all of these systems operate at low data rates due to this problem.

The main uses are portable sat-phones and low datarate transmissions.

The advantage is that the telephones are portable – the size of old cellular phones – and the call costs sometimes beat cell phones on a roaming plan.

A new system to revolutionize the market An Australian company called O3b has developed a new satellite system which promises to revolutionize the satellite telecommunications market by offering gigabit bandwidths and low prices. The system uses MEO satellites (Medium Earth Orbit) at a typical altitude of 8,063km. They analysed the main problem of LEO and MEO satellites – namely the hand-off from one satellite to the other – and came up with an extraordinary solution. It is easy to picture this, imaging Olympic relay athletes handing over the baton. They all run in the same direction and the runner who is waiting for the baton accelerates to the same speed as the retiring athlete, allowing a very efficient hand-off. Imagine the chaos that would ensue if the athletes all ran in different directions, but had to cross each other ’s paths at a specific point in time and space to hand-off the baton. O3b applied this analogy to MEO satellites and created a system where all the satellites would orbit the Equator, but at a much lower orbit than the geostationary satellites.

Using this idea, they managed to create a very efficient form of hand-off which allows gigabit data rates. The method uses two tracking antennas – which only have to track in one circular path – in each earth station. One antenna follows T&B Petroleum # 28

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telecommunications

efficient use of the very expensive offshore drilling and production resources.

Antennas for use offshore

the active satellite and the other picks up the “incoming” one, leaving a significant time period for the hand-off.

Having all the satellites circling the Equator has a further advantage, where the number of satellites required is much less than for the other systems. O3b will initially use 8 satellites and later move on to 16, compared to 64 for some other systems. But there are “no free lunches” and there is a downside – the service is limited to the geographical area which can be seen from a ring, 8,063km above the equator. The upside is that the major part of the Earth’s population is situated in this coverage area.

The service promises to bring cheap broadband to the masses, competing with the cost of fibre, and going where fibre never will.

LEO and MEO satellites have an advantage in relation to geostationary satellite – the transit time.

The “ping” time of a high-quality geostationary satellite service will run around 800ms, while O3b should achieve 125ms. This comes close to the time achieved in commercial fibre optic services.

Logically fibre transmits at the speed of light. The reason that the transit times get close to that offered

by O3b is that the routers and other equipment slow down the signals.

For the Offshore industry, the arrival of the O3b service could change the IT paradigm. The repressed demand will be set free and bandwidththirsty applications will abound, allowing for more 56 T&B Petroleum # 28

In 1978, Comsat was contracted by the US Navy to create a worldwide satellite communicatons systems focussed on the oceans. The Marisat service was formed and this later morphed into the Inmarsat organization. One of the Comsat engineers saw the need for stabilized antennas and started a company to manufacture these in California.

The company he founded in 1978 is now called Cobham SeaTel and is the largest worldwide manufacturer of stabilized antennas.

The early antennas – from 1979 to 1993 – used giros for stabilization. This method basically used 2 or 4 heavy discs spinning at around 3000 rpm.

The motors to which the discs were attached were supported in gimbals and the movement of the antenna base away from level (in relation to the Earth’s magnetic field) caused them to swivel and apply a force to bring the antenna back to the base point.

The next generation of antennas – still in use today – uses a real-time active stabilization system using positive feedback. This system measures the outputs of accelerometers in different planes and drives the motors with an equal and opposite acceleration force. Additional sensors measure the level plane in relation to Earth’s gravitational field and measure the azimuth pointing direction. Modern antennas can point to better than 0.1 degrees and maintain that in adverse sea states and with highspeed vessels.

Even so, a beam spread even that small signifies a large area 35,000 km away and a further method must be used to maintain the antenna accurately pointed.

This method is based on measuring the received signal, then moving the antenna or feed slightly and comparing the signal – always ending up pointing at the strongest signal.

There are several manufacturers of stabilized tracking antennas today, in addition to Cobham SeaTel. These include Schlumberger, who purchased the DMS factory in Scotland, Orbit from Israel and a newcomer, KNS from Korea.

pre-salt

Pre-salt

“strategic areas” A new regulatory framework for the E&P industry in Brazil.

O

n September 1st, 2009, the Brazilian Government submitted to the National Congress its proposals for creating a new regulatory framework for exploration and production of oil and natural gas in the deepwater areas known as pre-salt and in other areas considered by the former as being “strategic areas”. Altogether the proposal consists of four legislative bills, whose objective is to permit the Government to; 1) increase its control over the exploration activity and 2) obtain higher revenues from the production of oil and gas in the pre-salt region.

The proposals submitted by the Administration are divided into four projects, as follows: a) a legislative bill formulating a new contractual arrangement for exploration and production of oil and natural gas in the pre-salt and strategic regions, i.e. a production apportionment arrangement (“E&P Project”); b) a legislative bill creating a new state company (“Petro-sal Project”); c) a legislative bill implementing a fund for economic and social development in Brazil (“Social Fund Project”); and d) a legislative bill for the capitalization of Petrobras, the national oil company (“Capitalization of Petrobras Project”).

It is worthy of mention that the interest of the Administration in establishing new rules for the pre-salt had already been manifest during the Ninth Round of Public Tenders of the National Oil, Natural Gas and Biochemicals Agency (ANP). At this time, by means of Resolution number 6 of the National Council for Energy Policy (CNPE), the Administration instructed the Agency to exclude from the round, 41 blocks situated in the Santos, Campos and Espírito Santo basins.

This Resolution of CNPE was justified by the results of preliminary tests

by Petrobras, which suggested the existence of a new and significant oil province in Brazilian territory (denominated as pre-salt), at a depth ranging between five and seven thousand meters, and with huge potentially recoverable volumes of oil and gas.

On the date of its publication, this Resolution already instructed the Mines and Energy Ministry to analyze, within the shortest possible timeframe, the alterations necessary to the regulatory framework in order to take into account the new paradigm of exploration and production of oil and natural gas, introduced by the discovery of the new oil province.

The E&P Project is more comprehensive and proposes general rules for exploration and production of oil and natural gas in the pre-salt and other areas considered as strategic by the Administration, in addition to bringing some changes to Law 9.478/97 (Oil Law). If the E&P Project is approved by Congress, Brazil shall then have two laws relating to the activities of exploration and production in the country, with the Oil Law applicable to onshore areas and to offshore areas not situated in the pré-sal and which, at the same time, are not considered strategic for the Government.

Alexandre R. Chequer is a Mayer Brown LLP partner affiliated with Tauil & Chequer Advogados in Brazil.

Bruno Triani Belchior is an associate of ‘Tauil & Chequer in association with Mayer Brown’. Bruno advises domestic and foreign oil and gas companies in Brazil and West Africa, as well as companies involved in M&A and development projects.

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For these areas (pre-salt and strategic areas), the E&P Project establishes the creation of a production apportionment contractual arrangement,1 where Petrobras shall be the mandatory operator in all of the blocks, with a minimum participation of 30% in any consortium formed as a result of the public tender.

Worthy of mention is that, according to the E&P Project, the Union, through the Mines and Energy Ministry, will be able to enter into production apportionment contracts: 1) directly with Petrobras, in which case a tender is dispensed with; or 2) through public tenders with the auction format. In the case of a tender, Petrobras may participate, seeking to increase its participation in the proffered block beyond the minimum of 30%. As a result, all of the winners of tenders will be obligated to set up a consortium with Petrobras and with Petro-sal (public company linked to the Mines and Energy Ministry, and whose establishment is outlined in the pre-salt Project).

Without failing to acknowledge the arguments concerning the unconstitutionality of directly contracting Petrobras and of the minimum mandatory participation of 30% reserved for the company in all consortiums, the proposal underscores the control and interference role to be played by Petro-sal over the consortiums made up of Petrobras alone or with other oil companies. According to the E&P Project, Petro-sal will appoint one half of the members of the operational committee of each consortium, including its president, who shall have veto power and casting vote.

Notwithstanding that Petro-sal will have no responsibility relative to the operation, costs or risk involved with the exploration, development and production activities, nor with marketing oil and gas, the fact that the new state company will exercise control over operational committees has been subject to criticism, and concurrently, causes concern about the regulatory stability of exploration and production in Brazil.

It is perfectly understandable that the state company should be attributed competence relative to monitoring and auditing (overseeing) the costs and investments necessary for the activities of exploration, survey, development and production of oil and gas or even to the extent of evaluating the technical and economic soundness of their plans. However, the intended day-to-day control of operations does not satisfy the industry.

Once again, looking beyond the aspects of unconstitutionality, it is clear that the mandatory participation of Petrobras as an operator in all of the consortiums also causes a great degree of apprehension for foreign companies that operate in Brazil, mainly due to the technological factor involved in oil operations, which would become totally concentrated in Petrobras.

Illustration: Agency Petrobras

pre-salt

Furthermore, this model of compulsory participation in consortiums with a minimum of 30% may become prejudicial to Petrobras itself, who may not have very much control over what is being offered by other companies that participate in the auctions, and may conceivably have to shoulder huge operational costs in exchange for meager profits with oil and gas.

For this reason, the Government must be attentive with respect to the rules that will be formulated for the auctions, particularly with respect to the portions of cost oil and profit oil that will be allotted to the Union. What is being perceived in the international scenario is that the model of mandatory participation of Petrobras as an operator tends to disinterest the super majors and consequently attract the Asian oil companies, the state owned companies in particular (known as national oil companies or NOC’s). Such companies adopt different standards of economic viability, and in their points of view, the important factor is not the portions of cost oil and profit oil, but the guarantee of the availability of energy resources for their own internal needs, both present and future.

Another issue that is provoking widespread controversy in the oil industry is an amendment made to the E&P Project that alters the rules for distribution of royalties under this new Production Apportionment. The subject had not even been touched upon in the Congressional Bills, and its approval in the House of Representatives has had significant repercussions in the national political scenario. However, the future of this amendment is uncertain, as it is subject to approval by the Senate and to presidential sanction.

The current expectation of the Government is that the regulatory framework of the pre-salt will be approved during the first semester of 2010, which would allow for new public tenders to take place this year. Meanwhile, the international industry anxiously awaits the outcome of the definition of the rules for the pre-salt and hopes that they will be clear and just and, above all, that they will have judicial stability.

1 The E&P Project defines share of production as “the regime of exploration and production of oil, natural gas, and other fluid hydrocarbons where the contractor exerts, on its own and at its own risk, the exploration, evaluation, development, and production activities, and acquires, in the case of a commercial discovery, the right to retain the oil cost as well as part of the surplus oil in the proportion, under the conditions and within the period established by the contract.

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tax legislation

In the troubled waters of service tax Delinquent payers or delinquent collectors?

This is the great deadlock in the payment of Service Tax on offshore services.

“H

e who pays badly, pays twice”, this old proverb was never as fitting as it is for today’s Brazilian tax scenario. Our tax legislation, complex and often out-of-date, does not always can keep up with the economic relationships in a world of a dynamic and global market.

The oil industry is no exception: this economic segment has so many specificities that taxable events generate more doubt than certainty. As if things were not complicated enough, our tax authorities many times exaggerate the legal premise “in dubio pro Fisco” (in case of doubt, the law favors Tax Administration); although, in some cases, there is an entrepreneurial and collaborative attitude on the part of these authorities, who act to help industry players by assisting them in the development of their activities.

An example of this approach can be observed in the way some municipalities have been collecting Brazilian Service Tax on offshore services – a matter of paramount importance for companies with E&P activities.

Collected by the local governments (municipalities), the Service Tax is a tax that has always been surrounded by controversy, especially regarding which municipality should receive payment. The controversies arise when service providers, despite operating onsite in their respective territories, ended up paying the service tax from their respective headquarters or branches, located in another municipality.

This is due to the fact that, historically, the legislation has established that Service Tax should be paid to the municipality where the service-provider ’s business was located (general rule), without defining the concept of “establishment”, which at that time was considered to be the place formally registered (as headquarters, branch, office, etc.).

This situation remained apparently undefined until the Superior Court of Justice had consolidated the understanding that Service Tax would be due at the place where services were rendered, regardless of where the business’ headquarters were located. When the discus-

André L. P. Teixeira, an attorney and founding partner of André Teixeira & Associados, specializing in tax issues for the oil and gas industry and legal advice for both domestic and foreign E&P companies.

Bianca de S. Lanzarin an attorney specializing in tax issues for the oil and gas industry and partner of the law firm of André Teixeira & Associados, responsible for the tax litigation division.

Tiago Guerra Machado an attorney specializing in tax issues for the oil and gas industry and partner of the law firm of André Teixeira & Associados, responsible for the tax planning division.

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tax legislation

sion seemed to have been resolved by our jurisprudence, the Complementary Law no. 116/2003 was enacted, as result of almost two decades of parliamentary discussion (its bill is dated of 1989), which, despite representing an improvement in some respect, made other provisions outdated due to the fact that our time-consuming legislative process fell behind industry.

One of these provisions dealt with the place of payment of Service Tax, reiterating the idea that the tax should be paid to the municipality where the service-provider business is located. However, seeking to correct the distortion from the past, the new rule defined the concept of establishment, even without putting an end to the discussion.

The Complementary Law no. 116/03 regulates that “establishment� shall be the place where the taxpayer renders services activities, whether permanently or temporarily, and represents an economic and professional unit, regardless of the location of its headquarters, branch, service unit, representa60 T&B Petroleum # 28

tion office, contact or any other denomination that may be used.

Therefore, the business came to be defined as the place where services are effectively provided, according the understanding of the Superior Court of Justice. However, the Law improperly regulates the exception to the rule created by the case of Service Tax collection for offshore services: since there is no way to define in which municipality the service is actually provided. However, if one reads carefully, in a literary interpretation, that there should not be any exception to the general rule, since the tax should equally be paid to the serviceproviding municipality, which, as mentioned above, is the service-providing location.

In this respect, considering a systematic analysis of the legislation in effect and its objectives, we understand that the legislator intended to allow Service Tax due to the municipality of the service provider’s headquarters, because there is no provision in the Brazilian legislation for the municipali-

in the troubled waters of service tax

ties’ jurisdiction over the “facing” maritime waters – especially considering the fact that territorial sea belongs to Federal Government. according to our Constitution, the municipalities do not have any jurisdiction over this area.

Furthermore, there is no legal provision to apply the assumptions employed in the calculation of government takes (i.e. use of orthogonal and parallel lines from coastal boundaries) to limit the municipal tax jurisdiction, as some municipalities have been advocating, deeming themselves as collectors of service Tax due on operations provided at platforms or vessels “facing” their coastal lines. it is important to note how these municipalities use the term “facing” (when they mention the maritime region facing the coastal line of their territories), as if this word had a sense in itself. it does not. Thus, the attitude of local governments is surrounded by irregularities, including those constitutional in nature.

Meanwhile, whether a service provider of offshore services or an oilfield concessionaire, the taxpayer remains in a situation of legal exposure and uncertainty, insofar as service Tax collection is concerned, since the municipality where the service provider’s headquarters is located will not be enough to avoid future tax assessments and contingencies, due to a “facing” municipality that may charge taxes over these operations. several municipalities have already been assessing the e&p industry for service Tax payment in their respective territories, assuming the platform/ vessel projection is on its coastal region.

To reinforce the understanding that there is no legal grounds for this municipal decision, a complementary bill of law (plC 437/2008) is being considered by the national Congress to amend the

current service Tax legislation especially regarding to services in “facing” maritime waters.

This bill intends to impose, as the service Tax’s local of payment in case of e&p services, the municipalities where the service is actually provided, although the bill does not establish any assumptions for the “allotment” of maritime areas to municipalities. at any rate, such “allotment” would not be constitutional; no amendment to the Complementary Bill no. 116/2003 would uphold the concept of “facing” municipalities. in the judicial sphere, what we have seen that tax collection from the business’ headquarters has been upheld in few decisions, since municipal territorial projections, for the purposes of government takes, have not been granted.

Therefore, it may be concluded that tax levied on services provided in maritime waters is due to the municipality where the service provider ’s headquarters is located, and cannot be legitimately levied by municipalities projecting themselves over its coastal region to reach platforms and vessels. however, considering the unfounded behavior of some municipalities, the e&p industry has some alternative recourse in order not to negotiate agreements with the municipalities illicitly levying service tax. Filing for injunctions to protect companies from illicit charges, mitigating the risk of increase of tax burden on their activities, is one. as we tried to demonstrate, “paying twice” is not a consequence of incorrect tax payment. There are no “delinquent payers”. The risk of double taxation comes from these municipalities’ outrageous understanding, as “delinquent collectors”, whose frenzy to collect taxes may cause enormous losses and disturbance to taxpayers.

www.tbpetroleum.com.br news from the shipbuilding and offshore industry on your computer screen T&B Petroleum # 28

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pipeline leak

ILDS - an innovative approach for pipeline leak detection Leaks in liquid and gas pipelines always imply material losses. In some cases, an incident can turn into a critical event, particularly when the transported fluid is dangerous to life or environment

O

Marcio Bergh, graduated in Electric Engineer from FEI in 1984 and postgraduated in Administration and Marketing of Services from FGV/SP. He has worked for 28 years in Automation, Instrumentation, and Processes for the energy, infrastructure, and other industrial segments industries.He was also the Manager for Electric System Integration Projects, Automation and Instrumentation for Paper & Cellulose, Chemical & Petrochemicals and Infrastructure. He is currently the ASEL-TECH business manager for the pipe transport division.

Jairo A. Prezzi, an Electronic Engineer with a Master’s in Computer Science from UFRGS. Since 1982, he has worked in the industrial automation segment, working in administration and commercial R&D. He was a professor and researcher of the Computer Science Department of UFRGS. Currently, he is the Business Development Manager of Asel-Tech Tecnologia e Automação.

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perators all over the world are continously increasing their efforts and investments towards integrity programs targetting, primarily, prevention of these undesired events and, consequently, decreasing direct costs (e.g. remediation, penalties, reparations) and indirect costs (e.g. public image, stock devaluation). However, there’s always a chance that an accident occurs, no matter how much attention was given to its prevention. For this reason, leak detection systems (LDS) play an important role of integrity programs. LDS are specially designed tools that help operators to identify and react to a spill. They are in-line systems that continuously monitor and alarm deviations of some operational condition which can be associated with a leak. Speed of response, sensitivity, reliability, accuracy and robustness are common performance parameters used to diffferentiate and assess systems.

Last but not least, applicability to a wide range of scenarios is a highly desirable characteristic.

Asel-Tech’s new ILDS (Integrated Leak Detection System) has been designed around all the above mentioned characteristics and, most important, featuring two different methodologies to detect leaks: Negative Pressure Wave and Compensated Mass (or Volume) Balance. The concept itself is not new. On the other hand, it is clearly recommended in API RP 1130. The innovative approach is more subtle in the sense that it is hidden inside its hardware and software components.

In order to unvail ILDS innovative nature, one needs to look into the inner layers of its components. This article briefly describes ILDS principles, its architecture, emphasising the synergy between the two methodologies as opposed to other implementations that merely bundled two or more techniques as one package, but running as isolated subsystems. Beyond the additive and complementary nature of a dual methodology (final system inherits characteristics from each individual subsystem), a bidirectional collaborative implementation produces a synergistic improvement in overall performance.

Detection methodologies ILDS employs two methods to detect leak events: (1) identification of the negative pressure wave originated by the suddden despressurization (2) identification of an imbalance between inflow and outflow compensated by the line-pack variation over a given time interval. The block diagram of the system is shown on Fig. 1 Negative Pressure Wave – This subsystem, also known as sonic or acoustic, identifies the characteristic fluid dynamic transient wave that propagates

through the fluid, travelling long distances in both directions. Special transducers installed at both ends of the monitored stretch detect and transform pressure into an electrical signal which is read and analyzed by dedicated Field Processing Units (FPU).

The arrival time of the wavefront at each sensor is registered and, since the wave propagation velocity is a known constant for each fluid, the exact position of the leak can be easily calculated. Accuracy of the calculation is assured by GPS which keeps all FPUs clocks synchronized. Presence of back-ground noise and operational events, such as those originated by pump start/stop or valve opening /closing, require several different filtering techniques to be used in order to extract the characteristic leak signature. Effective filtering is the key element of this subsystem. Some examples of filtering are: correlation, band-pass, phase sequence, envelope extractor. The most innovative filtering technique in this subsystem is an artificial neural network (ANN) which reduces significantly the probability of false-alarms.

Mass Inbalance – This subsystem infers that a leak exhists based on the mass unbalance that results from product release. The detection can roughly be described as the analysis of the behavior of line-pack variation compared to the difference in inlet and outlet flows.

The model uses measurements taken at both ends of the monitored stretch, (flow, temperature, pressure and density), pipe and fluid specificationsas as well as preessure/temperatures measurements at intermediate points.

Computational Fluid Dynamics (CFD) algorithms based on real-time transient models (RTTM) run cyclically on the Central Monitoring Station, producing a curve representative of the behavior (signature) of the line-pack variation relative to in-out mass variation. Again, filters based on Artificial Neural Networks (ANN) qualify this signature, or its trend, as being typical of a leak or not . The final decision is taken by the Validation Module which, in its turn, also uses information generated by the Negative Pressure Wave Subsystem to validate the event and declare a LEAK ALARM along with associated informations (position, leak flow rate, duration, etc.).

The validation process and trend analysis employ special algorithms based in artificial neural networks (ANN) which allow the system to distinguish between various operational events and real leaks, reducing dramatically the false-alarm rate, a well known issue for all LDS, specially mass conservation methods.

In order to validate an alarm, the Validation Module performs a cross-check of the corresponding signals received from boths subsystems as well as qualitative and quantitative analysis of other variables, e.g. tendency of mass variation. Once recognizes and declared as a LEAK ALARM, the event is displayed to the operator along with relevant information such as the moment it started, its exact location, instataneous leak rate and total spilled volume.

System architecture ILDS architecture and its components are shown in Fig. 2. The Negative Pressure Wave Subsystem comprises Acoustic Sensors (FSS), Field Processing Units (FPU) and Central Monitoring Station (CMS). The Mass Balance Subsystem comprises transmitters at both ends of the pipeline (pressure, temperature, flow and density), Remote Terminal Units (RTU) and Central Monitoring Station (CMS).

ILDS architecture is supported by a communication subsystem that can be implemented by different media, like radio, optical fiber, cable, landline, cellular. The protocol is Ethernet. Integration between ILDS and pipeline SCADA is facilitated by an OPC driver embbeded in CMS. Moreover, all user interface functions are based on off-the-shelf supervisory package (such as iFix, Intouch, Elipse) according to client preferences.

Direct integration of both servers, ILDS and SCADA, allows information about operational events (valve operation, pump start/stop, operational changes, etc.) to be used in the validation module, improving robustness and reliability of the ILDS decision algorithm.

Conclusion ILDS dual methodology and innovative implementation allow fast leak detection, precise location and accurate quantification of realesed product, featuring the following characteristics: • Two complementary methodologies as recommended in API RP 1130; • Mass balance algorithms relying on Computational Fluid Dynamics (CFD) models; • Low false-alarm rate due to pattern recognition based on artificial neural networks techniques; • Adaptability to different operational conditions and self-learning hability; • Easy integration with SCADA or DCS using OPC protocol and commercial supervisory packages; • Fast detection with alarming in the range of 60 seconds or better; • Sensitivity better than 1% of the nominal flow; • Location better than 2% of the monitored length; • Detects progressive and pre-existent leaks; • Leak detection even with pipeline in shut-in condition.

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local content

Local content

in Brazilian oil industry The Brazilian offshore industry transformation: (i) escalating domestic content requirements in contracts with anp and Petrobras; (ii) foreign players compelled to establish and build up local manufacturing and operational capabilities

B

Heller Redo Barroso is the founding partner of Heller Redo Barroso & Associates, a Brazilian Rio-based boutique law firm specialized in Oil and Gas, Power, Shipping, and the Offshore Petroleum Industry.

Marcos Macedo is an associate lawyer at Heller Redo Barroso & Associates

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uoyed by GDP growth often exceeding 3 percent annually since 2004, Brazil is currently frantically building new infrastructure to develop its vast reserves of natural resources – in particular, oil from the so-called pre-salt cluster in the Atlantic Ocean, part of a region that extends about 800km along the coast of Brazil from the State of Espirito Santo to the State of Santa Catarina. The cluster’s oil has been found below water as deep as 3,000m and additionally as much as 7,000m below the seabed beneath a layer of salt. The area covers 112,000 square kilometers of deep and ultra-deep water reservoirs, of which 41,000 square kilometers have not yet been put up for bidding. It is the “most significant oil discovery in the past 20 years”, according to Wood Mackenzie consultants.

Petrobras, the state-controlled oil giant of Brazil, will itself invest a whopping US$174bn through 2013. A total of 23 development and production projects are forecast to be up and running by then. By 2020, US$111bn will be invested in the pre-salt reservoirs alone.

Petrobras is about to start spending on a gigantic shopping list that includes 550 generators, 550 derricks, 350 turbines, 700,000 tons of structural steel for platform hulls, 550 wet Christmas trees, 500 wellheads, 80,000 pumps, 18,000 storage tanks, and 4000km of flexible lines. And it doesn’t stop there. It goes on for 55,000 more items of which drilling packages and FPSO packages, sub-sea equipment, and compressors are considered to be the most critical. And there will be contracts for rigs and platforms that will be chartered under service agreements: 24 drilling rigs for 10,000-14,000 feet, mostly drillships and some semi-submersibles, 200 support vessels (especially pipelayers, AHTS’s, Psv’s, tug and tow boats, and line handlers), 18 FPSOs, and so on, and so on. The company will also renovate its oil tanker fleet with 26 ships already contracted and another 23 for bidding later.

Needless to say, Brazil will become a gold mine for suppliers and service providers in the offshore petroleum industry. But there is one catch. These vendors will likely be required to meet an ever-growing local content percentage established by Petrobras (which will probably control over 90% of the exploratory blocks). And Petrobras will have targets to reach with Brazil’s National Agency for Oil, Gas, and Biofuels (ANP) regarding national content and will most assuredly pass on these requirements to its supply chain.

Photo: Stéferson Faria, Petrobras Agency

Dutch Disease and Local Content Policy The discovery of massive oil reservoirs can be both a blessing and a curse to a country. These windfalls can cause the so-called “Dutch Disease” experienced years ago by the country of Holland, when big petroleum finds triggered massive outside investment and currency exchange escalation that disrupted other industrial sectors as the country’s economy became more dependent on hydrocarbons.

To avoid the Dutch Disease, Petrobras’s contracts will all contain gradually increasing minimum local content requirements that could go as high as 95 percent for some equipment by the year 2020. This means that interested companies should scramble and start looking for local partnerships, areas to establish new facilities, bases for operations, and of course enrollment as bona fide supplier with Petrobras (CRCC).

In order to achieve such an audacious plan, Petrobras will rely on large capital infusion from shareholders, especially the controlling stakeholder, the Brazilian Government. Petrobras will further count on cheap and abundant financing from the government development bank, BNDES, and other state-owned banks.

In order to trim prices of equipment, while pushing for the gradual escalation of local content requirement in its projects, Petrobras is breaking up large EPC, service and supply contracts into smaller packages, emphasizing greater detail and standardization of orders.

This will kick off with an ambitious program of eight FPSO’s to be built locally, in a dry-dock chartered by Petrobras in the city of Rio Grande in southern Brazil.

To aid in reducing prices, Petrobras is also planning to revise its standard contracts in ways that will reduce risks to suppliers.

All these changes, however, will now be carried out in tandem with the stepping up of domestic content requirements. Enrollment of Petrobras vendors on the

service providers’ list (CRCC) as well as significant domestic content will become gradually omnipresent in all new Petrobras auctions and contracts.

History of the Local Content Concept Basically local content consists of contractual commitments, embedded in concession contracts (oil licenses, or oil lease licenses in some jurisdictions), whereby oil companies are required to procure a minimum percentage of equipment and services from local suppliers. By making such demands throughout their exploration and production projects, the country aims at fostering the development of a strong local petroleum offshore industry supply chain.

Naturally any obligation imposed on the concessionaires (license holders) will subsequently be mirrored in contracts with their suppliers and contractors.

However, in practical terms, the concessionaires (remembering that Petrobras is holder over 90% of all concessions) will require varying levels of local content from its suppliers and contractors based on the specific type of activity. Technology-intensive products and services will carry a lower local content percentage rather than low-tech activities. This is obviously because Brazil still lacks an installed capacity for high-tech work in the offshore industry.

Under Brazil’s current regulatory framework, local content commitment is one of the judgment criteria applied in evaluating bidders’ offers, together with the Minimum Exploratory Program and the Signature Bonus. In presenting their offers, bidders indicate a specific percentage of local content, which is turned into a number of points used to rank bidders’ offers along with other parameters.

During bidding rounds 1 to 4 for oil concessions, there was no minimum requirement for local content T&B Petroleum # 28

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commitment. The local content percentage had a cap and counted only for minor effects. Companies offered their local content commitment for both the exploration phase and the development stage, limited to the cap provided in the bidding.

In rounds 5 and 6, minimum commitment percentages were introduced. These varied depending on the blocks’ locations (onshore, shallow waters, and deep waters). In these rounds, local content gained more weight in evaluating bidders’ offers and percentages increased from the earlier 15% to 40%.

In ensuing rounds, up to the 9th and last offshore bid rounds (the 10th round auctioned only onshore blocks), the bidding indicated both minimum and maximum percentages of local content. Shallow water blocks were divided into two types (shallow water up to 100 meters, and shallow water from 100 meters up to 400 meters). In these auctions, the weight of local content was reduced to 20% of bids’ final point evaluations.

Evolution of Local Content Policy Local content policy is not expressly established in Brazil’s current Petroleum Law (Law 9.478/97.) Development of local industry is mentioned only in the section on the main principles of the national energy policy.

In the first few bidding rounds conducted by ANP, local content commitment was mainly regulated by concession contract provisions. Later, ANP established (in Ordinance 180/2003) specific rules regarding the reporting and monitoring of local content.

In Bidding Round #7, ANP introduced major changes in concession contract provisions and created a guide book for concessionaires to use in monitoring the fulfillment of local content commitments. This was due to PROMINP (Programa de Mobilização da Indústria Nacional de Petróleo e Gás Natural – Mobilization Program for the Oil and Gas National Industry), introduced in 2003 and first applied to the licenses in Bidding Round #7.

Since its inception, PROMINP has significantly raised the participation of local industry in investments in the oil and gas sector from 57% in 2003 to 75% in the first half of 2009. This represents an additional value of US$14.2 billion for goods and services purchased in the Brazilian marketplace. Estimates say that 640,000 new jobs were created in this period.

To sum up, investment in PROMINP significantly increased local participation from US$35 billion in the years 2003/2007 to US$190 billion expected for the years 2009/2013.

With this new scenario, Petrobras and other oil & gas players operating in Brazil will demand locallyproduced goods and services in increasingly larger amounts. This offers a great opportunity for local companies (even those with foreign ownership) to 66 T&B Petroleum # 28

supply locally in the most efficient manner materials, equipment, components, and services in a shorter period of time while meeting the industry high quality standards. Of course, they must be prepared to move quickly to become enrolled on the CRCC vendors list with Petrobras.

As far as regulation is concerned, ANP established the local content certification system to be applied in concession agreements between ANP and the concessionaires. This complies with contractual requirements established since Round 7. This regulation already constitutes a set of four administrative acts.

The “Local Content Certificate” is a document issued by a “certifier” that is pre-registered with ANP. The most important certifier is ONIP, which is also the one appointed by Petrobras in almost all their contracts. ONIP has 2,000 companies registered as members, all of them in the supply chain for the offshore petroleum industry.

The certification is conducted according to a template made available by ANP. It states the percentage of local content of the particular good or service hired for measurement. The “Local Content Certification” involves sets of activities developed by an entity duly accredited by the ANP (regardless of commercial relationship) to publicly certify, through issuance of a certificate, that a given good or service is in compliance with the requirements established in the Regulations of Local Content Certification.

According to Administrative Act ANP no. 36, the agreement executed between the certifier and contracting party will necessarily contain: • Clear definition of the product, product for temporal use (goods used in rental agreements, charter party, tenancy, or operational or financial leasing, etc.), service, subsystem, system, or set of systems to be certified • The schedule of certification activities • A contract clause stipulating that all activities will be carried out according to present regulations • Identification of certifier personnel involved in the execution of activities • Identification of contracting party personnel responsible for conducting the activities • Definition of access, examination, and analysis of: – the documentation to be analyzed – the productive processes necessary for the preparation of the product to be certified – the constituent components of the product to be certified – the outsourced and/or subcontracted components and relevant documentation – the imported components and relevant documentation • Prices and commercial conditions of the certification agreement • Agreement identification code.

local content in brazilian oil industry

Definitions, methods, and criteria for calculation of local content of goods, goods for temporal use, services, subsystems, systems and set of systems related to oil & natural gas exploration and production activities are those defined by the local content primer according to Annex III of Administrative Act ANP 36.

English translations of all these Administrative Acts relating to PROMINP and national content can be downloaded in our web page (www.hrblaw.com.br).

For example, the local content (CLb) percentage for goods is applicable to equipment and materials and is calculated using the following formula: CLb = (1 – x/y) x 100 where: “X” stands for the price of imported components (in R$), including raw material“ “Y” stands for the sale price of product in practice, excluding IPI and ICMS. In parallel, the Brazilian Government created the Fund to Ensure Shipbuilding (the “FGCN”) to mitigate the risks of completion, performance, and credit connected with the construction of new yards and manufacturing facilities in the oil supply chain. FGCN will mainly support the credit risks of financing the construction of drilling rigs.

Petrobras will also negotiate with local banks a Special Program of Credit with certain conditions to fund the local offshore petroleum industry supply chain.

CRCC The CRCC is intended to prequalify companies and products so that when Petrobras needs such products or services, bidding or negotiation will be simpler and faster, largely based on price and delivery capabilities. This will dispense with a thorough examination of products on a case-by-case basis, which currently is time consuming and counter productive for Petrobras.

The aim of CRCC is to build a database of service providers and suppliers organized according to their products or services, so as to expedite Petrobras’s purchasing process.

On the basis of information contained in the CRCC database, Petrobras will invite companies to participate in biddings or direct purchase negotiations.

CRCC has existed for a long time but was largely dispensed with in international purchases and in most deals with the majors.

However, in a few months, companies without CRCC registration, will be prevented from selling or providing services to Petrobras. Moreover, there is a noticeable trend in making CRCC enrollment a requirement for qualification of companies for biddings.

This is being especially pressured by the Petrobras Engineering Division.

CRCC may also be used as an instrument to control domestic content requirement. For example,

the companies registered will also be prequalified considering their “local content”. CRCC may then be updated from time to time as companies become more and more “Brazilian”, or “tropicalized”.

Achievements of the Local Content Policy So Far In the early concession bidding rounds, the local content commitment was very soft – e.g., in BM-ES-1, the local content commitment was 5% in the exploration phase and 15% in the development stage. However, in the latest rounds we have noticed a major push in the offered percentages, some reaching as high as 80%. In view of this more aggressive scenario, oil companies, most notably Petrobras, have started to contract local suppliers for huge projects. Two such examples are the R$2.5 billion semi-submersibles P-51 and P-52, with a capacity of 180,000 barrels/day, to be built by Keppel and Technip with local content requirements of 65% and 55% respectively.

Other recent projects with sizable local content include part of the construction of FPSO P-54; modernization of FPSO P-34, and construction of the topsides of FPSO P-63.

In addition to these major capital-consuming projects, we could also cite other engineering projects involving the construction and installation of subsea systems, support vessels, and offshore cranes as examples of increasing local content.

Likely Changes in Local Content Commitment Introduced by the Proposed New Brazilian Regulatory Framework A very sensitive point in currently proposed regulatory changes is the direct participation of the Government in managing E&P projects. According to the wording incorporated in the new proposed framework for hydrocarbons exploration in the pre-salt area, a new 100% public company (nicknamed “Petro-Sal”) would have the right to name half of the operating committee members for all E&P projects in the pre-salt region, including the chairman, who would have a tiebreaking vote and veto powers.

Accordingly, the new public company would have control over any decision of the operating committees, including the contracting of services and goods. This would enable its representatives to require higher local content percentages -- or even to decide on contracting specific local suppliers.

Furthermore, the new regulatory framework has introduced the concept of “sole operator”: it sets forth that Petrobras will operate all pre-salt areas. Since Petrobras is essentially controlled by the Government, Government officials will therefore pull the strings at Petrobras so as to make it the chief instrument for implementing national local content policy (e.g., by T&B Petroleum # 28

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making Petrobras’s vendor’s list – CRCC enrollment – a requirement in future biddings and contracts).

First Come, First Served In light of recent Government statements, local content requirements will undoubtedly climb, thereby forcing interested international suppliers to establish Brazilian subsidiaries in order to participate in the massive oil revenues that will begin to flow from the pre-salt region.

As previously mentioned, in the pre-salt area, the Brazilian government has already signaled national content requirements of 85 to 95 percent for some items by the year 2020. This means that whichever player wants to have a piece of the pre-salt pie will have to establish significant local presence. In particular, equipment suppliers will likely need to build production facilities in Brazil.

The new policies will affect, without limitation, activities such as the purchase and sale, construction, conversion, upgrade, and chartering (bareboat, time, and voyage charters) of ships and offshore units.

This would include a lengthy list of vessels such as Jack-Up’s, Spars, TLP’s, Pipe-layers, ROVs, Floatels, Semi-Submersibles, Drillships, FPSO’s, FSO’s, as well as support vessels (PSV’s, Line Handlers, AHTS), seismic vessels, and coastal-trade and long-haul BulkCarriers, Chemical and Oil-Tankers, and LNG vessels (including FSRV’s and SRV’s). Equipment supply will probably be the hardest hit: drilling packages, topsides and the sub-sea systems, and equipment “by the piece” such as offshore cranes, manifolds, turrets, derricks, cantilever, umbilicals, risers, wet x-mas trees, thrusters, power modules, compression modules, and hydraulic pumps.

Consequently, some major international major offshore contractors and suppliers are jump starting their competitive position by establishing operational and manufacturing facilities in Brazil. This is the only way these companies will be able to have contracts with Petrobras or Petrobras contractors in the near future.

Even direct association with local Brazilian companies will become insufficient in the very near future, as the lack of local content from a foreign supplier or contractor could jeopardize a project even if the company is an established subcontractor to a contractor of Petrobras.

The CRCC and the new procurement department at Petrobras’s Engineering Division will certainly be two very powerful instruments for realizing the ambitious domestic content targets within the very short time-frame set out by the Brazilian Government.

Due to the lack of local installed capacity of the major international players in the offshore petroleum industry, bidding and direct negotiation invitations are currently going mostly to Brazilian contractors, 68 T&B Petroleum # 28

who in turn will procure from abroad technological partners, operators, financial partners, and project managers.

Most of these Brazilian contractors are unfamiliar with the finer details of the offshore petroleum industry and somewhat “illiterate” in the high-tech end of it. So they are quite dependent on associations with international companies. This is a huge opportunity for international suppliers and contractors to begin opening the door into Brazil: first with association But players should always bear in mind, as mentioned before, that associations should only be a first a step toward future independent standing achieved through the construction of local presence and infrastructure. For those companies that do not know, a company is deemed to be a Brazilian company for local content purposes if it is incorporated in Brazil. For the purposes of quantifying local content, certifiers will certainly check on how many Brazilian employees the company has, what are its local assets, and what is the percentage of imported items.

Although this somewhat oversimplifies the process, the message is clear.

By becoming established in Brazil, foreign companies may be directly invited to participate in auctions where high national content is required, therefore allowing it to compete with native Brazilian contractors.

But the early birds are already chasing the worms.

New ports and shipyards are already under construction. Every major global shipyard is already involved in Brazil, negotiating the construction of their own yards here, all of them in association with the biggest Brazilian conglomerates. All the Korean yards are here, for example.

Despite these challenges, the Brazilian pre-salt region, also nicknamed as the “blue rump steak” due to its shape, still represents one of the best business opportunities for E&P services and goods providers throughout the world.

Newcomers to Brazil’s oil and gas marketplace are usually dismayed by what seems to be an overlycomplex, heavily-regulated, and bureaucracy-prone legal system. Companies worry about corruption and about securing their assets against unlawful seizure or nationalization. However, these are somewhat farfetched concerns in today’s Brazil.

The hard facts are: (i) Brazil boasts a booming economy that weathered the worldwide financial meltdown; (ii) Brazil is an investment-grade country; (iii) Brazil blossoms among the BRICs; and (iv) Brazil is clearly poised to become the huge next safe hub for the world’s smart money.

Companies ready to come and establish local manufacturing capacity in Brazil and strategic associations will be well-positioned for a head start in the run for black gold.

green ship

Anti-ship immobilisation – anti-pollution for the sea

An available and affordable technology Can we imagine a modern car nowadays without passive safety equipment onboard, such as air bags and structural integrity?

Nevertheless, we accept vessels without Marine Passive Safety devices.

K

eeping ships afloat and avoiding accidents are sometime not enough to avoid disaster when sea constraints are too high. The FOR systems are the best Marine Passive Safety devices ever developed for shipping and have now been adapted for the oil & gas industry.

Such leading-edge onboard technology provides ships with efficient and permanent solutions to mitigate environmental & financial damages in the event of an incident.

Fpso and shuttles: matter of time, productivity and transport Link between the offshore oil production and the shipping activity: • The Floating Production Storage and Offloading (FPSO), the gigantic offshore production facility that house both processing equipment and storage, • Shuttle tankers, which transport the oil from the FPSO to the coast, have seen their services grow with increased demand.

Financial loss and pollution risks Deep analysis on tank weaknesses has shown that a small incident occurring on FPSO or shuttle tankers can turn into major catastrophe involving all users and stakeholders.

Productivity, profitability, and image will be directly affected and can be deeply impacted in the event of oil spill. Such harmful crises have not yet benefited from fast solutions to mitigate damages.

Make fpso or shuttle tankers secure and “eco“ Ten years of study have led the French company JLMD to design new equipment belonging to the group called the Fast Oil Recovery Systems (FOR); the only equipment that limits the consequences generated by an incident.

JLMD was the first company to work out a FOR System: the result of a meticulous analysis of tanks (Cargo and Bunker) in order to provide the ship, in any event, with the adapted onboard circuit to deal with a minor or major incident.

In order to avoid expensive circuit and component redundancies, JLMD installs each tank with two simple additional and permanent circuits properly chosen and positioned.

Gilles Longuève is Diretor de JLMD Ecologic Group and Master’s Degree in Strategy & Economy of Paris Dauphine University. He has a large experience of international B to B business development.

Sales and Marketing Director of JLMD, he is in charge of the commercial strategy and works at marketing the JLMD system® in the worldwide global maritime industry.

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Photo: Petrobras Agency

green ship

The FOR systems provide the ship and the technical staff with simple and reliable solution reducing by more than 50% the time of the immobilization of the damaged tank or the damaged ship.

For a small investment, the JLMD system® FOR systems can: • Stop an incident from becoming an accident • Protect the productivity and profitability of production assets, such as FPSO and Shuttle tanker.

• Ensure authorities and all crisis players (insurers, salvage companies) are free of potentially damaging situation.

• Enhance oil industrial players with a green image • Protect the company image

Tank weaknesses Ten years of test and analysis considering diverse situations led JLMD to highlight tank weaknesses.

The technical gap should be fulfilled with devices and architectural modifications that become active after an incident to mitigate its consequences: the passive safety devices.

The Fast Oil Recovery System is one of these passive equipments. It allows the recovery of the pollutant, directly into the tanks whatever the situation.

When an accident arises the tank becomes the core of the environmental concern. The ship (FPSO, Shuttle tanker) and tanks are not designed to participate to the mitigation of the after-incident only focus on productivity.

The FOR system provides the ship with solutions to limit the consequences of an incident at sea.

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The tank: an addition of requirements In order to increase the shipping business profitability and to reduce incidents, the tank design follows economical, commercial, legal, safety and engineering constraints as: Content, function, ship type, ship route constraints, and legal requirements.

Each cargo and bunker tank is a specific element, dedicated to a definite function, with its own particular and precise modules, accesses and equipment.

The tank includes many different inputs called by diverse departments of the shipping industry.

To complete the functioning of the tanks, some important and recurrent devices equip the tank: pumps; valves; level sensors; temperature sensors…

The failure of one of these components could at least result in stopped production, tank blockage, or the immobilization of the ship (Crude Oil Tanker, Shuttle Tanker, FPSO, FSO, etc...).

The tank is always a major player in the incident: it is either a cause or the main centre of attention.

Incidents scenarios Devices dysfunction: Pump/valves/pipes failures – Redundancy would be the only and obvious correction for this design gap. If all these components were doubled, the tank utilization would not be affected and the malfunctioning component could be replaced during sailing.

This costly redundancy matter can be solved by a multifunction, alternative piping circuit.

Major incident (wreck, grounding, collision, loss of main power …) – Since the attention is focused on the

anti-ship immobilisation – anti-pollution for the sea

oil pollution risks, the principal goal of the technical staff will be to empty the tanks and recover most of the pollutant poured into the sea as quickly as possible in order to minimize the oil spill, its cleaning costs, and the public reaction.

The common salvage procedures employed in these cases is to drill new accesses to reach the tanks.

New designs for the prevention of pollution, such as: double hull; tanks moved toward the centre of the ship; segregation of big tanks into a multitude of smaller tanks.

Ensure tank integrity but make tank access complex. The oil recovery operations are much more difficult, risky, time consuming thus costly.

The solution will be to fit each tank with recovery facilities.

The FOR System: The Recovery facilities The Fast Oil Recovery System is a clever alternative circuit replacing the failing/missing equipment.

It is composed of at least two dedicated, pre-installed, emergency piping accesses per tank. Each of these accesses is a DN 200 pipe with a minimal radius of curvature of one meter, ending on main deck with a standardized connector.

With such system onboard, it is obvious that a failure of the loading/discharge line, inert gas system, venting circuit, gauging and sampling pipe could be solved by the use of the FOR System connectors and pipes, since they assure the back-up of some tank equipment functions.

In the case of collision or grounding the standard equipment onboard is either out of order or out of energy. Therefore additional means of pumping are necessary. In that respect, the FOR accesses are designed (DN200 and a bending radius of pipe not less than one meter) to allow the insertion of a submersible pump.

In the case of a sunken ship, since the head of the pumping distance is far too high, a submersible pump will be useless. The pumping engine used in that case would thus be the water cushion process.

As the oil is lighter than the sea water, filling the tank with sea water would push up the oil toward the sea surface.

Additionally, during the dismantling, the cleaning of the tanks is a key problem in terms of worker safety, environmental protection and costs. The FOR system provides an access and means of pumping via pair of connectors located on each tank. As a side benefit, the FOR system becomes a useful tool when the vessel is being deconstructed.

Such equipment would permit to keep the control on the oil in any situation and limit the ship knowledge required for the treatment of a major incident.

Study cases have been carried out based on major accident as: Prestige, Exxon Valdez, Erika‌More than 50% of time can be gained with a FOR system reducing the damages accordingly.

Easy to install A deep analysis of the existing piping architecture can simplify a FOR installation by merging the FOR accesses to part of the existing piping circuit. This task requires know-how since a valve or an unseen circuit could block the process or divert the oil during recovery. However, the gain in terms of installation complexity and cost deserves it. It can be, thus, possible to retrofit the FOR System to an operating vessel within few hours and without hot works.

The FOR System is either implemented during the construction of the ship or retrofitted during a technical stop. The equipment is thus available in sleep mode and active as soon as the incident occurs. In that respect, as the air-bag in the automotive industry and the dry riser for the firemen, the FOR System is proactive equipment which will intervene to mitigate the consequences of the incident, by contributing to a more efficient oil recovery from tanks.

As the zero risk does not exist, this system introduces a new way of thinking, where solutions are developed in order to limit the transformation of an incident into an economic and environmental disaster.

The Emergency Response Plan In event of incident a deep pre-study is carried out to define the tanks location, the way to reach them and the recovery process to deploy. Such time consuming steps are an important source of cost. During this period, the oil gets thicker and continues to be poured into the sea.

Regarding the time that could be saved, it seems evident to associate to the Fast Oil Recovery system, an Emergency Response Plan. This document encloses all the technical information required for a fast and safe oil recovery: location and access to each FOR connector, location of each tank, tanks capacities, the FOR system arrangement on each tank. The information given in this document allows to deploy the proper procedures so the crew can handle small events and the salvage teams can act very quickly on major ones.

Green Label: be a part of it!

The experts from Bureau Veritas have studied the FOR system’s conformity and awarded a quality-label which acknowledges effectiveness of function of the Fast Oil Recovery System.

This recognition is here to insist on a critical stake that is the protection of the industrial productivity and the marine environment.

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coffee break

20 years of

ranCho inn The story of Andrea Tinoco

by Orlando Santos

B

esides being one of the most traditional streets in the Centro of rio de Janeiro, rua do rosário offers a rich and varied gastronomic tour with more than 15 restaurants that serve delicious and beautifully decorated dishes from competent chefs. rancho inn, from chef Andréa Tinoco, is the most famous. her talent and excellent buffet service has made it to several culinary festivals around the country. she began her career in gastronomy with the renowned José hugo Celidônio, with whom andréa stayed for 10 years.

For more than twenty years, the object of rancho inn has been to balance a perfect ambience in the heart of the city with light and healthy food. one needs to look no further than the line that forms at the door daily to be assured of the success of the establishment, made in the beautiful old colonial building that had once been the office of the renowned jurist rui Barbosa. even after the recent renovations that have amplified the ground level floor to double capacity, the line is still there, but the first, mezzanine and second floors offer more comfort for its clientele.

Four ways to enjoy the taste

RANCHO INN rua do rosário, 74 – centro, rio de Janeiro, Brazil Phones: (55 21) 2233-6446 and (55 21) 2263-5197 172 seats from Monday to friday, from 11:30h am – 15:30h pm

72 T&B Petroleum # 28

The contemporary food is the same whether at the buffet on the first floor or the á la carte service on the second floor. rancho inn has four formulas for clients – 1, 2, 3 and 4 – although they have the same price with a choice of three side dishes from the buffet (r$ 19,90), they vary according to the main dish: beef, chicken or pasta (formula 1), fish (formula 2), quiche (formula 3), and roast beef (formula 4). Whomever prefers to choose whatever they like without one of the four formulas may do so at a fixed price of r$ 23,90.

The menu changes daily, meaning there are more than 20 options each month, including fresh and inventive salads and hot dishes: chicken with orange and honey sauce, zucchini with butter and mint, green beans with crunchy shredded leeks, spinach and ricotta cannelloni, and eggplant and honey confit are just some of the delicacies of rancho inn.

fotos: Berg Silva

To end your meal, there are several options from which to choose, including verrines (r$ 3,90 each) and cakes (r$ 7,50 a slice). a banana sweet with crema catalana arrives at the table in a martini glass (r$ 10,60).

For chocolate fans, a brigadeiro crepe with ice cream (r$ 12,20), profiteroles (r$ 6,20, small), chocolate mouse cake (r$ 8,90) and a brownie with ice cream (r$ 10,60). any one watching their weight can count on a variety of other options, such as a fruit salad (r$ 8,70, large) or simply seasonal fruit (r$ 5,50 portion).

A 100% carioca chef “although i have lived in other countries, my heart and head have always been here in rio, the city where i was born and where everything good and important in my life has happened”, states andréa Tinoco.

The chef, who had studied law at pUC-rio, opened her first restaurant, rancho inn, in 1990 at its present location. With the success of her business, she created Buffet andréa Tinoco, a mixture of buffet, catering and consulting services, rendering services to several companies and even clients of the establishment – the result of the innovative work of andréa and her team for more than 20 years.

Besides being the owner of rancho inn, andréa is connected with two restaurants in the Zona sul of rio, and, under the supervision of her sister, Márcia Tinoco, participated in major events, such as the exhibition celebrating 90 years of the artist Tomie ohtake at the Museu nacional de Belas artes; 30 years of Maison Chandon in Brazil; and 50 years of Banco Cruzeiro do

sul. she also handles large scale events for petrobras for up to four thousand people. as a consultant, andréa has worked for many restaurants, implementing and reformulating menus, such as the porcão group and plataforma in new York. andréa Tinoco is not only witness but also party to the innovations and changes in the eating habits of cariocas for more than thirty years. she holds the same opinion of many other professionals in the industry: gastronomy is doing very well in rio – thank you – with booming tourism and the mega-events awaiting rio: the olympics and

World Cup will only make things even better. andréa has closely followed how the municipal government has regrettably treated some of the older streets of Centro, especially rua do rosário: complaining of bad conservation with frequent potholes and often dirty, besides the other urban problems. For these reasons and more, andréa was pleased with the announcement of the closure of ave. rio Branco and other cross-streets, transforming them into ‘pedestrian streets’. “Then maybe we will have a ‘Calle Florida’ carioca”, she says with hope.

T&B Petroleum # 28

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meeting

May

3 to 6 – USA OTC 2010 Local: Houston , USA Phone: +1 972 952 9494 Fax: +1 972 952 9435 www.otc.net service@otcnet.org 4 to 6 – Singapore Asian Biofuels, New Feedstocks and Technology Roundtable Local: Singapore Phone: +44 0 1242 529 090 Fax: +44 0 1242 529 060 wra@theenergyexchange.co.uk 11 to 13 – Uzbekistan Petrotech 2010 Local: Tashkent Phone: +44 0 207 596 5000 Fax: +44 0 207 596 5106 oilgas@ite-exhibitions.com 18 to 20 – Egypt Mediterranean Offshore Conference & Exhibition Local: Alexandria Phone: +20 2 27065210 Fax: +20 2 25184980 conference@omc.it www.moc-egypt.com/ 23 to 66 – Bharein Petrotech 2010 Local: Manama Phone: +973 17 550033 Fax: +973 17 553288 abdul@aeminfo.com.bh www.mepetrotech.com

June

1 to 4 – Baku Caspian International Oil & Gas/Refining & Petrochemicals Exhibition Local: Azerbaijan Phone: +44 0 207 596 5000 Fax: +44 0 207 596 5106 oilgas@ite-exhibitions.com 1 to 4 – China AchemAsia Local: Beijing Phone: 0049 69 75 0 Fax: 0049 69 75 64 201 www.achemasia.de bukatschek@dechema.de

4 to 9 – USA ASME Annual Meeting Local: Pittsburgh Phone: 800 843 2763 Fax: 973 882 1717 www.asme.org infocentral@asme.org 6 to 9 – Brazil IAEE International Conference Local: Rio de Janeiro Phone: 216 464 5365 Fax: 216 464 2737 ab3e.org.br/rio2010/ • iaee@iaee.org 8 to 10 – Canada Global Petroleum Show Local: Calgary Phone: (888) 799-2545 Fax: (403) 245-8649 www.globalpetroleumshow.com paulaarnold@dmgworldmedia.com 8 to 10 – Italy NGV 2010 Local: Rome Phone: +39 335 189 3249 www.ngv2010roma.com info@ngv2010roma.com 9 to 11 – Malaysia SUBSEA Asia Local: Kuala Lumpur Tel: +603 40410311 Fax: +603 40437241 www.subseaasia.org enquiry@mesallworld.com 20 to 26 – China International Offshore and Polar Engineering Conference (ISOPE) Local: Beijing Phone: 650 254 1871 Fax: 650 254 2038 meetings@isope.org 21 to 25 – Russia NEFTEGAZ International Exhibition Local: Moscow Phone: +44 0 207 596 5000 Fax: +44 0 207 596 5106 oilgas@ite-exhibitions.com 22 to 23 – Canada Atlantic Canada Petroleum Show Local: St. John’s, Newfoundland Phone: 403 209 3555 • Fax: 403 245 8649 www.petroleumshow.com/PDM/ Events/Event.aspx?evesid=8&pgid=80

Send your release to: tnpetroleo@tnpetroleo.com.br.

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28 to 29 – USA API Tanker Conference Local: San Diego, California Phone: 202 682 8000 Fax: 202 682 8222 www.api.org/meetings/topics/ marine/tanker-conference.cfm June, 28th to July, 3rd – USA API Exploration & Production Standards Conference Local: Washington, DC Phone: 202 682 8000 Fax: 202 682 8222

July

20 to 22 – Canada Oil Sands and Heavy Oil Technologies Local: Calgary Phone: +1 713 963 6251 Fax: +1 713 963 6201 www.oilsandstechnologies.com gailk@pennwell.com 7 to 9 – USA COGA Rocky Mountain Energy Epicenter Conference Local: Denver, Colorado Phone: 303 861 0362 Fax: 303 861 0373 conference@coga.org 13 to 14 – USA IADC Lifiting & Mechanical Handling Conference & Exhibition Local: Houston Phone: 713 292 1945 Fax: 713 292 1946 info@iadc.org

August

3 to 05 – Nigeria SPE Nigerian Annual Conference Local: Abuja Phone: 972 952 9393 Fax: 972 952 9435 spedal@spe.org 19 to 20 – USA Summer NAPE Expo Local: Houston, Texas Phone: 817 306 7171 Fax: 817 847 7703 www.napeexpo.com info@napeexpo.com

opinion

of José Carlos Ribeiro Filho, consultant for Oil, Natural Gas and Biofuels at Vieira, Rezende, Barbosa e Guerreiro Advogados – VRBG.

An idealogical debate in the Brazilian petroleum industry After the discovery of the new Brazilian oil frontier, called the presalt layer, the Brazilian petroleum industry finds itself at a turning point that has been driven by the Brazilian government’s debate for the best way to explore these gigantic fields and distribute the subsequent wealth to the people and future generations.

T

wo years of intense research from the Executive Power has led the current debate in the National Congress regarding a new regulatory regime for these fields.

It is now possible to get an idea of the strategic objectives that have structured the proposed Bills of Law. Prior to any analysis, it is important to point out that the pre-salt area, where extraordinary reserves have already been confirmed in at least four gigantic fields – Tupi, Júpiter, Iara and Guará – had already been publicly tendered and contracted under the concessionary regime established by the current Law, when the National Council for Energy Policy (CNPE), citing the constitutional principle of national interest, issued a resolution excluding the exploration blocks situated in the Espírito Santo, Campos and Santos basin from 9th Bid Round held by the National Petroleum, Natural Gas, and Biofuels Agency (the government regulator). Furthermore, the CNPE requested that the Ministry of Mines and Energy (MME) evaluate changes to the regulatory regime for the new paradigm of exploration and production of oil and natural gas for the rest of the blocks that have not already been concessioned.

The questions raised by this great national debate have been provoked by 4 Bills of Law in Congress that have proposed: production sharing agreements, designating Petrobras as the sole operator of the blocks, constituting an entirely new state company, capitalizing Petrobras by ceding it exploration and production rights, and creating a

social fund from oil profits as a source for funding for government projects.

Although these projects should have incited great controversy in the Congress, the surprising fact is that the discussion has focused on the division of current and future royalties from the oil fields between the Federal government, and oil-producing and non-producing States and Municipal governments, to the detriment of the issues of greater concern to the oil industry: (i) maintaining the current concessionary regime versus implementing a production sharing agreements; (ii) the new role of Petrobras as the sole operator; and (iii) the question of the Consortium Operational Committee.

The question regarding the concession contracts and the production sharing agreements is less concerning as long as there are well-defined and longterm contractual rules for the oil industry. This kind of stability may raise interest in operating under either regime, depending, of course, on the commercial terms offered by the Government in future bid rounds under a production sharing agreement.

The same cannot be said about the other two points.

In fact, the issue that raises the most consternation – according to testimony industry leaders at the T&B Petroleum # 28

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opinion

public hearing held in Congress – is the new role of Petrobras and the Consortium Operational Committee. These issues are exactly the ones that can either make or break the Brazilian petroleum industry.

Above all these issues is the revival of the ideological debate regarding the economic role of the state, which had been a closed issue since the enactment of the Constitution of 1988, which had established a primarily liberal market.

We are currently revisiting the 1960s and 1970s – the last time the country went through a development phase with a strong presence of the State in the economy, with the expansion of state companies organized under holding/subsidiary companies, and creating conglomerates that actively participate in the economy of the nation.

This strong presence of the state companies in the economy had been redirected in the 1990s upon the opening of the Brazilian market to the world, at a time of increasing foreign trade and privatization of the economy, and extinguishing several state companies.

The Constitution of 1988, together with free market economics and political democracy expanded both imports and exports to and from Brazil, causing a very positive impact in the lives of Brazilians.

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Specifically regarding the oil exploration and production industry, it is clear that after the enactment of Law 9478/97, the same positive impact was felt upon the occasion of deconstructing the state oil monopoly and transforming Petrobras into a concessionaire, equal to other oil companies with activities in the country, from its original role as the monopoly acting in the name of the state – resulting in the unprecedented expansion of the private sector in the oil industry.

Today, the tide has changed, and not only in Brazil. There has been a global trend to re-establish a strong state presence in the economy, due, in part, to the crisis in capitalist economies after September 2008, and, according to other analysts, due to the success of the “capitalist” model of China.

At present, it appears that, with the 4 Bills of Law, the Government is reaching out with two clear objectives: to reassert a strong state presence in economic segment of oil and gas, with Petrobras as its main player; and to capture the larger share of pre-salt profits for the treasury of the Federal government, to the detriment of State and Municipal governments.

The debate in the Senate has thus far revealed this trend.

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