T&B Petroleum 31 by Webmaster TN Petróleo

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

opinion

Year XI • Issue 31 • october 2011 • www.tbpetroleum.com.br

Running against the clock, of Goret Pereira Paulo, is the adjunct director and coordinator of the Energy Unit of the Fundação Getúlio Vargas.

The refinery giants start taking shape osx announces action plan 2011-2015 Pre-salt and the new technology highlights at Rio Pipeline 2011

special: Petrobras Business Plan 2011-2015

continued and necessary reinforcement in

E&P Special interview

Welter Benicio, Director of Oil & Gas for Siemens do Brasil

Local Content: understanding the issues through a geological metaphor, by Heller Redo Barroso and Marcos Macedo

Growing in Brazil

The royalties effect and the exploration of Brazilian petroleum, by Antonio Bastos Sarmento Survival Craft: training using simulators, by Anthony Patterson, Philip McCarter, Scott MacKinnon, Brian Veitch and Antonio Simões Ré A step up for oil intelligence, by João Guilherme Sabino Ometto

special interview Welter Benicio, Director of Oil & Gas for Siemens do Brasil

Growing

in Brazil

WITH 13 FACTORIES, MORE THAN 10,000 COLLABORATORS, AND REVENUES OF R$ 4.3BN, THE COMPANY HAS SET SOME DARING GROWTH TARGETS FOR THE BRAZILIAN MARKET IN THE NEXT FEW YEARS.

by Maria Fernanda Romero

In Brazil for more than one hundred years, Siemens has further increased local content in products and equipment by setting up new factories and specialty centers in the last ten years, and big investments and projects for excellence are the wager of the Brazilian outfit of the company for the next ten years, according to Welter Benicio, director of Oil & Gas for Siemens do Brasil. AN ELECTRIC ENGINEER with a master’s in business administration from FGV, this executive started his career in 1987 with Petrobras, where he worked for 11 years before moving on to ABB and Vetco Gray. Mr. Benicio states that Siemens has set some daring goals for Brazil: considering the current boom in the Brazilian market, the company plans to concentrate efforts in the oil, gas and energy segments – investing heavily in research and development (R&D) within the country. TB Petroleum – Siemens has recently announced plans to broaden its activities by with new investments in the country. How important is the Brazilian market to the company? What are the company’s revenues here in Brazil? Welter Benício – The Brazilian market is crucial to any company, regardless of the market segment. We have witnessed the growth and potential of emerging markets, especially in the BRIC nations, which Brazil is a part

of. When comparing the major emergent countries, Brazil has favorable conditions for sustained growth, due to its modern and robust industrial capacity, its large and young population, abundant natural resources, its strengthening democracy and institutions, and its state and federal governments that are concerned with fiscal discipline. With 13 factories, more than 10,000 collaborators, and revenues of R$ 4.3bn, the company has set some daring growth targets for the Brazilian market in the next few years. Brazil is responsible for 2.5% of global revenues, mostly from the Industrial and Energy segments. In the oil and gas segment, the company has sought to become one of the main technology partners of the industry, but has only recently taken up its projects and investments in the Brazilian industry once again. Why is that? How much does the company plan to invest in the upcoming years?

The oil and gas industry has attracted various enterprises from around the world. The end of the easy oil era and the growth of the world economy – especially in the BRICS nations – has projected a high demand for hydrocarbon resources in the next 20 years, which explains the need for heavy investments in order to identify and explore new reserves. This situation has been no different in Brazil. After reaching self-sufficiency in the middle of the last decade with the recent discoveries and with the economic adjustments that have made sustained growth possible, Brazil has set the stage for more ambitious projections in hydrocarbon production. To increase production requires sizeable investments, which have indeed been announced by Petrobras and other international operators (IOCs), as well as domestic ones, such as OGX. Considering these heightened investments, Siemens has begun a program to increase its competitiveness and,

8 T&B Petroleum # 31

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Business Plan 2011-2015

BUSINESS PLAN 2011-2015

The Petrobras Business Plan for 2011-2015 was approved at the end of July, forecasting total investments of US$ 224.7bn (R$ 389bn), which is US$ 700m more than the previous plan. The highlight once again was the exploration and production area, which gained 57% (US$

by Maria Fernanda Romero

Continued and nece ssary reinforcement

in E&P

127.5bn) in resources (against 53% in the previous plan) in order for Petrobras to expand it exploration activities and assure the increased total production (oil and gas) in barrels of oil e q u i v a l e n t ( b o e d ) f ro m t h e current 2.7m (Brazil and abroad) to 4m by 2015 and 6.4m in 2020.

12 T&B Petroleum # 31

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new refineries

Petrobras accelerates construction of the Abreu e Lima Refinery (RNEST) and the Rio de Janeiro Petrochemical

The refinery giants

Complex (Comperj) in order to meet the growing demand for oil derivatives and increased oil production. The projects will start operations within the new company vision to produce less gasoline and more diesel and petrochemicals.

n Rio de Janeiro and in Pernambuco, Petrobras has been accelerating the two biggest endeavors of its downstream history: the Rio de Janeiro Petrochemical Complex (Comperj) in Itaboraí (RJ) and the Abreu e Lima Refinery in Ipojuca (PE). Together, the state company ’s two gigantic oil refineries will process 560,000 barrels of oil per day, once they are concluded – representing a quarter of Petrobras’ current production. With an area of 45 km² – more than 200 Maracanã stadiums – Comperj began in 2008 and is 23.5% complete, after the earthmoving of 81m m³ of land. Since it is in constant evolution, Petrobras has coined the Comperj project as “a living project”. The petrochemical complex started in 2007, initially conceived as a nation’s first petrochemical factory to process the heavy oil from the Marlim field into propene and ethene by a cracking system developed by Petrobras’ research center – Cenpes. Thanks to the growing demand for derivates in Brazil since 2009, the company changed its project: today, the complex holds two refineries (two refining lines) and a petrochemical unit. Petrobras is responsible for the two refineries, while Braskem is responsible for the petrochemical unit with cen-

start taking shape

by Maria Fernanda Romero e Rodrigo Miguez

COMPLEXO PETROQUÍMICO DO RIO DE JANEIRO (COMPERJ)

Fotos: Divulgação

REFINARIA ABREU E LIMA (RNEST)

ter for raw materials and polyolephines. Other products are still under negotiation. Petrobras has already held the public tenders and signed all the service contracts for the processing units and major equipment established in the first phase. The first refining unit should be up and operating in the first semester of 2014 (although Petrobras hopes to start in the second semester of 2013), with 165,000 barrels of oil per day. However, the second refining line with the same capacity is forecasted to start operations only in 2018. With a total capacity of 330,000 barrels/day, Comperj will produce diesel, aviation kerosene, basic oils, nafta and bunker. The second refining unit, according to Paulo Roberto Costa, director of Supply at Petrobras, will produce gasoline to meet the growing demand of the Brazilian market. The petrochemical unit will begin production of polypropylene, styrene and other products by 2016. To t r a n s p o r t t h e g i g a n t i c equipment and units to Comperj and to optimize the transfer of production, Petrobras will undertake major infrastructure projects. The company has signed an agreement with the City Hall of São Gonçalo to construct an express lane (called the UHOS) 20km long (13.5km in São Gonçalo), a 120

meter pier with and mouth of 80 meters, a retroport of 6,000 m² and 5 meters deep. The project awaits Pre-Licensing. After utilizing the express lane and pier, the infrastructure will be transferred to the municipality for implementing the Port of São Gonçalo. According to Paulo Roberto Costa, oil and gas pipelines will also be constructed to connect the petrochemical complex to the Duque de Caxias Refinery (Reduc). Petrobras is also studying the use of railways, whether operational or not, to help in the transport of products from Comperj for the demands of markets within the region, such as Macaé. Another way of transport is under study that would interconnect with the Port of Açu, which is being constructed upstate, in the region of São João da Barra. The vacuum and atmospheric distilleries and the Complex already have much equipment under construction, such as ovens 1 and 2, the base of the permutators, towers 3 and 4, the gas compressor room and compressors. The consortium comprised of Odebrecht, Mendes Junior and UTC will begin work on interconnecting tubes, electric and fiber optic cables between the industrial units of Comperj, g u a r a n t e e i n g the operational

24 T&B Petroleum # 31

OSX

T&B Petroleum # 31

OSX

announces action plan 2011-2015

Fotos e ilustrações: Divulgação OSX

by Maria Fernanda Romero

With around US$ 15bn in orders until 2015, OSX decided to draft an action plan to direct its business during the period, with its portfolio of seven items (five FPSOs and two WHPs) for its main client, OGX, and for the start of operations at the Açu Naval Construction Unit (UCN Açu). 28 T&B Petroleum # 31

SX, a Grupo EBX company, dedicated to the equipment and services segments of the offshore oil and gas industry, presented an action plan at the end of July for producing equipment for oil and gas vessels at its Açu Naval Construction Unit (UCN) by 2015, taking into consideration construction activities of the UCN. “This action plan shows in detail how the construction of the shipyard, construction of the units, operation of the units and what we are doing to have an operation and an efficient project with both the construction of the shipyard as well as the construction of the units so that it our operations will remain as objective as possible”, states Roberto Monteiro, director of finance and investor relations at OSX. OSX planning includes: the construction of the largest shipyard in the Americas, together with its partner and world leader Hyundai Heavy Industries, in São João da Barra (RJ); supplying the OGX demand of the oil and gas production equipment; and supplying an additional demand from new clients in Brazil.

Currently, the company is developing a project for the Naval Technology Institute (ITN) with the Rio de Janeiro State Industrial Federation (Firjan) in order to give vocational training to 3,100 people by the end of 2012. “We have invested R$ 12.7m in this first step and the idea is to reach 7,800 trained people by the end of 2013”, states Monteiro.

Order book The potential order book of OGX together with OSX totals 48 pieces of equipment (24 WHPs, 19 FPSOs and 5 TLWHPs) with an estimated value of US$ 30bn. Of these 48 units, five FPSOs and two WHPs have already been confirmed at a value of US$ 4.8bn. Regarding the FPSO OSX-1, OSX stated it is in the final phase of customization at the Keppel shipyard in Singapore, after having been constructed at the Samsung shipyard in South Korea. “On August 17th, OSX-1 will depart from the Singapore shipyard and arrive in Brazil on September 25th. It has been commissioned to be ready for operations upon arrival, but will only begin production in October”, says Monteiro. The FPSO OSX-2, however, has been forecast by the shipyard to ar-

rive in the second quarter of 2013, and the FPSO OSX-3, which is still under negotiations, for the third quarter of the same period. Furthermore, the FPSOs OSX-4 and OSX-5 have been forecast to be delivered in the second and fourth quarters of 2014, respectively. Monteiro pointed out that the conversion of the OSX-4 will be done outside the Açu shipyard, but that its integration will probably be done at Açu itself, since the shipyard will be ready to receive the vessel as of the first quarter of 2013 and, from then on, it will take 14 months to do the conversion. “We still do not know if the shipyard will be doing it. Today we are in the bidding process for the OSX-4 and 5, which we should finalize by the end of this semester. The engineering project for the conversion and integration of the twin VLCCs, acquired from the Vela Corporation, is also in the bidding phase”, he states. The fixed WHP-1 and WHP-2 platforms are scheduled to be delivered to the Technit site in the first and second quarters of 2013, respectively.

The Açu shipyard The director of finance and investor relations for OSX clari-

Unidade de Construção Naval (UCN) do Açu - Área total: 3,2 milhões/m 2 - Área construída: 2,55 milhões/m 2 - Processamento de aço: 220 mil ton/ano - Dique seco: comprimento 480m x 130m largura x 11m de calado - Custo: US$ 1,7 bilhão (primeira fase da obra)

T&B Petroleum # 31

event

Rio Pipeline 2011

Events

Pre-salt and the new technology

Foto: Banco de Imagens TN Petróleo

highlights at Rio Pipeline 2011 Rio Pipeline, organized the Brazilian Oil, Gas and Biofuels Institute (IBP), has grown in the number of international exhibitors and participants, and the 2011 edition had even greater numbers due to the growth of the industry. New technological challenges and the high demand for the goods year’s event.

by Maria Fernanda Romero

Photo: Petrobras Agency

B RIO PIPELINE 2011 FAIR Exhibition area: 2.300 m² Exhibitors: 150 Countries: 15 Visitors: 2.000 CONFERENCY Participants: 1.300 Papers: 342 Countries: 27

EDITORIAL ADVISORY BOARD 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

Photos: Ricardo Almeida

and services of the pipeline industry were among the main issues of this

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

esides the congress with almost 1,300 participants and the presentation of 342 technical lectures, the Fair of the 4th edition of Rio Pipeline – held every two years – also had 150 exhibitors. This year’s edition brought together almost 3,000 professionals from 27 countries. “With the growth of the global oil and gas industry, there has been an increased need for transferring production and fuel distribution. This scenario has made the pipeline industry even more strategic, opening up many business opportunities. Rio Pipeline is, today, an important opportunity for the industry to meet, and therefore, we count on the institution-

the subjects of most interest to the industry: biofuels transport, decommissioning pipelines, new pipeline inspection technology, managing outsourced services, and operational safety at terminals in conjunction with the Regional Association of Oil, Gas and Biofuels in Latin America and the Caribbean (Arpel). At the previous event in 2009, Rio Pipeline had had a record public and presentations. There were 1,300 participants, up 10% from the previous event in 2007. Internationalization also increased: 25% of the participants were foreign. At the fair, which happened at the same time, there were 120 exhibitors and 2,435 visitors during the three days of the event.

al support of the industry”, states Marcelo Rennó, president of the organizing committees of the event. The program of the 2011 conference was divided into 16 relevant topics of the pipeline industry. Besides the technical lectures, there were also two major panels scheduled: one on pipeline transfer for the Pre-salt, with the participation of representatives of Petrobras, Technip and BG; the second one the technological trends in pipelines, with the participation of the Pipeline Research Council International (PRCI). On the second day of the event, Rio Pipeline held debate forums on

According to Luiz Mendonça, superintendent of the National Organization for the Oil Industry (Onip), Rio Pipeline is compatible with the growth and demands of the industry in the country and has consolidated itself as an international reference in pipeline transport during the last three events. “ Putting together the Exposition Fair with the Conference

makes for the presentation and discussion of topics that reach the entire pipeline industry, with all of its goods, services and technologies”, concludes Mendonça. According to the executive, the presentation of the selected works contribute to the spread of new research and technology that have developed across the industry. “They effectively contribute to the growing participation of the domestic industry in the increasing amount of investments being made”, he says. Alvaro Teixeira, executive secretary of IBP, stated that Rio Pipeline is the 2nd largest event that the institution promotes – and that has become increasingly international.

32 T&B Petroleum # 31

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Rio Pipeline 2011

Pre-salt and the new technology highlights at Rio Pipeline 2011

64 Coffee Break coffee break

Foto: Vicente de Mello

Museu de Arte Moderna do Rio de Janeiro

5 Louise Bourgeois: o Retorno do Desejo Proibido

Louise Bourgeois.

Museu de Arte Moderna do Rio de Janeiro (Espaço Monumental) Opening: September 15, 2011 Exhibition: September 16 through November 13, 2011

the intense and original work of the spider woman

Tuesday to Friday, 12:00 to 18:00 Saturdays, Sundays and holidays, 12:00 to 19:00 Address: Av. Infante Dom Henrique, 85 Parque do Flamengo, Rio de Janeiro/RJ – CEP 20021 140 Telephone: (21) 2240 4944 www.mamrio.org.br

Fotos: © Louise Bourgeois Trust

by Orlando Santos

inally, after having toured São Paulo and Buenos Aires, the major exhibition of Louise Bourgeois arrives to Rio and will stay until the middle of November, with the added advantage that the gigantic spider Mamam, nine meters high and eleven tons – which could not be installed at the two previous exhibitions – will be set up outside of MAM. The exhibition entitled, Louise Bourgeois: the Return of Forbidden Desire, is the first great individual showing of the 20th centuries most emblematic artists. Louise participated in different artistic currents, first in the United States, under the influence of surrealism, and in the 1960s her work was in metal sculpture, with major installations with themes on sexuality, family and society. Her representations of maternity, in the form of spiders, are some of her most

64 T&B TN Petróleo 79# 31 Petroleum

famous works, recognized around the world. The exposition brings together a total of 113 works – designs, paintings, sculptures and installations – completed between 1942 and 2009. The ensemble creates and ample panorama of the work of the French-American artist, born in Paris in 1911 and died recently in New York, on May 2010, at the age of 98. Curated by Philip Larratt-Smith, organized by Studio Louise Bourgeois (New York) and produced by the Tomie Ohtake Institute, the exhibition unites the work of Bourgeois with some of the most important concepts of psychoanalysis. From the more than 1,000 pages of paper, among the correspondence and writings of the artist between 2004 and 2010, the curator investigates the psychoanalytic legacy of her work, in which the artist shares her traumas and desires for cure. This unprecedented archive, detailing the Bourgeois’s relation with the outside world, confirms the centrality of memory to the creative process. Composed of notes, registers of dreams and notations for sculptures, this repository of texts, written during the time the artist underwent psychoanalysis, complements the diaries that she kept throughout her whole life. According to Larratt-Smith, the work of Bourgeois is comprised of forms she encountered to relate plastic equivalents of psychological states. “All the works were chosen to highlight the persistent presence of psychoanalysis as the inspiring force and exploratory space of her life and work”, says the curator. Imaginary autobiography, ghosts of her father, echoes of her childhood, to be a mother, hysteria, phallic representation, the physiological, the oniric dimension, and the unconscious are all represented in her work. They activate a vocabulary anchored in episodes of her biography, but may resonate in the body and memory of any observer. According to Larratt-Smith, the surrealists found a way to access the imaginarium of dreams, while the spontaneity of abstract expressionists

is connected to the unconscious, but the art of Bourgeois allows for the understanding of the connection between the creative process and cathartic function in a privileged way. The curator points out that for Louise, the artist, deprived of any power in day to day life, had a talent for sublimation and becomes, therefore, omnipotent during the creative act, but that it is also a kind of Sisyphus torment, condemned to repeat the trauma infinitely via artistic production. Thus, continued the curator, the creative process becomes a kind of exorcism, a way of moderating the tensions and aggression, an act of catharsis, besides being a source of knowledge, just as psychoanalysis. Better yet, as the artist said, “art is a guarantee of sanity”.

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 Paulo Buarque Guimarães Roberto Alfradique V. de Macedo Roberto Fainstein Ronaldo J. Alves Ronaldo Schubert Sampaio Rubens Langer Samuel Barbosa

6 (1) MAMAN, 1999 (2) ARCH OF HYSTERIA, 1993 (3) MAMELLES, 1991 (4) UNTITLED, 1970 (5) Louise Bourgeois trabalhando no SLEEP II, Itália, 1967 (6) FEMME MAISON, 1946-1947

T&B Petroleum # 31

Louise Bourgeois.

The intense and original work of the spider woman

articles 48 Local Content: understanding the issues through a geological metaphor, by Heller Redo Barroso and Marcos Macedo

54 Survival Craft: training using simulators, by Anthony Patterson, Philip McCarter, Scott MacKinnon, Brian Veitch and Antonio Simões Ré

sections 40 products and services 64 coffee break 66 meeting 67 opinion

# 30

3 editorial 4 hot news 32 events 38 professional profile

SPECIAL PERSPECTIVE 2011: EXPECTATIONS RUNNING ON OIL

62 A step up for oil intelligence, by João Guilherme Sabino Ometto

opinion

Year XI • Issue 31 • october 2011 • www.tbpetroleum.com.br

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

T&B PETROLEUM

50 The royalties effect and the exploration of Brazilian petroleum, by Antonio Bastos Sarmento

Year XII • Issue 31 • October 2011 Photos: Petrobras Agency and Siemens Running against the clock, of Goret Pereira Paulo, is the adjunct director and coordinator of the Energy Unit of the Fundação Getúlio Vargas.

The refinery giants start taking shape OSX announces action plan 2011-2015 Pre-salt and the new technology highlights at Rio Pipeline 2011

SPECIAL: PETROBRAS BUSINESS PLAN 2011-2015

Continued and necessary reinforcement in

E&P Special interview

Welter Benicio, Director of Oil & Gas for Siemens do Brasil

Growing in Brazil

Local Content: understanding the issues through a geological metaphor, by Heller Redo Barroso and Marcos Macedo The royalties effect and the exploration of Brazilian petroleum, by Antonio Bastos Sarmento Survival Craft: training using simulators, by Anthony Patterson, Philip McCarter, Scott MacKinnon, Brian Veitch and Antonio Simões Ré

A step up for oil intelligence, by João Guilherme Sabino Ometto

T&B Petroleum # 31

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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 PUBLISHER Benício Biz beniciobiz@tnpetroleo.com.br NEW BUSINESS DIRECTOR Lia Medeiros (55 21 8241-1133) liamedeiros@tnpetroleo.com.br EDITOR Beatriz Cardoso (55 21 9617-2360) beatrizcardoso@tnpetroleo.com.br ART and CULTURE EDITOR Orlando Santos (55 21 9491-5468) REPORTER Karolyna Gomes (55 21 9187-7801) karolyna@tnpetroleo.com.br Fernanda Romero (55 21 8867-0837) fernanda@tnpetroleo.com.br Rodrigo Miguez (55 21 9389-9059) rodrigo@tnpetroleo.com.br INTERNATIONAL AFFAIRS Dagmar Brasilio (55 21 9361-2876) dagmar.brasilio@tnpetroleo.com.br GRAPHIC DESIGN Benício Biz (55 21 3221-7500) beniciobiz@tnpetroleo.com.br PRODUCTION GRAPHIC and WEBMASTER Fabiano Reis (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

Lorraine Mendes (55 21 7801-7860) lorraine@tnpetroleo.com.br Bruna Guiso (55 21 7682-7074 bruna@tnpetroleo.com.br Luiz Felipe Pinaud (21 7861-4828) l.felipe@tnpetroleo.com.br SUBSCRIPTIONS Rodrigo Matias (55 21 3221-7503) matias@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

Brazil is still the focus of attention

n the international stage, we see attacks, conflicts and economic crisis. Scandals have broken out abroad and in Brazil. Here, interest rates remain high (12%), forecasts of GDP growth have fallen to around 4%, and it is likely that industrial production will shrink this year. Even so, we continue to be the focus of the world, especially in the oil and gas sector, due to the enormous potential of the new presalt discoveries, in addition to other onshore and offshore finds in the post-salt zone. We also have the extra attraction of high local investment volumes: Petrobras alone plans to invest US$224.7 billion (R$389 billion) in its projects up to 2015 – R$79 billion next year, according to the Planning Minister, Miriam Belchior. Then there is the considerable volume of resources to be invested by other oil companies and consortia in the country – there are now 25 operators producing in Brazil, pumping out 2.5 million barrels of oil equivalent per day (boed), from 307 concessions. And now OGX, established in 2007, is set to join their ranks, as it will produce its first oil before the end of this year, using FPSO OSX-1, to be deployed in early October. The supply chain is also investing heavily in training, expansion of production capacity, and the establishment of oil and gas research laboratories (the vast majority in Rio). Strategic partnerships have been formed, to raise competitiveness and to guarantee compliance with local content requirements. All this is due to the many business opportunities in this fast-ex-

panding sector, which, although fundamentally based on hydrocarbons, also revolves around another natural resource, as precious as petroleum: water. This resource is present throughout the oil and gas production cycle, from exploration and production (where it is an essential ally) to refining and petrochemicals, and water management is now a priority for oil companies. This is the subject of this edition’s cover story, which looks at the main water treatment technologies used in platforms and refineries to optimize processes, reduce costs and create environmental benefits. The subject of sustainability is also examined in terms of Petrobras’ new projects, including Rio de Janeiro Petrochemical Complex (Comperj) and Abreu e Lima Refinery (RNEST). Construction work on the two projects is set to accelerate in order to achieve the company’s oil processing targets, in line with growing domestic oil production in the coming years, as various presalt projects start up. A powerful “additive” in the industry’s engine, pre-salt isn’t just boosting the whole production chain, but has also attracted a unique event to the country: OTC Brasil 2011. The first local edition of the world’s biggest offshore technology event, OTC Brasil is attracting companies from many different countries and will of course be fully covered by TN Petróleo. This and other regular events, such as Rio Pipeline, now make Brazil the world’s second largest market for oil sector trade fairs and conferences, making clear that the country remains the main focus of the international oil and gas industry.

Benício Biz Publisher

T&B Petroleum # 31

hot news

Excelerate Energy has signed with Petrobras a 15-year time charter to provide an advanced floating storage and regasification unit (FSRU). This vessel, designated by Petrobras as VT3, will deliver 20 million cubic meters per day of natural gas to the Southeast Region of Brazil. In addition, from July 2013 until the arrival of the VT3 new building, the Guanabara Bay Terminal will make use of the Exquisite, one of Excelerate Energy’s existing FSRUs with an increased regasification plant, expanding the terminal’s delivery capacity from 14 to 20 million cubic meters per day. The VT3 new building design is based on Excelerate Energy’s existing fleet and Petrobras requirements, and will have a storage capacity of 173,400 m³ making it the largest FSRU in the

Photo: Courtesy Excelerate Energy

Excelerate wins FSRU contract from Petrobras

industry. Capable of operation as both an FSRU and a fully tradable LNG car-

BNDES launches support program for the oil & gas sector supply chain The BNDES approved the creation of the Support Program for the Development of the Supply Chain for Oil & Gas sector-related Goods and Services (BNDES P&G). The program offers the BNDES new ways to support the supply chain of oil & gas goods and services, narrowing the relationship existing between the Bank and the sector. The high volume of investments expected for the coming years shows a favorable panorama to consolidate the oil & gas sector supply chain, with heightened competitiveness of Brazilian companies in the domestic and international markets. With a budget of R$ 4 billion and effective until December 31, 2015, the BNDES P&G aims to remove some of the obstacles to the sector’s competitiveness and development, such as difficult access to credit, high capital cost and access to state-of-the-art technology. The program focuses on projects undergoing implementation, expansion and modernization of produc4 T&B Petroleum # 31

tion capacity; supply chain consolidation, merger and acquisition, and internationalization; financing of working capital required to produce equipments and render services; and support for research, development and innovation activities. Besides offering different financial conditions, with interest rates ranging from 4.5% per annum for innovation to 11.04% for financing working capital in direct operations, the program eases access to credit for micro, small and medium-sized companies (MPMEs). Smaller companies represent approximately 85% of O&G supply chain companies in the country. The program also outlines higher levels for the BNDES’ participation in financing projects and enables support for the acquisition of technology, manpower qualification and capacity-building and services rendering, especially sector-related engineering and certification services. The BNDES P&G may also support the supply chain by means

rier, this vessel is expected to enter into service in May of 2014. Excelerate Energy has selected DSME for the construction of the new vessel, the same shipyard that built its previous eight FSRUs. Working with DSME, Excelerate is continuing the evolution of a highly reliable and proven design, while at the same time, expanding its fleet of compatible vessels. “We are extremely pleased with the selection of Excelerate Energy to provide this industry-leading vessel, and we are confident that with our experience and expertise in floating regasification that we will provide a high standard of service to justify the confidence that Petrobras has placed in us,” said Rob Bryngelson, President and CEO of Excelerate Energy.

of operations with the so-called “anchor companies”. In this case, the idea is to ease access to credit for smaller companies (MPMEs). The anchor company is a larger-sized company (with annual gross operating income over R$ 90 million) that, based on a Suppliers Development Plan, forwards at least 30% of financing resources to its suppliers and sub-suppliers, boosting production activities in which it is direct or indirectly involved. These operations are expected to foster an even closer relationship among the sector ’s companies, in addition to enabling access to credit throughout the entire O&G supply chain. BNDES P&G’s clients are all companies with head offices and management in Brazil, which integrate, or will in the future, the supply chain of oil & gas sector-related goods and services. The BNDES P&G may operate with financing, in direct, indirect (by means of accredited financial institutions) or mixed modalities, and with variable income instruments, involving corporate stakes (shares).

Siemens: Research and Development Center for Oil & Gas in Rio de Janeiro Siemens will install in Brazil one of the most advanced global Research & Development (R&D) centers for the Oil & Gas sector. The announcement was made by Rio de Janeiro’s Governor, Sergio Cabral and Siemens’ global CEO, Peter Löscher. Result of a partnership with the Federal University of Rio de Janeiro (UFRJ), the center shall receive an investment of roughly US$ 50 million from the company. The initiative is part of the company’s plan of increase its activities with new investments in the country. According to Löscher, besides having inaugurated eight new manufacturing facilities in the last five years, the company intends to grow even more and invest up to US$ 600 million through 2016 to expand technology and innovation activities and open new plants in the country. ”Brazil is one of the drivers of the global economy and this trend is expected to continue over the next years. Today, our commitment to the country became even bigger ”, said Peter Löscher, Siemens’ global CEO. “The new research and development center in Rio de Janeiro is a milestone in this new growth phase in Brazil”, he added. Siemens’ new R&D Center will be installed at the Ilha do Fundão Technological

R$ 520.7 million in ethanol

Park in Rio de Janeiro, and is expected to start up by the end of 2012. With an area of four thousand square meters and operating initially with 800 researchers and engineers, the center is expected to generate at least another 200 high skilled jobs untill 2016. Adilson Primo, CEO of Siemens Brazil, said that the initiative elevates Brazil to the status of global center of excellence in Advanced Engineering, Research & Development in Oil & Gas and Subsea Technologies within the Siemens Group. UFRJ Technological Park will have R&D centers of Schlumberger, Baker Hughes, FMC Technologies, Usiminas, Halliburton, Tenaris Confab. BG Brasil e EMC Computer Systems Brasil.

Liderroll wins the Global Pipeline Award Brazil-based Liderroll was awarded the “Global Pipeline Award” by ASME the American Society of Mechanical Engineers (ASME), as the leading technological development in the pipeline industry, for Liderroll’s work with Second Generation Propelled Rollers installed in Petrobras pipeline systems in Brazil. The “Calgary Award” for Best Technical Paper was presented to Attlus RTD Group’s Cesar Buque, Xavier Deleye, and Nils Portvgen’s presentation “3D Ultrasound Tomography: Eliminating TOFD and Phased Arrays”. Along with that recognition, IBP offers the winners, transportation and hotel accommodations to present paper at the International Pipeline Conference, to be held in Calgary, Alberta, September 2012. Winners at the Calgary conference receive the “Rio Award” to

Petrobras Biocombustível and Grupo São Martinho, through Nova Fronteira, announced an investment plan worth RS$520.7 million aimed at expanding the milling capacity of the Boa Vista plant to 8 million tons of sugarcane from the 2014/2015 season. The unit, which is located in the municipality of Quirinópolis in Goiás has gradually increased its sugarcane processing capacity since its inauguration in 2008. 2 million tons of sugarcane was milled for the 2010/2011 harvest, with 2.3 million tons for the 2011/2012 harvest. Of the amount to be invested, R$430.5 million will go towards the purchase of industrial equipment and R$90.2 million for agricultural equipment. Upon completion of the expansion, scheduled to take place in 2014, about 70% of the total production of the unit will come from own sugarcane. From this investment, the Boa Vista plant will produce 700 million liters of ethanol, with an annual cogeneration of 600 000 MWh of electricity, which will make it the largest unit dedicated exclusively to the production of ethanol from sugarcane in the world. In addition, 3,000 jobs, both direct and indirect, will be generated in the region of Quirinópolis. For Petrobras Biocombustível CEO Miguel Rossetto, “this great project should mark the beginning of a new cycle of investment in ethanol production for the country.” “The investments are essential to boost our production capacity and thereby increase the supply of ethanol in the market,” said Fabio Venturelli, CEO of Nova Fronteira Bioenergia S.A.

Marivaldo Escalfoni, Executive Director and Paulo Fernandes, CEO

present their paper at the Rio Pipeline Conference the following year. As IBP spokesman Ernani Filgueiras announced when adjourning Rio Pipeline 2011, “This year’s event consolidates Rio Pipeline in the calendar of leading international specialized events in the global community.

T&B Petroleum # 31

hot news

First Company signs agreement for installation at Unicamp’s Science Park Cameron do Brasil signed an agreement with Unicamp for the installation of a laboratory at the University’s Science Park. The agreement, which was arranged by Agência de Inovação Inova Unicamp, a University’s body responsible for managing the Science Park, lays down the conditions for occupation and permission for using the area for the construction of the lab’s building. The company, an equipment manufacturing company for oil and gas exploitation, will be the first to settle on the location chosen for the Park. The total area of the land granted to Cameron is 850 m2 and the laboratory will occupy an area of approximately 1000 square meters. Total construction time for the work will not exceed two years and the costs involved in the construction will be borne by company. In order to a company to install itself at Unicamp’s Science Park, besides funding the construction of the building, it must meet some conditions, according to Inova’s CEO, Roberto de Alencar Lotufo. “The main motivation for setting up a research and development laboratory of companies in the Park is to conduct research projects in collaboration with Unicamp”, pointed out Lotufo. Cameron entered into a cooperation agreement with the University in February this year, anticipating the prospect for research projects in the areas of submarine equipment and processes for oil processing and production, focused in the pre-salt layer. The cooperation agreement involved the School of Mechanical Engineering of Unicamp (FEM) and Unicamp’s Centro de Estudos de Petróleo (Cepetro).

As per John Bartos, VP of Development & Technology of Cameron Corporation, “It is our pleasure to have signed with the Unicamp a master research agreement. Unicamp is a perfect fit for our business in Brazil and we feel very fortunate in having a partner like Unicamp to develop our technological projects in Brazil.” The first project to be held in the context of the partnership involves the research group on Maritime Systems and Risers (LabRiser) and the research “Experimental and Numerical Study of a PTMD Suppressor in Reduced Scale Model of Submerged Jumper ”. Part of a line of investigation of the group, the research will allow the study of innovations for the suppression of vibration in subsea lines submitted to current efforts, among others.

According to Professor Celso Kazuyuki Morooka, of the Department of Petroleum Engineering of FEM, besides bringing contributions for postgraduate students, this study may be attended by graduate students in undergraduate research and there is a chance of interaction with the University of Houston (UH) in the United States. The agreement also covers R&D interdisciplinary activities. “The research will involve areas such as chemical and material processing, which present strong interactions with the Institute of Chemistry, for example”. According to him, the study will contribute to studies on oil, started at Unicamp within the Exploration and Production (E&P) area in 1987, upon the creation of the master ’s degree in Petroleum Engineering.

T&B Petroleum Newsletter Every week, on your computer screen, the news from the shipbuilding and offshore industry. Subscribe at www.tbpetroleum.com.br 6 T&B Petroleum # 31

Lula-Mexilhão gas pipeline comes onstream in Santos Basin The Consortium operating Block BM-S-11, formed by Petrobras (65% Operator) in partnership with BG Group (25%) and Petrogal Brasil S.A. - Galp Energia (10%), has opened up the Lula-Mexilhão gas pipeline. The system connects the Lula field to the Mexilhão platform, located in shallow Santos Basin waters. With a capacity to take off up to 10 million m3 gas per day, the pipeline will transport gas produced in the Pre-Salt Cluster. This project is strategic for developing production in the Santos Basin Pre-Salt layer and to increase gas supply flexibility on the domestic market. Lula-Mexilhão is an unprecedented milestone for Brazilian engineering. Extending over 216 kilometers, 18 inches in diameter and operating at a pressure of 250 bar, it is the deepest and longest undersea pipeline ever laid in Brazil It begins 2,145 meters below sea level, where it is connected to the Cidade de Angra dos Reis FPSO vessel (floating production, storage and offloading) in the Lula field, and terminates at the connection to the Petrobras’ Mexilhão platform, at a depth of 172 meters. Of strategic importance to Santos Basin logistics, the Mexilhão platform is the largest fixed production unit in Brazil.

The new pipeline will also play a part in taking off natural gas from the platforms involved in developing phase one of the Santos Basin Pre-Salt operations. To deploy the gas pipeline, it was necessary to analyze the conceptual design and make sure that capacity was adequate to meet market demand, as well as organizing very tight coordination among equipment suppliers, integrators and installers. Developing new suppliers and incorporating innovative designs for equipment and accessories were also essential to guarantee project viability.

Mission accomplished The arrival of FPSO OSX-1, which is to be installed in Waimea field in Campos Basin, and operated by OGX, is yet another proof of the capabilities of the country’s oil and gas supply chain. It is a tribute not only to the young oil company, established four years ago, which will produce its first oil by the end of this year, and its sister company OSX, responsible for the vessel, but also Forship, Brazil’s foremost commissioning engineering specialist. Forship will deliver the FPSO ready to operate, after just over one year of work, starting in August 2010. To ensure a successful handover, during the voyage from Singapore to Brazil, the company maintained a team of approximately 20 people on board the vessel, including the cook. “People wan-

ted less spicy food!” recalls Paulo Elias, the company’s O&G vice president and executive director of subsidiary Forship Asia. Elias explains that the work performed at the Keppel shipyard in Singapore basically involved adapting the vessel to operating conditions in Waimea field, given that the platform was designed and built for North Sea conditions. Forship’s scope included commissioning operating systems and ensuring full compliance with Brazilian legislation. “Forship also performed the pre-commissioning activities, checking whether all the equipment was installed in line with the design and legislation,” says Elias. After arriving in Brazil, the FPSO will be inspected by the maritime authorities before proceeding to its final location, with

The Lula-Mexilhão gas pipeline is linked to other Petrobras System facilities, including the pipeline connecting the Mexilhão field to the Monteiro Lobato Gas Treatment Unit (UTGCA) in Caraguatatuba (state of São Paulo) for transporting gas to the mainland, and the Caraguatatuba-Taubaté pipeline which transports processed gas to the domestic market distribution network. Integration of the BM-S-11 Consortium’s Lula-Mexilhão gas pipeline with Petrobras’ existing facilities will be crucial for speeding up Brazilian Pre-Salt oil production. a Forship team still on board, to complete the process in order to produce the first oil. “OSX-1 should arrive in Guanabara Bay with 65% of its commissioning work concluded. You don’t need to reach 100% to extract the first oil. We will finish our work while operating in Campos Basin,” says Elias. “Although we have many similar projects in our portfolio, it’s always a source of pride to complete another job,” says Fábio Fares, the president of Forship Engenharia. “Not just because we’ve confirmed our competence once more, but because we’ve demonstrated, once and for all, the capability and competitiveness of Brazilian industry.”

T&B Petroleum # 31

special interview Welter Benicio, Director of Oil & Gas for Siemens do Brasil

Growing

in Brazil

by Maria Fernanda Romero

In Brazil for more than one hundred years, Siemens has further increased local content in products and equipment by setting up new factories and specialty centers in the last ten years, and big investments and projects for excellence are the wager of the Brazilian outfit of the company for the next ten years, according to Welter Benicio, director of Oil & Gas for Siemens do Brasil. An electric engineer with a master’s in business administration from FGV, this executive started his career in 1987 with Petrobras, where he worked for 11 years before moving on to ABB and Vetco Gray. Mr. Benicio states that Siemens has set some daring goals for Brazil: considering the current boom in the Brazilian market, the company plans to concentrate efforts in the oil, gas and energy segments – investing heavily in research and development (R&D) within the country. TB Petroleum – Siemens has recently announced plans to broaden its activities with new investments in the country. How important is the Brazilian market to the company? What are the company’s revenues here in Brazil? Welter Benício – The Brazilian market is crucial to any company, regardless of the market segment. We have witnessed the growth and potential of emerging markets, especially in the BRIC nations, which Brazil is a part 8 T&B Petroleum # 31

With 13 factories, more than 10,000 collaborators, and revenues of R$ 4.3bn, the company has set some daring growth targets for the Brazilian market in the next few years.

T&B Petroleum # 31

special interview

some underway for both on- and offshore.

The SPG is a technology with a difference that can be applied in any oil field at depths of up to 3,000 meters, which includes the areas that we now call the consequently, participate in this market. This program foresees initial investments of around US$ 100m in facilities and centers for research and innovation. Was the acquisition of Chemtech part of the strategy to meet the needs of the oil and gas industry? Were other acquisitions done with this focus in mind? What were the companies involved? Yes, Chemtech represents a differential for Siemens. It is a company with a strong reputation in the market and fantastic track record in the O&G industry. Acquiring this company was an important step in our market positioning, to say the least: after all, how many companies in this country can claim a corps of 1000 engineers from various disciplines? Other acquisitions also took place. This year, Siemens announced the purchase of Bennex and Poseidon, to subsea engineering companies based in Norway. The purpose of these acquisitions was to give Siemens the necessary expertise to develop subsea power grids (SPG). Bennex, with a portfolio that includes electric connectors and penetrators, among other products, and Poseidon, with its 10 T&B Petroleum # 31

pre-salt blocks.

corps of subsea engineers, are fundamental to taking the company offshore and in developing SPG components. Part of this development is already being done in Brazil and the scope of our work will grow with the new research center in Ilha do Fund達o. What are the main products and services that Siemens offers the oil and gas industry? What have been the main projects of Siemens in the last few years (platforms, refineries, tankers), focusing on the products and services supplied for each? Siemens supplies multidisciplinary engineering, gas and steam turbines, compressors and ventilators, water treatment systems (sulphur removal), electric and automation systems for oil plants, whether initial processing or further downstream. Our SPG will be tested in shallow waters and available for applications in Brazil, at water depths of 3,000 meters, according to the request of Petrobras, in 2015. We have delivered innumerous projects, and

What are the main technologies that Siemens can offer offshore operations? What are the solutions that have been made in Brazil? The portfolio mentioned has been installed in offshore platforms (drilling and production). Some components are fabricated in Brazil and it is important to point out that Siemens has met the demands of local content as requested, including for rotating equipment (turbines and compressors). Are there any special technologies you have to offer the oil companies to meet the needs of the Pre-salt? What is the best technology for the severe conditions to be encountered there? The SPG is a technology with a difference that can be applied in any oil field at depths of up to 3,000 meters, which includes the areas that we now call the pre-salt blocks. As far as compressors are concerned, we have analyzed and defined material to be used with corrosive fluids that are rich in CO2 and quite prevalent in the presalt area. The other components are trustworthy and strong enough for the typical offshore scenario, regardless of whether applied in the pre-salt or any other area. For the offshore industry, Siemens has already announced the installation of a compressor production plant. What kinds of investments are foreseen for this unit? In general, we plan on investing around US$ 50m in facilities for rotators, which includes compressors. How is the project going? Where will the factory be constructed and when will it be up and operating? What will be production capacity?

growing in Brazil

Some steps have already been taken in Jundiaí (SP), where we already have a steam turbine factory. Greater investments should accompany the orders of our clients. It is important to point out that, today, Siemens is the only company that manufactures turbines in the country. Our Jundiaí facility produces steam turbines up to 100 MW, and thus, adapting it for other rotators or higher-powered steam turbines would be easier than simply starting a new plant from scratch. Regarding capacity, it will certainly be sufficient to meet the demands of the oil and gas market.

Siemens do Brasil fact sheet

You are also planning on two new factories in Itajubá, Minas Gerais, to produce electric motors and mechanical reducers, especially for mining, steelworks and the oil and gas industries, as well as for the sugar and

ethanol segments. How much was invested in these factories and when will they be up and operating?

- First operations in the country: 1867 - First country headquarters: Rio de Janeiro, 1895 - Company founded in Brasil: 1905 - Responsible for 50% of the nation’s electric power - More than 10,000 employees - Six research, development and engineering centers - 13 factories - 12 regional sales and services offices

We will invest some R$ 300 million in these two new factories.

The forecast is that they should be finished by the end of 2012 and fully functioning by 2016. At the end of last year, Siemens announced that plans on surpassing R$ 40 billion in revenues from ‘green’ technologies by 2014. How exactly will the company accomplish this? Will there be an increase of investments in the environmental portfolio of the company? Will more sustainable technologies for the oil and gas industry be included in this strategy? Yes, Siemens is already investing heavily in this segment. The company invests almost R$ 4 billion per year in the research and development of products for energy efficiency and greater productivity. At least R$ 1.5 billion of this total has specifically been allocated for green technologies.

T&B Petroleum # 31

Business Plan 2011-2015

Business Plan 2011-2015 by Maria Fernanda Romero

Continued and nece

12 T&B Petroleum # 31

ssary reinforcement

E&P

127.5bn) in resources (against 53% in the previous plan) in order for Petrobras to expand exploration activities and assure the increased total production (oil and gas) in barrels of oil e q u i v a l e n t ( b o e d ) f ro m t h e current 2.7m (Brazil and abroad) to 4m by 2015 and 6.4m in 2020. T&B Petroleum # 31

business plan 2011-2015

he need for major investments, mainly in exploration and production, according to the president of Petrobras, José Sergio Gabrielli de Azevedo, has already consolidated Brazil as the seventh biggest consumer of oil and one of the world’s most growing markets, at an annual average of 2.1%. “The pre-salt alone will be almost 2m barrels of oil equivalent per day in 2020. Therefore, the contribution of the pre-salt will go from the current 2% to 18% in 2015 and 40.5% in 2020. This growth will be made possible with the installation of 30 long-term duration tests (LTDs) in the next five years, of which 20 will be in the pre-salt and 10 in the post salt”, stated the president of the Brazilian state enterprise during the presentation of the business plan to journalists in Rio de Janeiro. The Petrobras Business Plan 2011-2015 has allocated resources of US$ 224.7bn for the period, of which 95% of the investments (US$ 213.5bn) are for development activities in Brazil and 5% (US$ 11.2bn) abroad, covering a total of 688 projects. Of this total, 57% refers to project that have already been authorized for execution and implementation. Petrobras has once

again prioritized investments in E&P. According to the new plan, 87% of the investments in this area will be concentrated in new projects included in its portfolio, highlighting the development of the pre-salt areas and in the areas of remunerated assignment. “Since the pre-salt will have the main role in E&P, we will invest 52% in the pre-salt and 48% in other areas. Furthermore, we will invest in new refineries and the other half of the investment cycle in quality, as far as the current refineries are concerned”, explained Gabrielli. The refinery, transport and commercialization area will have a 31% of the total investments, compared to 33% in the previous plan, with investments falling, in this case, from the US$ 73.6bn in the 2010-2014 Plan to US$ 70.6bn in the next five years. The main changes should be concentrated in the timelines for the new refineries and in the development of exploration areas. The Premium I (in Maranhão) and II (in Ceará) Refineries, with an investment forecast of US$ 30bn will begin operation a year or a year and a half later than the forecast between 2015 and 2017.

The gas and energy division will also face reduced investments, going from 8% to 6% of the total volume: from US$ 17.8bn to US$ 13.2bn; the same will occur for the petrochemical division, whose investments will fall from US$ 5.1bn to US$ 3.8%. The distribution area has been allocated investments of US$ 3.1bn, compared to the US$ 2.4bn of the previous plan. The biofuel division will also have increased investments, from US$ 3.5bn in the previous plan to US$ 4.1bn. Furthermore, total company sales, which were at 3.8m boed (barrels of oil equivalent/day) in 2010 should grow 6.6% per year, reaching almost 5m boed in 2015 and more than 7m boed in 2020, a detail highlighted by the company president. “The major part of the financial divestment will be in Brazil, but, if not considering the monetary part, most of the sales will be abroad”, stated Gabrielli. Among the corporate challenges, the company president cited the planning of human resources so that the company may become an international reference in the energy industry and in the management of human resources. “The plan requires an additional personnel requirement, surpassing the current 85,000 employees to 103,000 by 2015, which includes subsidiaries and employees abroad. The E&P division is mostly responsible for the Petrobras Business Plan 2011-2015 increase, which follows the US$ 224.7 billion E&P investments in Brazil (pre-salt and pos-salt) increase in production”, GaUS$ 127.5 billion brielli pointed out. Biofuels (2%) Distribution (1%) US$ 3.1 US$ 4.1 Infrastruture (17%) Production “From a financial standdevelopment (65%) Petrochemicals (2%) Corporate (1%) US$ 20 point, we consider it a solid US$ 3.8 US$ 76.4 US$ 2.4 Gas, energy & Pre-salt (37%) Exploration (18%) plan, which is feasible with Gas chemical (6%) US$ 28.3 US$ 21.2 US$ 13.2 all the conditions to reach Pre-salt (26%) US$ 5.5 E&P (57%) the long-term goals, without US$ 127.5* RTM (31%) jeopardizing the financial US$ 70.6 *US$ 53.4 billion in Pre-salt US$ 64.3 billion in Pos-salt health of the company”, stated the president of Petrobras. 14 T&B Petroleum # 31

continued and necessary reinforcement in E&P

Petrobras Business Plan: Petrobras Business Plan:evolution Evolution Plano de Negócios da Petrobras: evolução BP 2011-2015: US$ 224.7 billion BP 2010-2014: US$ 224.0 billion BP 2009-2013: US$ 174.4 billion BP 2008-2012: US$ 112.4 billion BP 2007-2011: US$ 87.1 billion BP 2006-2010: US$ 52.4 billion

The executive clarified that the cash flow will be the main source of investments of the plan and that the need for finance will be between US$ 67bn and US$ 91.4bn, representing captured resources between US$ 7.2bn and US$ 12bn for each year of the plan, which is within the company’s average goal for financial leveraging between 25% and 35%. The total production goal for the next five years shows an increase when compared to the previous plan, reaching 3.993m boed in 2015, of which 3.070m bpd represents oil production in Brazil (543,000 boed in the pre-salt). The long-term goal increased significantly, from 5.382m boed to 6.418m boed in 2020 (4.910m bpd of Brazilian oil production). According to the company, this increase is basically due to the growth in the expected participation of pre-salt production and the beginning of production in the areas of remunerated assignment, during the capitalization process last year. Regarding regional investments, Gabrielli stated that Petrobras will invest US$ 104.7bn in Rio de Janeiro. If including the investments of partner enterprises in the state, this amount reaches US$ 127.4bn.

For the Southeast region, the forecasted investment is US$ 139.2bn: the state of São Paulo, specifically, will receive an investment of US$ 20.9bn. Of this total, US$ 8.248bn has been allocated for exploration and production; US$ 9.851bn for refinery, transport and commercialization; and another US$ 1.575bn for biofuels, among other projects.

Reduced investments for 2011 In this Business Plan, Petrobras reduced its investment forecast for this year, from R$ 93bn to R$ 84.7bn. Even after the reduction, the investments forecasted represent and increase of 11%, when compared to the R$ 76.4bn of 2010. Regarding it production target for 2011, the company maintained 2.1m barrels per day and total oil and gas production in Brazil and abroad at 2.772m boed.

US$ 7bn less for the financial area Next came the company ’s divestment plan: US$ 13bn, of which US$ 7bn will come from the financial area. “We are going to do operations will receivables and guarantees”, commented Gabrielli, who pointed out that the rest will come from the sale of assets.

According to the president of Petrobras, the world economic crisis should not complicate the sale of company assets. “The crisis is not about liquidity problems. The problem is not lack of money; the problem is that there is too much. Clearly there will be selectiveness and only more solid projects with greater expectations of quick profitability will attract investments”, he said. The executive highlighted that he sees no problem for Petrobras to capture resources for its Business Plan 2011-2015. The company will need a total somewhere between US$ 67bn and US$ 90bn for the period. “The price of oil falls a bit on the international market, but remains high and generate the cash flow necessary for Petrobras to complete its plan”, commented Gabrielli, who restated that the company has been maintaining its longterm policy for gasoline and diesel prices, balanced and on par with the American market: “[the prices] have followed closely, at times for distantly”. On the occasion of the presentation of the Business Plan, the financial director of Petrobras, Almir Barbassa, called the inclusion of the divestment plan in the business plan an “unprecedented strategy” of the company, stating that divestment plan mainly includes the partial sale of assets in exploration areas both in and out of Brazil. “Since the exploration and production division is where the major part of the investment lies, it is only natural that it will also contribute a large amount in the sale. It would make no sense to try to T&B Petroleum # 31

business plan 2011-2015

New projects: large projects drive the increase in production Lula Pilot FPSO BW Cidade Angra dos Reis 100.000 bpd

Guará Pilot 2 FPSO Cidade de São Paulo 120.000 bpd

Cachalote and Baleia Franca FPSO Capixaba 100.000 bpd

Mexilhão Jaqueta HG

3000

Uruguá FPSO Cidade de Santos 35.000 bpd

Tambaú FPSO Cidade de Santos NG

2500

Jubarte FPSO P-57 180.000 bpd

Thous. bpd

2000

2.004 1500

1000

500

2.100 Marlim Sul module 3 SS P-56 100.000 bpd

Tiro Pilot SS-11 Atlantic Zephir 30.000 bpd

EWTs Lula NE e Cernambi FPSO BW Cidade São Vicente 30.000 bpd

EWT Guará FPSO Dynamic Producer 30.000 bpd

EWT Carioca FPSO Dynamic Producer 30.000 bpd

2010

Baleia Azul FPSO Cidade de Anchieta 100.000 bpd (FPSO Espadarte realocation)

Roncador module 3 SS P-55 180.000 bpd

Juruá NG Lula NE FPSO Cidade de Paraty 120.000 bpd Parque das Baleias FPSO P-58 180.000 bpd

Guará (North) FPSO 150.000 bpd Cernambi South FPSO 150.000 bpd

Papa-Terra TLWP P-61 & FPSO P-63 150.000 bpd

FPSO P-67 Replicant 2 150.000 bpd BMS-9 or 11

3.070

FPSO P-66 Replicant 1 150.000 bpd BMS-9 or 11

Tiro/Sidon FPSO Cidade de Itajaí 80.000 bpd

Roncador Module 4 FPSO P-62 180.000 bpd

Baleia Azul FPSO 60.000 bpd

Maromba FPSO 100.000 bpd

Aruanã FPSO 100.000 bpd

Siri Jaqueta and FPSO 50.000 bpd

ESP/Marimbá FPSO 40.000 bpd

4 EWTs Pre-salt

3 EWTs Pre-salt

5 EWTs Pre-salt

Pos-salt projects

2011

Franco 1 Transfer of Rights FPSO 150.000 bpd

2012

Pre-salt and transfer of rights projects 2013

NG Projects

EWTs

2014

2015

New vessels anddeequipments / Resources required for production growth Sondas, barcos apoio e plataformas a serem contratados no período Current Posição Situation (dez/2010) (dec/10)

Critical resources Equipamentos Drilling depth above 2.000 m de 2.000 m Sondas rigs de perfuração LDA acima

Delivery Plan (to becontratados contracted) Accumulated Value Equipamentos e a contratar

By Até2013 2013

By Até2015 2015

By Até2020 2020

37¹

65²

287

423

479

568

Productions platforms SS and FPSO Semissubmersíveis e FPSOs

Others Jaqueta(Jacket e TLWPand TLWP)

Supply special vessel Barcos and de apoio e especiais

(1) rigs sondas reallocated from international operations, expire expiram in 2015, em so it2015, is notassim, considered in theconsideradas 2020 accumulated value. (1) Two As duas realocadas de operações internacionais não foram no valor acumulado de 2020. (2) demandde forlongo long-term beajustada adjustedde asacordo new demand assessments are made. pois estes números incluem 29 sondas cujos contratos vencem até 2020. (2) The A demanda prazowill será com a evolução da necessidade,

reach US$ 13bn in divestments in areas that do not even have this amount in assets”, commented the financial director, who added that most of the divestment will occur in the next two years. The farm-outs (the partial or total sale of the oil concession rights) is where most of the divestment will be concentrated, according to the financial director, although the company is “incessantly searching” for “intelligent” alternatives to reduce administrative costs. Barbassa cited the creation of the Sete Brasil 16 T&B Petroleum # 31

company to contract and manage drill rigs, may be an alternative to reduce costs: “Henceforth, Petrobras would not need to invest in rigs”, he stated. Petrobras will also invest US$ 1.3bn per year to explore new frontiers, recuperate oil fields, and to develop a new generation of offshore systems and subsea production systems, natural gas logistic solutions, as well as to facilitate refinery activities and aggregate value and diversify products.

Currently, four supply companies are constructing research centers and several companies are interested in developing technology centers within the country in order to meet the demand for local content. “New technologies will represent a gain in efficiency for E&P processes, and increase production during the period” stated the president of Petrobras. Gabrielli highlighted the investments in energy efficiency and reduced greenhouse gases: “by voluntarily committing to re-

continued and necessary reinforcement in E&P

duce burning of gas during E&P operations and reducing the energy demand in refinery and gas and energy operations, besides other action items, with investments of US$ 1.2bn by 2015â&#x20AC;?. For refinery, transport and commercialization (RTC) and petrochemicals, the Business Plan forecasts total investments of US$ 74.4bn by 2015. New refineries, quality in fuels and upgrading represent 74% of the investments in RTC. According to the company president, the investments in refining capacity will meet the demands of the growing Brazilian market. The Business Plan forecasts investments of US$ 11bn in the international division. Of this total, 87% will be allocated to the E&P of foreign assets. The focus is on developing exploration and production in the Gulf of Mexico and off the coast of West Africa

(Nigeria). The remaining 13% will be allocated for the distribution and refining areas.

Supply remains with US$ 74.2bn

Rigs contracted: 39 and another 28 to be constructed by 2020 By 2013: 16 rigs contracted before 2008 and 2 rigs reallocated from international operations; +15 new rigs contracted in 2008, +1 in 2009, +1 in 2010 and +4 in 2011, via international public tender; 2015 to 2020: of the 28 rigs to be constructed in Brazil, 7 have already been contracted (EAS) and the public tender has already been opened for chartering the 21 remaining rigs.

The supply division will receive US$ 74.2bn of the total US$ 224.7bn in investments foreseen in the Business Plan. Of the total US$ 70.6bn invested in Refinery, Transport and Commercialization, 51% will be allocated to increase the refinery facilities. â&#x20AC;&#x153;After 32 years, we are constructing major refineries and we already know that we will be operating at the market limit, but meeting t he d e ma n dâ&#x20AC;? , stated the director of Supply for Petrobras, Paulo Roberto Costa. The executive also highlighted that Petrobras will increase its processing capacity

T&B Petroleum # 31

business plan 2011-2015

Business Plan 2011-2015: downstream investments New refineries, fuel quality and modernization account for 74% of RTM investments Logistics for oil (4,9%)

US$ 3.45

International (1,0%)

US$ 0.7

Fleet expansion (6,2%)

US$ 4.4 Operational improvement (13,9%)

US$ 9.8

Refining capacity expansion (50,1%)

US$ 35.4

Quality and conversion (23,9%)

US$ 16.9

Investments: US$ 70.6 billion by 395,000 barrels per day in the next five years. The forecast for the 2016-2020 period is 1.065m barrels refined per day. “Without new refineries, we are going to have to import up to 1m barrels of diesel by 2020. Today we import 5% of what we sell in liquid derivatives. The US imports 3%. In 2011, we already cannot meet the demand of the internal market. If we do not construct [refineries], we will import – generating wealth abroad”, he pointed out. The director defended the location of the new refineries, stating that the demand is growing in the North, Northeast and in the Midwest of the country. Petrobras concluded the gasoline unit at the Potiguar Clara Camarão Refinery (RPCC) in the state of Rio Grande do Norte, and is constructing three more units in the Northeast: Premium I, in Maranhão, Premium II, in Ceará, and the Abreu e Lima Refinery in Pernambuco. The company is also constructing the Rio de Janeiro Petrochemical Complex (Comperj). Regarding oil derivatives, the first six months of this year showed liquid derivative consumption grew an average of 6.6%. Gasoline grew 17%; aviation kerosene, 12.9%, and diesel, 8.6%. The executive guaranteed 18 T&B Petroleum # 31

that the country will not be without fuel: “Regardless of the increased consumption, there will be no lack of gasoline or any other derivative product in the Brazilian market”. With the increased demand in the domestic market, the selfsufficiency of the country in oil derivatives was postponed and at times like this, Petrobras needs to import to guarantee supply. According to Costa, the company will import 630,000 barrels of gasoline in two shipments by the end of August, and there may be more importations throughout the year. Paulo Roberto stated that the Brazilian Development Bank (BNDES) will assess by the end of September the guarantees of PDVSA to bear with the 40% regarding the loan contracted with the Bank for the construction of the Abreu e Lima Refinery. “If the guarantees are approved, the investment of the Venezuelan company should occur by November. The conditions should be signed by the 20th”, he concluded.

Gas and energy focused on E&P In the Gas and Energy division, Petrobras will count on US$ 13.2bn of this total for the period, of which US$ 300m will be allocated to the International division

and US$ 12.9bn will be invested in Brazil. Furthermore, US$ 2.8bn will be invested in thermoelectric energy generation and US$ 800m for the liquefied natural gas chain (LNG) – regasification and liquefaction – for the transfer of pre-salt gas and the meeting the demands of the thermoelectric market. The director of Gas and Energy of Petrobras, Maria das Graças Foster, stated that the company forecasted gas supply, from the E&P division of the company at 78m m³ per day. This volume, due to the increasing oil and gas production foreseen by the company, will be increased to 102m m³ per day by 2020. “We constructed, effectively, during this period (2007-2011), the network of gas pipelines in Brazil. From 2007 to 2011 there were at least 5,000 km of gas pipelines, two terminals, 17 compression stations, 43 delivery stations. Now, our objective for this new plan (2011-2015) is to reap the maximum benefit of this flexible network of gas pipelines, with the minimum investment possible”, assured Foster. The executive pointed out that Petrobras has already closed a cycle of natural gas transport network that took up US$ 15bn in resources. The largest part of the resources (US$ 5.9bn) will be allocated to convert natural gas in urea, ammonia, methanol and other products used for fertilizers. Another big part of the budget (US$ 3.4bn) will be allocated to new natural gas delivery stations and management together with distributors in order to increase sales.

continued and necessary reinforcement in E&P

Business Plan 2011-2015: gas, energy and gas-chemicals Gas pipelines, LNG regasification, power and fertilizers International (2%) US$ 0.3

LNG (6%) US$ 0.8 Network (26%) US$ 3.4

Gas-chemicals plants (nitrogenized) (45%)

Electric energy (21%) US$ 2.8

US$ 5.9

Investments: US$ 13.2 billion

Business Plan 2011-2015: biofuel investments PN 2011-2015: biocombustíveis Business Planinvestimento 2011-2015:em biofuel investments

Priority for partnership with withprivate privatecompanies companies Total: US$ 4,1ethanol bilhões in Priority for ethanol in partnership P&D (7%)

R&D (7%) R&D (7%) US$ 0,3 US$ US$ 0.3 0.3

Biodiesel (14%)

Biofuel (14%) US$ 0,6 Biofuel (14%) US$ US$ 0.6 0.6 Ethanol Ethanol Logística para Logistics Logistics (32%) (32%) o etanol (32%) US$ 1,3 1.3 US$ 1.3 US$

Etanol (47%)

US$ 1,9

Ethanol(47%) (47%) Ethanol US$1.9 1.9 US$

Investments: US$ 4.1 billion Investments: billion Regarding the investments in the Fertilizers division, the executive stated that the investments will allow the country to reach self-sufficiency in ammonia by 2015 (today Brazil imports 53% of its consumption), to reduce dependence on imported urea to 28% by 2015 (currently 53% of consumption is imported) and to 20% of imported methanol by 2017 (today 68% of consumption is imported).

US$ 2.5bn for biofuels Petrobras, via Petrobras Biofuels, will invest US$ 2.5bn in expanding ethanol and biodiesel production between 2011 and 2015. This amount is part of the total US$ 4.1bn allocated to the biofuels business, which forecasts US$ 1.3bn for ethanol logistics and US$ 300m for research in this industry. Increasing ethanol production will be the priority. A total of US$ 1.9bn will be invested, represent-

ing 76% of total production. The goal is to reach, together with its partners, a volume of 5.6bn liters by 2015 and a 12% stake in the domestic market. This way, the Petrobras subsidiary should assume the lead in the domestic market. “Our priority is to expand ethanol production capacity. Therefore, we plan on increasing our initial ethanol investment by 30%”, stated the president of Petrobras Biofuels, Miguel Rossetto. Almost 70% of the investment volume in ethanol will be allocated to production, with the construction of new mills, distilleries, increased crushing capacity and renewing the sugarcane fields. The investments will be made from the partnerships that have already been signed with

the companies of Guarani, Nova Fronteira and Total Agroindústria Canavieira. “The profile of this plan is geared towards expanding new plants. We are concluding assessments for increasing investments in the state of Goiás at the Nova Fronteira Mill”, stated Rossetto. Regarding the biodiesel segment and agricultural supply, with investments around US$ 600m, the company will maintain almost 25% of the domestic market in the next few years, taking into consideration the growing demand for diesel and the regulation of B5 (5% biodiesel added to diesel). With the recent 50% acquisition of BSBios in Passo Fundo, Petrobras Biofuels can count on the facilities of five mills and a production capacity of almost 700m liters of biodiesel per year. The company will concentrate efforts in the state of Pará: the Pará project to impleT&B Petroleum # 31

Photo: Petrobras Agency

business plan 2011-2015

ment a mill to meet the demand of the North region, and the Belém project to produce green diesel in Portugal, in partnership with the Portuguese company, Galp. The two projects mean investments of R$ 884m, currently creating 861 jobs and they are in the final phase of implementing the agroindustrial part. In the area of biofuel research, investments of US$ 300m will be

allocated for the advancement of second generation ethanol development, cellulosic ethanol, for production on an industrial scale. They will also increase investments for research in aviation biofuels, and the refining of production processes in order to be at the forefront of sustainability. “We are in the technology prospecting phase to produce BioQAV (biofuel mixed with aviation kero-

sene) by 2015. Research is being conducted on two technological pathways: one using vegetable oils as a raw material, and the other, sacarose”, concludes the executive. Furthermore, together with Grupo São Martinho, the company will invest R$ 520.7m to increase crushing capacity from 2.3m to 8m tons at the Boa Vista Mill, which is part of the joint venture between the two companies, a Nova Fronteira. The new crushing capacity of 8m tons should be implemented by the 2014/15 harvest, according to press release from São Martinho. Petrobras and Grupo São Martinho will invest R$ 430.5m in the industrial expansion of Boa Vista, located in the state of Goiás, and another R$ 90.2m in the agricultural project in order to increase the sugarcane productivity to feed the plant. Already for the next harvest, the Boa Vista Mill will increase crushing capacity from the current 2.3m tons to 3.4m tons, and jumping to 4m tons in 2013/14, and reaching an expected 8m tons for the following harvest. When it reaches the total crushing capacity, the mill will produce 700m liters of ethanol and 600,000 megawatt hours of electric energy.

Environmental investment

Petrobras has stated that it plans to invest US$1.2bn in energy efficiency projects to meet carbon emissions targets by 2015: reduce burning of natural gas by 65% by 2015; reduce greenhouse gases in exploration and production operations by 15%, in refinery operations by 20 T&B Petroleum # 31

Photo: Petrobras Agency

US$ 1.2bn by 2015 to reduce emissions 8%; and in thermoelectric mills by 5%. Petrobras has stated that energy consumption in refinery operations and thermoelectric mills will be reduced by 10% and 5%, respectively, improving the energy efficiency of the company.

Photo: Petrobras Agency

continued and necessary reinforcement in E&P

Production chain A

ccording to the manager of industrial competitiveness and investments of the Firjan System (the Rio de Janeiro State Industrial Federation), Cristiano Prado, t h e Pe t r o b r a s investment plan is a strong indicator of an active market and potential growth for the industry. “However, we need to work even harder to consolidate the supply chain of goods and services on a globally competitive basis, which is mature from a technological standpoint, with the dense coverage and reach of production clusters, and with an international presence that is orchestrated in order to strengthen the domestic system of enterprise”, says Prado. According to the executive, as far as Brazilian industrial competitiveness is concerned, the

country is, in many cases, still behind its international competitors, not because of the industries themselves, but rather due to structural questions that are the responsibility of the State. “The government needs to do its part to contribute to Brazilian industrial competitiveness. Questions such as tax equalization and commercial equality with imported products, the simplification and increased transparency of local content policies and guaranteed Access to raw materials, inputs and infrastructure at competitive conditions need to be on the government agenda. The Petrobras plan may give good reason for the government to adopt this favorable agenda”, he states. Regarding training people for the oil and g a s i n d u s t r y, Prado believes this to be yet

another major challenge to the nation’s competitiveness, and will continue to be so in the future, since the industry is increasingly demanding workers that are better prepared, with more certifications, and ready to work with technology. “We need to greatly expand vocational training centers, using the latest in available technology to simultaneously increase the productivity and quality of such training programs, which is what we have been doing, for example, at the National Industrial Training Service (Senai) in Rio de Janeiro at its Training Center in Benfica. Simulators, real-life and 3D environments are already apart of training professionals, whether they are steelworkers or oil platform operators”, he concluded. According to the directorpresident of ONIP (the National Oil Industry Organization), Eloi Fer nández y Fer nández, the

T&B Petroleum # 31

business plan 2011-2015

Petrobras plan reinforces the excellent opportunities of the Brazilian supply industry, and consequently, the need to face the challenges to competitiveness, in order to increase the participation of domestic supply in the heavy investments that lie ahead. According to the president of the Brazilian Association of Infrastructure and Base Industries (ABDIB), Paulo Godoy, the Petrobras business plan is always an investment motivator for infrastructure, reaching various areas, from exploration and oil and prospection until refining, electric generation and port activities. According to this executive, the investments forecasted in the business plan contribute to activating and modernizing the supply chain of goods and services, for the oil and gas industry as well as for other infrastructure segments.”This plan concentrates efforts in existing projects and programs, with a strong emphasis in the vocational training of the workforce, the development of technology from the enterprises that comprise the supply network of goods and services, structuring finance for projects, and the safety and reliability of the supply chain”, states the president of ABDIB. Godoy says that the last decade of Petrobras investments has shown constant annual growth, especially in Brazil. “We believe that, in 2011, this level of investment will remain high”, he says. The executive director for oil and gas of the Brazilian Association of Machines and Equipment Industries (ABIMAQ), Alberto Machado, believes that although the value of the Petrobras plan for the period remains virtually the 22 T&B Petroleum # 31

same, there are some important changes when compared to the previous plan: “The increased amount to be invested in the pre-salt, the postponement of the Premium refinery operations, and the priority for developing the fields of remunerated assignment, among others. Although the plan considers values to be allocated in investments, it is important to remember that he these amounts are spent annually in the operations of already existing facilities, which makes the demand for goods and services even greater”. According to Machado, from the point of view of the industry, the amounts as stated are still very general and do not contain the information necessary to prepare adequately. The forecast of annual investments do not always happen at the same time along the supply chain, which makes it difficult to meet future demands. According to him, the availability of information does not always occur with ample time for the market to adjust in time for the demand. “The information on physical chronograms for the industry, ahead of time, is paramount for the market to take advantage of the demand”, he states. Machado further pointed out that postponing some endeavors also jeopardized the industry, since it ends up interfering in the production programs for items that have already been purchased and in future demand. “Rarely will the demand of Petrobras and other oil companies, which have increased the forecasted values by 25%, be able to increase local content if there is not a government policy that makes domestic par-

ticipation feasible on a competitive basis”, explains Machado. T h e d i r e c t o r o f A B I MAQ points out that competitiveness involves price, terms and quality – and that quality is not a problem for the domestic industry, terms are a question of planning and that price is often the disqualifying factor. “The Petrobras plan already contributes to demand, what is left is to make local content feasible, since there can be no local content if the industry does not have the conditions to compete”, he concluded. From the point of view of the Brazilian shipbuilding industry, Ariovaldo Rocha, president of the National Naval Construction and Repair Union (SINAVAL), estimates that the most significant points of the Petrobras Business Plan 20112015 are the investments of US$ 224.7bn, during the period, the largest stake of which, 57%, has been allocated to exploration and production and increasing Brazilian oil production from 2.1m barrels/day in 2011 to 3.07m in 2015 and on to 4.9m barrels/day in 2020. “These figures demonstrate the need to implement around 40 new production systems, each representing one oil platform, each platfor m requiring five support vessels, which means a demand for 200 support vessels and more than 90 tankers, most of which will be used to transport oil from the platforms to the onshore terminals”, says the executive. According to the president of the Brazilian Association of Maritime Support Companies

continued and necessary reinforcement in E&P

(Abeam), Ronaldo Lima, the investment plan as announced is exceptional for the industry and the nation, since it will bring a large volume of orders for platforms, vessels and boats for maritime support. “The shipyards have to be ready to meet the demands of these orders. There will also be a dire need for vocational training for several segments throughout the industry ”, Lima emphasized.

The president of Abeam points out that Petrobras’ new investments, the maritime support fleet – today with almost 400 boats (60% of which are under foreign flags and 40% Brazilian) – should make it to 2015 with more than 500 support boats, increasing the percentage of Brazilian vessels in the fleet. In this scenario, Lima explains that the ship parts industry will have to keep up with the growing demand, especially considering the requirements for local content in vessels and platforms. “Our expectation is that the support companies are able to

meet the demands of the orders in the shipyards with competitive prices, as well as the ability to staff the vessels”, he says. Despite the positive outlook, the executive stressed the serious slack of sailors in the country: “We have a deficit of more than 700 officers in the Merchant Marines and the studies show that by 2013 this should double. The entrance of foreigners to staff these vessels should be opened up, temporarily, as has been done for other positions where human resources have been scarce”, he concluded.

Petrobras: financial results

Petrobras’ policy of not transferring price oscillations in the price of the oil barrel on to the price of derivatives shortened the financial results of the company in the second quarter of the year, and made the R$ 10.9bn in net profit remain stable, when compared to the first quarter results. During this period, the company presented net results of R$ 21bn and 928m, 37% higher than the same period in 2010. Contributing to these results was an increase in sales of 12%, which was due to a 2% rise in domestic oil and gas production, and, mainly due to increased volume of derivates sales (+ 9%) and natural gas (+ 7%) on the internal market, which were sold an average 5% higher. “We had higher costs with intervention and in wells and maintenance. Furthermore, we imported derivatives, paying the international price”, stated the finance director of Petrobras, Almir Barbassa.

Photo: Petrobras Agency

Company net profits of R$ 21.9bn

The price of commodities reflected an increase of 44% on the average price of Brent oil (up from US$ 77.27/barrel to US$ 111.16/barrel), which increased export revenues and sales in the international segment. “This [fact] basically happened in the second quarter of the year, in which the international price curve went up sharply and was subject to big variations. It is now readjusting”, says the director.

According to Barbassa, the pricing policy obviously had an impact on the results, as it also had on the greater cost of derivatives in the oil industry: “We have to train and contract more people and make equipment, all of which means additional costs that still have not been absorbed by production. From now on, as we get closer to peak production at some platforms, we hope to see a reduction in the average cost of production and also in refining.” In the first six months of 2011, the company spent R$ 32bn, a fall of 16% when compared to the same period of 2010. “The investments were smaller and we may revise the forecast of R$ 84bn for 2011. But all of this leads us to believe we have the conditions to reach our targets”, stated the executive. In the previous quarter, gains reached R$10.94bn. Revenues from sales grew 12% for the period, up from R$ 54.8bn to R$ 61.4bn. T&B Petroleum # 31

new refineries

The refinery giants start taking shape

by Maria Fernanda Romero e Rodrigo Miguez

COMPLEXO PETROQUĂ?MICO DO RIO DE JANEIRO (COMPERJ)

Photo: Courtesy

REFINARIA ABREU E LIMA (RNEST)

24 T&B Petroleum # 31

Petrobras accelerates construction of the Abreu e Lima Refinery (RNEST) and the Rio de Janeiro Petrochemical Complex (Comperj) in order to meet the growing demand for oil derivatives and increased oil production. The projects will start operations within the new company vision to produce less gasoline and more diesel and petrochemicals.

meter pier with and mouth of 80 meters, a retroport of 6,000 m² and 5 meters deep. The project awaits Pre-Licensing. After utilizing the express lane and pier, the infrastructure will be transferred to the municipality for implementing the Port of São Gonçalo. According to Paulo Roberto Costa, oil and gas pipelines will also be constructed to connect the petrochemical complex to the Duque de Caxias Refinery (Reduc). Petrobras is also studying the use of railways, whether operational or not, to help in the transport of products from Comperj for the demands of markets within the region, such as Macaé. Another way of transport is under study that would interconnect with the Port of Açu, which is being constructed upstate, in the region of São João da Barra. The vacuum and atmospheric distilleries and the Complex already have much equipment under construction, such as ovens 1 and 2, the base of the permutators, towers 3 and 4, the gas compressor room and compressors. The consortium comprised of Odebrecht, Mendes Junior a n d U TC w i l l b e g i n w o r k o n interconnecting tubes, electric and fiber optic cables between the industrial units of Comperj, g u a r a n t e e i n g the operational

T&B Petroleum # 31

new refineries

feasibility of the refinery ’s first complex.

ABREU E LIMA REFINERY (RNEST)

Average capacity: 230,000 bpd (heavy oil) Suape, Ipojuca, PE (in 2013) Investment: US$ 12bn Total area: 6.3m m² Workforce during construction: a peak of 30,000 people Production:

LNG (1,236,000 tons), petrochemical nafta (686,000 m²), diesel (70% of production), bunker (fuel for vessels) and coke. Oil derivatives with low level sulfur, able to meet European standards that specify a limit of 10ppm of sulfur. Water treatment stations: processing capacity of 2,000 m³/hour of filtered water and 400 tons/hour of reprocessed water for industrial use.

COMPERJ

Average capacity: 165,000 (1st unit) and more than 165,000 bpd in 2nd unit, three or four years after start of operations. Investment: US$ 8.4bn Total area: 45m m² Basic petrochemicals (1st generation): ethene (1.3m tons/year), propene (880,000 tons/year), benzene (600,000 tons/year), butadiene (157,000 tons/year) and paraxylene (700,000 tons/year. Afterwards, the Basic Petrochemicals Unit (UPB) will produce coke and sulfur. 2nd generation petrochemicals: styrene (500,000 tons/year), ethylene-glycol (600,000 tons/year), polyethylenes (800,000 tons/year), polypropylene (800,000 tons/year) and PTA/PET

26 T&B Petroleum # 31

Modern and efficient Another major Petrobras project under construction – in this case in the Northeast of the country – is the Abreu e Lima Refinery (RNEST). According to Petrobras, it will be the most modern ever constructed within the country, and will expand the company ’s processing capacity to aggregate value to the oil produced in Brazil. This refinery occupies an area of 6.3 km² that is being constructed in Ipojuca, in the Port Complex of Suape, almost 60 km south of Recife. Its construction was started in September 2007 and has involved the work of around 26,000 people, most of whom are from the region (and a forecast to reach up to 30,000). Designed to meet the internal market demand and guarantee self-sufficiency in diesel, RNEST will process 230,000 barrels of heavy oil per day (bpd) – 70% of which is for diesel. The refinery will also produce LNG (liquefied natural gas), petrochemical nafta and coke, among other oil derivatives. It is estimated that 20% of production will be for the state of Pernambuco; the rest will be used to supply the Northeast region. Construction of the refinery is scheduled for conclusion by the end of 2012, and to be up and operating in the first quarter of 2013. After much uncertainty, Petrobras and the Venezuelan state oil company, Petróleo de Venezuela S/A (PDVSA), concluded negotiations to create the company that will construct and operate the Abreu e Lima Refinery at the end of October last year. A shareholders agreement was reached with 60% for Petrobras and 40% for PDVSA. However, Petrobras state this past August that this composition has not been duly consolidated. Petrobras gave PDVSA until the end of August to fulfill its part of the agreement, investing 40% of

the financing of the more than R$ 9bn with the Brazilian Development Bank (BNDES) – approximately R$ 3.6bn. Even with the investment, BNDES will have to define the guarantees by the end of September. Once accepted, PDVSA must make the financial disbursements by the end of November. If not, Petrobras will assume the entire endeavor of R$ 26bn. Part of the diesel produced at RNEST will be sent to other states via the Port of Suape, in order to meet the domestic demand, especially in the Northeast. “The pipelines that connect the port of Suape will transport the diesel. When it is up and operating, the refinery will have the capacity to produce 20% of the nation’s diesel. However, most of this diesel production will be for the state of Pernambuco – the second biggest market in the Northeast, after Bahia”, explains Marcelino Guedes, managing president of the refinery. In May of this year, accompanied by director Paulo Roberto Costa at the construction site of the refinery, Guedes stated that two of every ten trucks in Brazil will be running on diesel produced in Pernambuco. Despite the workers’ strike in August this year, Guedes believes that construction of the refinery is on schedule and all the contracts signed are up and running: “The refinery is already 40% finished”, he concluded. One of the last equipment contracts signed was for the coking unit between Petrobras and Fidens Engenharia S/A and Milplan Engenharia Construção e Montagens S/A. The unit will be responsible for converting 70% of the processing at the refinery into diesel. At the end of 2009, Petrobras also signed five contracts for the

the refineries giants start taking shape

construction of the refinery with a total value of R$ 8.9bn. The biggest contract was signed between the Camargo Corrêa/CNEC consortium, comprised of Construções e Comércio Camargo Correa S/A and CNEC Engenharia S/A, for the Delayed Coking Unit – DCU (U-21 and U-22), including the substations, control room and caustic regeneration treatment units (U-26 and U-27) for R$3.4bn. Another contract for the Diesel Hydrotreating Units (U-31, U-32), Nafta Hydrotreating Units (U33 e U-34) and the Hydrogen Production Units (U-35 e U-36), was signed with the consortium of Conest-UHDT (Odebrecht Plantas Industriais e Participações S/A and Construtora OAS Ltda) for R$ 3.19bn. Whereas the contract for the Atmospheric Distillations Units (U-11 and U-12), with a total value of R$ 1.48bn, was signed with the consortium of RNEST/ Conest (Odebrecht Plantas Industriais e Participações S/A and Construtora OAS Ltda). The scope of these contracts includes the supply of materials, partial equipment supply, civil construction, electromechanical

assembly, maintenance, conditioning, tests, pre-operations, and start of operations, operational assistance, technical assistance and training. An agreement has also been signed for the pipelines that will receive and expedite refiner y products, which include analysis services for the consistency of the basic project, project execution, materials and equipment supply, civil construction, electrical installations, electromechanic assembly, maintenance, conditioning, testing, pre-operational support and operations assistance. The contract was signed with the consortium of Conduto/Egesa (Companhia Nacional de Dutos and Egesa Engenharia S/A) for R$ 649m. The fifth contract signed is for the civil infrastructure services and includes the clean water drainage, concrete pylons, land clearing and paving, storage and gateways areas. This service will be executed by the consortium of Construcap/Progen (Construcap CCPS Engenharia e Comércio S/A and Projetos Gerenciamento e Engenharia Ltda) for R$ 120m.

Guedes states that since 2007, via the Oil and Natural Gas Ind u s t r y M o b i l i z a t i o n Pr o g r a m (Prominp) and the Sectorial Qualification Program (PlanSeQ) – programs of the Ministry of Mines and Energy and the Ministry of Labor, respectively – Petrobras has taken steps to train professionals to work on the construction of the Refinery. “Just this year alone, more than 1000 professionals have received vocational training for civil construction via Planseq. In the fifth Prominp cycle, the state of Pernambuco has had more than 6,000 candidates approved, and the classes have already begun for some categories”, he says. The executive further points out that in order to include the regional economy in the opportunities that have been rising, Petrobras has held events to attract and orient regional companies on the quality standards expected by Petrobras, so that these regional players will have better chances of becoming direct and indirect supplies of Petrobras, thereby spurring both technical and economic growth in the local business environment.

Concern with the environment Besides the low-sulfur diesel oil as the refinery’s main product, Petrobras has adopted some special technologies to control the environmental impact of the RNEST project. According to Marcelino Guedes, in order to control gas emissions, the refinery will have two units using the Snox technology – unprecedented in the Southern Hemisphere – that will convert nitrogen and sulfur oxides into non-polluting nitrogen and sulfuric acid (useful in the fertilizer and other industries), respectively. “These units represent low-level emissions in order to comply with the more strict legislation to come. We closed a contract in June of this year with the Empresa

Brasileira de Engenharia (EBE) and Alusa”, he stated. Part of the energy of the gases processed is recuperated in the form of vapor and hot air, which contributes to the energy efficiency of the system. Sulfur and nitrogen oxides (solid particles) will be removed in the process, greatly reducing pollutants. The process also produces sulfuric acid, which may be used in the fertilizer, mining and explosives industries. The two units (U-93 and U-94) will have a greater capacity than the two others in the world, processing a total of 30,528,000 Nm³/day (normal meters cubed), or 15,264,000 Nm³/day each unit. The ENI refinery in Gela, Italy, has a Snox unit that processes 24,000,000 Nm³/day,

and the OMV refinery in Vienna, Austria processes 19,920,000 Nm³/day. As far as hydrocarbon gas emissions are concerned, the refinery will practically eliminate them by using special coverings in the tanks of volatile products and in the water treatment and drainage systems – speaking of which, Guedes stated that the air refrigeration will be used at RNEST, in order to reutilize treated water. “The refinery was designed to optimize water consumption. And two reservoirs will be constructed to retain rainwater for later usage, and runoff will be discarded by submarine pipe 2 km offshore”, he concluded. T&B Petroleum # 31

OSX

announces action plan 2011-2015

Photos and Illustration: OSX

by Maria Fernanda Romero

With around US$ 15bn in orders until 2015, OSX decided to draft an action plan to direct its business during the period, with its portfolio of seven items (five FPSOs and two WHPs) for its main client, OGX, and for the start of operations at the Aรงu Naval Construction Unit (UCN Aรงu). 28 T&B Petroleum # 31

SX, a Grupo EBX company, dedicated to the equipment and services segments of the offshore oil and gas industry, presented an action plan at the end of July for producing equipment for oil and gas vessels at its Açu Naval Construction Unit (UCN) by 2015, taking into consideration construction activities of the UCN. “This action plan shows in detail what we are doing to have an operation and an efficient project with both the construction of the shipyard as well as the construction of the units so that our operations will remain as objective as possible”, states Roberto Monteiro, director of finance and investor relations at OSX. OSX planning includes: the construction of the largest shipyard in the Americas, together with its partner and world leader Hyundai Heavy Industries, in São João da Barra (RJ); supplying the OGX demand of the oil and gas production equipment; and supplying an additional demand from new clients in Brazil. Currently, the company is developing a project for the Naval Technol-

ogy Institute (ITN) with the Rio de Janeiro State Industrial Federation (Firjan) in order to give vocational training to 3,100 people by the end of 2012. “We have invested R$ 12.7m in this first step and the idea is to reach 7,800 trained people by the end of 2013”, states Monteiro.

Order book The potential order book o f O GX t o g e t h e r w i t h O SX totals 48 pieces of equipment (24 WHPs, 19 FPSOs and 5 TLWHPs) with an estimated value of US$ 30bn. Of these 48 units, five FPSOs and two WHPs have already been confirmed at a value of US$ 4.8bn. Regarding the FPSO OSX-1, OSX stated it is in the final phase of customization at the Keppel shipyard in Singapore, after having been constructed at the Samsung shipyard in South Korea. “On August 17th, OSX-1 will depart from the Singapore shipyard and arrive in Brazil on September 25th. It has been commissioned to be ready for operations upon arrival, but will only begin production in October”, says Monteiro. The FPSO OSX-2, however, has been forecast by the shipyard to arrive in the second quarter of 2013,

and the FPSO OSX-3, which is still under negotiations, for the third quarter of the same period. Furthermore, the FPSOs OSX-4 and OSX-5 have been forecast to be delivered in the second and fourth quarters of 2014, respectively. Monteiro pointed out that the conversion of the OSX-4 will be done outside the Açu shipyard, but that its integration will probably be done at Açu itself, since the shipyard will be ready to receive the vessel as of the first quarter of 2013 and, from then on, it will take 14 months to do the conversion. “We still do not know if the shipyard will be doing it. Today we are in the bidding process for the OSX-4 and 5, which we should finalize by the end of this semester. The engineering project for the conversion and integration of the twin VLCCs, acquired from the Vela Corporation, is also in the bidding phase”, he states. The fixed WHP-1 and WHP-2 platforms are scheduled to be delivered to the Technit site in the first and second quarters of 2013, respectively.

The Açu shipyard The director of finance and investor relations for OSX clari-

Açu Naval Construction Unit (UCN) Total area: 3.2m m² Constructed area: 2.55m m² Steel processing: 220,000 tons/year Dry dock: 480m long x 130m wide x 11m deep Cost: US$ 1.7bn (1st phase of construction)

T&B Petroleum # 31

OSX

FPSO OSX -1 will have a hot-site: after getting ready in Singapore, the FPSO OSX-1 started its voyage to Brazil to produce oil and gas in the country. The voyage will take 40 to 50 days. In order to present complete information about the unit, OSX created a hot-site, where internauts can access the technical data of the FPSO OSX-1 and information about the voyage from Singapore to Brazil. The hot-site is available at: www.osx.com.br/osx-1.

OGX and OSX order book: WHPs (wellhead platforms): 24 FPSOs (floating production, storage and offloading): 19 TLWHPs (tension leg wellhead platform): 5 Total: 48 items

fied that in order to optimize the construction of the UCN Açu, the project has been divided in 11 packages.“The 11 packages are being negotiated and contracted according to the installation chronogram of the company. Preparing the land, industrial buildings and work yard, for example, are just one step away form being contracted; and the support and verification of the construction have already been signed and underway”, he stated. The executive pointed out that the company is using twin hulls whenever possible in order to facilitate the process of the VLCC 30 T&B Petroleum # 31

projects, and that the WHPs are being standardized, which may mean a 30% gain on the value of the equipment. Luis Eduardo Carneiro, directorpresident of OSX, further points out that the UCN will have the capacity to commission up to eight FPSOs at the same time, and will at fullcapacity by 2014. “At first, the VLCC conversions will be done abroad, but will later be able to be done at the UCN itself, since the shipyard’s dry dock will be able to convert up to two FPSOs at the same time”, explains Carneiro. According to the president of OSX, the company will get a jacket assembly area in the fourth quarter of 2012; in the first quarter of 2013, the first cutting of the steel slabs will be done, and will receive the quays for the first FPSO. The UCN Açu has a total area of 3.2m m2, of which 2.55m m2 will be utilized in its first phase of development. The first phase includes the possibility of integrating up to six

FPSOs and constructing up to eight fixed platforms (WHPs) simultaneously, making full use of its steel processing capacity of up to 220,000 tons per year, and a dry dock that is 480 m long, 130 m wide, with a depth of 11 meters. OSX has the capacity to deliver up to 10 FPSOs and 11 WHPs by 2015 for OGX, depending on the confirmation of some other orders. Of this total of offshore vessels, seven FPSOs and nine WHPs will be constructed at the UCN Açu, according to the company plan. The budget for the construction of the first phase of the UCN Açu is estimated at US$ 1.7bn, among equipment and civil construction.

Result of an important phase Despite having gone from profits to a loss of R$ 10.95m in the second quarter, OSX pointed out that even with the negative result, it had revenues in the quarter worth R$ 25.35m and the consolidated cash

OSX announces action plan 2011-2015

July and will take 34 months, meaning 2011 to 2014, at a cost to OSX of US$ 1.7bn. According to Carneiro, the capex has been divided accordingly for the following periods: 2011 in 28%; 48% in 2012; 20% in 2013; and 4% in 2014. Moreover, the company received the priority of the Merchant Marine Fund (FMM) for 80% of the total capex.

Flare

Fast-track to success

Naval Technology Institute (ITN) Partners: Hyundai Heavy Industries and Firjan/Senai Investment: R$ 12.7m, 1st phase Workforce: 3,100 people by 2012 and 7,800 by 2013

flow from its companies of in June reached R$ 1.8bn. “The company has started its production phase, because our first FPSO asset, the OSX-1 is in the final phase of construction in Singapore. It will be delivered next week, and on August 14th, we will celebrate its arrival. The vessel leaves on August 17th”, stated the director of finance and investor relations of the company. The main investments of the period were made for the exploration and production units that will be chartered by OGX.

According to the company, the FPSO OSX-1 was an investment of US$ 64.9m in 2011 for customization; the FPSO OSX-2, US$ 61.7m in 2011 for the first payment of the EPCI (Engineering, Procurement, Construction & Installation) contract to SBM and other costs; the WHP-1 and 2 fixed platforms, US$ 6.4m in 2011, in engineering projects and initial work for the two fixed exploration and production platforms. Regarding the construction of the Açu Naval Construction Unit, the executive said that it began in

Founded in the third quarter of 2009, OSX acquired the OSX-1 platform in the fourth quarter of the same year; in the first quarter of 2010 the company held its IPO, closed its strategic contract with OGX and Hyundai, and closed the finance contract for the OSX-1. Still in 2010, the company purchased two vessels abroad to be converted, which will become the base of the OSX 4 and 5, and started the licensing process for the Açu shipyard. Now in 2011, OSX closed many deals: receiving new orders form OGX, signing a contract to construct the OSX-2 with Modec, receiving the license to begin Açu, and securing the financial support for the UCN Açu by the Board of the Merchant Marine Fund with a credit line of up to R$ 2.7bn.

T&B Petroleum # 31

event

Rio Pipeline 2011

Pre-salt and the new technology highlights at Rio Pipeline 2011 Rio Pipeline, organized the Brazilian Oil, Gas and Biofuels Institute (IBP), has grown in the number of international exhibitors and participants, and the 2011 edition had even greater numbers due to the growth of the industry. New technological challenges and the high demand for the goods and services of the pipeline industry were among the main issues of this year’s event.

by Maria Fernanda Romero

Photo: Petrobras Agency

B Rio Pipeline 2011 Fair Exposition area: 2,300 m² Exhibitors: 150 Countries: 15 Visitors: 2,000 Conference Participants: 1,300 Papers: 342 Countries: 27

32 T&B Petroleum # 31

Foto: Banco de Imagens TN Petróleo Photos: Ricardo Almeida

event

He remembered when Rio Pipeline began in 1997 as a small domestic seminar, bringing together some 100 professionals in the industry. “This time around, we had more foreign participation from the international pipeline institutions. So far, we have 750 registered participants in the conference, but we are quite certain that we will reach the 1,300 of the last event”, he added. Teixeira also pointed out that during the same week that Rio Pipeline 2011 was held in September, the industry also held two international meetings, also in Rio de Janeiro, which only goes to show the interest of the international community in interacting with Rio Pipeline. The representative of the IBP also mentioned that the question of Petrobras’ ethanol pipelines were on the agenda of this year’s conference. “Few countries have ethanol pipelines – which I believe gives the country a certain advantage. It was an important topic to be discussed”, he said. Teixeira further stated that despite the country having continental proportions, the country still has a small pipeline network. Therefore, the horizons for investments are enormous: “The IBP plans on setting up a commission within its pipeline directory to focus on the terminals segment in 2012, for which we will be counting on the support of Transpetro”, he concluded.

Hot market, but still lacking Upon initiating the Rio de Janeiro-Belo Horizonte Pipeline, Gasbel II, Brazil has reached 22,000 km of pipelines in operation, including all gas, mineral, submarine pipelines. According to Raimar van den Bylaardt, president of the Executive Council of the Pipeline Technology Center (CTDUT), Brazil is going through an important moment in the industry with great expectations. With 34 T&B Petroleum # 31

the pre-salt, the country is no longer just another supporting actor on the international oil scene. “This is a time of great transformations and challenges. The increased oil and gas production will demand more transfer and distribution. Our number of pipelines in operation will grow, if considering that we should reach around 3.9m barrels of oil per day by 2020”, he estimated. Despite the numbers, industry experts consider the Brazilian pipeline network small, if considering the size of country and the oil and mineral production – the main industries that require this kind of transport. In 16th place in the world ranking, Brazil has a pipeline network that is even smaller than countries with less territory, such as Mexico (40,000 km), Argentina (38,000 km) and Australia (32,000 km), and is far from the more than 400,000 km of North American and 800,000 km of pipelines in the European Union. According to specialist, there were increases, especially in the case of gas pipelines, that doubled in extension when compared to the beginning of the decade, reaching the current 10,000 km. The expansion had the incentive of the Anticipated Gas Production Plan (Plangás), which utilized resources from new discoveries and associated gas from the Campos Basin that had previously been burned on the platforms. The advances, however, have not changed the fact that the current network of gas distribution in the south of the country is insufficient. Furthermore, the expansion continues to be slow, which creates logistical problems and instability for the pipeline industry. “Pipelines are an economical means of transport, which is safe and pollutes less. Expanding the network requires ever more complex technologies for an efficient operation that is risk-free, which widens opportunities and drives the enterprises in the

industry”, states the executive of the CTDUT. In the first semester of 2010, for example, the segment hit the bottom, due to great fluctuation in the fabrication of tubes and construction work. In the best scenarios, some companies were able to compensate for part of the fluctuation in Brazil with order and projects abroad, but most were bittered by losses and reduced volume. Therefore, the Petrobras Business Plan 2010-2014 brings high hopes for investments in the industry. Released at the end of June, the Plan forecasts investments to the tune of US$ 5.3bn, closing up the investment cycle in expanding natural gas transport via pipelines.

Solutions in tubes The French company, V&M do Brasil, a producer of seamless pipes, brought to the Rio Pipeline its project line pipe solutions, such as the new end-truing with laser measurement made in line with the pipe production and the automatic high performance pipe welding executed in the customer spoolbase or on the barge, develop by Serimax, a subsidiary of the Vallourec Group. According to the superintendent of the oil and gas division of V&M do Brasil, João Perez, the Brazilian pipeline market has a great growth potential and the socio-economic growth of the nation has increased the demand for products for the oil industry, especially for natural gas and oil derivatives. “The growing demand for these products, together with increased oil and gas production in the business plans of Petrobras and other companies of the industry, should bring growth to this market in the mid- and long-term”, he points out.

Despite the expected growth, Perez says that one of the major challenges to the land pipeline industry is to interconnect the gas and oil derivative units to the distribution points – an endeavor of logistical limitations and difficulties in environmental licensing when considering the continental proportions of the Brazilian territory. In the offshore pipeline industry, despite the inherent problems of environmental licensing in this segment, the executive points out that transferring production from the pre-salt fields requires specialized pipelines to withstand the aggressive environments and work in ultradeep waters. “Advanced technology to install these pipes is yet another challenge to the industry”, he adds. The company offers tubes with anti-corrosion casing for the pipeline industry in general and tubes with thermal insulation for offshore pipelines. “We have specially designed carbon steel pipes to resist aggressive environments and with smaller heading sizes for the offshore industry, automatic welding, specialized logistics for pipe transport, among other solutions”, explains Perez. Among other solutions, the executive of V&M do Brasil cites the new end-truing with laser measurement as an innovative solution for the industry, since it reduces the dimensional tolerance to perform welding in the field, avoiding pipe sorting and a great differential to install rigid risers. In the submarine pipe area, Perez states that Serimax, a company of the Vallourec group, offers highperformance automatic welding at the client’s spoolbase or vessel that meets the welding requirements for use in ultradeep waters. The executive points out that the investment projections and estimated production volume of Petrobras for the next few years are impressive and will

have an impact along the entire supply chain. “V&M, as a traditional supplier of tubes for Petrobras has been preparing to meet this demand by investing in increasing production capacity and developing tailor-made solutions are far as specialized products and services are required”, he states. For the past five years, the company has had the VPP (Valourec Pre-salt Project) that, together with Petrobras, maps the demands and develops alternatives to meet the challenges encountered in the oil exploration in extreme environments. “Today we have several projects to maximize local content for all kinds of metalworks and an impressive package of services in conjunction with these products”, he states. Due to the hot market for oil and gas equipment, V&M has constantly invested in updating its industrial production. According to Perez, the company expanded its production capacity of OCTG Premium tubes, especially in thermal treatment and a new line of reaming for these products, beside a recently inaugurated drill pipe plant, and the opening of the V&M Tube Alloy in Rio das Ostras, specialized in supplying Premium accessories and services, by the end of this year. Currently, the company is involved in the flowlines and risers projects for the P-55 and the Guará and Lula projects.

More savings and safety in operations White Martins, a subsidiary of one of world’s largest companies for industrial and medicine gases, Praxair, presented its industrial services for oil and gas pipeline services and industrial facilities, such as nitrogen pumping – a safer, more practical and economic way of operating pipelines – at Rio Pipeline 2011. T&B Petroleum # 31

event

systems of up to 15,000 m3 per hour of nitrogen, throughout the country.

Integrated solutions

According to the executive director of White Martins, Marcelo Rodrigues, among the services the company showcased were inertization (injection of nitrogen gas in equipment and tubes to substitute hazardous environs to inert ones that are out of the bounds of explosion, inflammability and toxicity), via removal, dilution and pressure; and the internal cleaning of lines, done with a combination of cleaning equipment propelled by nitrogen, known as pigs or the Sandjet process – a technology that removes coke deposits in oven tubes and encrusted pipelines in general. “Due to its highly pure quality that without any humidity whatsoever, nitrogen by White Martins is more practical, economic and safer in inertization, pressurization, cleaning, emptying, drying and purging processes”, says the executive. The company has moveable pumping 36 T&B Petroleum # 31

Although not having participated as an exhibitor in this year’s fair, Maxen, former Mercotubos, a Brazilian company that offers integrated solutions for the domestic oil and gas market, was present at the event. “We visited to evaluate the possibility of participating at the next event”, says the president of Maxen, Luiz Fernando Pugliesi, president of Maxen. The company offers carbon and alloy steel tubes, besides the pre-fabrication of spools. “The management of materials and manufacturing is our responsibility, freeing our clients of yet another interface, besides offering gains in productivity, quality and delivery terms according to the needs of each project”, explains the president. Furthermore, Maxen offers complete control of the spool project, meaning the company can do the consistency analysis of spools before and during the project, avoiding re-doing work and optimizing labor force in the project. Regarding the pipeline market in Brazil, Pugliesi considers it without major investments. “We are currently between construction cycles. The existing ones have already contracted demand. We have an expectation of a near future of a return to movement in the market”, he states. According to Pugliese, the main points are headed by the investments of Petrobras. “That means that just as soon as the client even starts constructing, the industry will feel a need demand once again”, says Pugliesi.

The executive of Maxen commented that the demand in the deep waters of the pre-salt and the major investments announced by Petrobras in the next few years have directly impacted the business of the company, especially at its Equipment Unit, which is geared exclusively for the subsea segment. “Today, we have a certain available capacity, but from what we are seeing in the market, we will shortly reach full capacity and start investments in doubling the size of the factory in Atibaia/SP. As far as equipment and services are concerned, we will be integrating an engineering center for detailing and constructive solutions within 2011”, he states. Last year, Maxen acquired a pioneer in induction bending, and, according to Pugliesi, Maxen is completing the installation of equipment in September and will be up and operating in the last quarter of the year. “We have several opportunities to apply technology, but we prefer to start operations in order to assume solid contracts for the process”, he pointed out. With the recently inaugurated factory in the city of Escada (PE), Maxen already has plans of constructing a new plant in Rio de Janeiro. “We hope to be in operation already by the end of the first quarter of 2012. The investment plan is ready”, stated the executive, without further details about the project. Today, the company is involved in the installation work of the Abreu e Lima Refinery (RNEST), with contracts for interconnections, industrial waste treatment station (ETDI), the refinery’s power plant (Cafor), and the water treatment station (ETA); in the Paulínia Refinery (Replan) the company has the offsite contract for the diesel portfolio; and in the Presidente Bernardes Refinery (RPBC) in Cubatão, the company is supplying their diesel portfolio.

T&B Petroleum # 31

professional profile

Duperron Marangon Ribeiro

Tech-

vision

Naval engineer, professor and entrepreneur with almost thirty years’ experience, Duperron Marangon Ribeiro, founder of PhDsoft, has made a life of learning with a focus on technology.

by Rodrigo Miguez

Ever since university, technology has been a part of Duperron Marangon Ribeiro’s life, from the time when computers were still rare, expensive and of little interest – even for students. With a degree in naval engineering from the Polytechnic School of the University of São Paulo (Poli/USP) – one of the nation’s most competitive – Marangon found the inspiration to enter the world of research and development from this center for excellence. His first opportunity was in the fourth semester of university, when he was an intern at the Instituto de Pesquisas Tecnológicas (IPT), developing innovative projects with his first contact with the microcomputer that only he wanted to use. “I went deep into that apprenticeship, from where I developed my interest in applied computer science in engineering – which I use today in PhDsoft”, he recounts. The choice for naval engineering was made by chance and for personal reasons. Although liking electronic engineering, he found the course boring. Soon afterwards, he learned the fun of water skiing and thought to make a career of his fondness of boats. Having graduated from USP opened may doors when looking for his first job. His high grades called the attention of several companies from different industries, such as Embraer, Itaú and Lloyds Bank, but he chose another Road. Duperron worked four years as a naval engineer in the Marine Arsenal of Rio de Janeiro, where he had contact with the state-of-the-art technology that is his passion. As soon as he began, he became the supervisor of the construction of two vessels, and shortly afterwards became the head of the welding and assembly divisions. During his career at the Navy, he constructed three vessels, repaired many ships – and acquired a lot of experience. He left the Navy after passing the civil service exam for Petrobras, but while he was looking for the best area to work in, former president José Sarney prohibited contracting by state enterprises. He then turned

38 T&B Petroleum # 31

to the public exam to be a professor at the Federal University of Rio de Janeiro (UFRJ), where he taught for 18 years in the naval engineering department. Going to UFRJ represented two major changes in his life. The first was the beginning of an academic career and the other was the move from São Paulo to Rio de Janeiro. At first it was difficult, with few friends, but soon everything fell in place and he adapted well to the carioca way of life. “Despite the difficult beginning, I never thought of returning to São Paulo. Rio is really a wonderful city, incomparably beautiful and with a life quality that is unbeatable”, he states. Father of one son, Duperron has Rio de Janeiro even in his cellular: when his wife calls, the ringtone is his favorite song – Garota de Ipanema. This engineer is quite proud of his years as a professor, when he was able to transfer knowledge to students, as well as new alternatives and endeavors to be taken on. Innovation was a part of his classes. Virtual course, ship maintenance and repair area, and a course in alternative materials were some of his ideas implanted at UFRJ. PhDsoft began as a consulting service rendered by Marangon for Docenave, when he realized he could develop software to significantly reduce to work time that would normally take a year to get done. Afterwards, another company, Fronape, was interested in the software, and then a North American company wished to license the technology. However the company’s stalling to take the technology to market concerned him, so he founded PhDsoft in 2000. At the very beginning of PhDsoft, Finep had begun a financing program for technology companies – which was a fundamental incentive for developing his company at the time. Although today his clients include Petrobras

and Shell, PhDsoft had to win the confidence of the Brazilian market at its beginning, since, according to the company founder, the companies did not believe that the technology was the world’s best. “Even today, after 11 years and long-term contracts with major clients, it is easier to sell to foreign companies operating in Brazil than to domestic operators”, he says. The main products developed by the company were the C4D software and the Ballast Simulator, which is installed at Senai, in Rio de Janeiro. C4D was developed for structural integrity management, allowing for the visualization of structures and follow-up of repairs, as well predicting degradation and repairs, based on the measurements taken over

Age: 50 First job: internship at the Instituto de Pesquisas Tecnológicas (IPT) Positions held: naval engineer, professor and president of PhDsoft Hobby: ultralight piloting Song: Garota de Ipanema, by Tom Jobim Book: Pleasure, by Alexander Lowen Great place to rest: home in Búzios Film: Matrix

time – reducing costs and risks. The Ballast Simulator is used for training professionals to work on Petrobras platforms. An important partner of the company is Microsoft, which made the use of software feasible at a competitive price, bringing savings and productivity to the company. PhDsoft is also geared for the pre-salt, having in its portfolio technology for submarine robots. Besides technology development, PhDsoft also supplies new talent for the market, offering free courses on Tridimensional Modeling for Marine Structures at the impoverished Complexo do Alemão community in Rio de Janeiro, in partnership with the Central Única das Favelas (Cufa). According to Marangon, the need for vocational training – not only for the oil industry but for his company as well – was the warning call for his company to start the initiative that would bring the chance to improve the lives of people in the community. “Besides helping people, we are helping society at large, since the opportunities in the booming oil industry, with their increasing salaries, we avoid losing these people to illegal activities. We are very happy with the graduation of the first class, as well as the growing interest in the course”, he commented. With so much work, he also reserves time to relax with the family in Búzios (RJ), where he has a house. Another pastime to unwind is piloting his ultralight plane – his favorite hobby. According to Duperron Marangon, PhDsoft is the synergy of all his professional experience and passions. “I put together what I learned in the Navy with what I researched at UFRJ on maintenance and ship repair to the problems of my clients and my passion for software and technology.” T&B Petroleum # 31

products and services

Reflex Marine

Expert in marine personnel transfer Reflex Marine has developed an innovative safety accessory for use with the FROG – the ‘Arctic Thermal Pod’. The safety device is designed to combat potential exposure to wind chill whilst performing crane transfers at low temperatures. During a detailed risk assessment of crane transfer activities an Operator in the Arctic recognised that, in the unlikely event of a crane stoppage mid-transfer, passengers could be exposed to very low temperatures and significant wind chill effects, for up to 20 minutes while waiting for repair, or performing a manual crane line descent. Temperatures in the region can routinely drop to -40 degrees and FROG transfer operations have been conducted in this harsh environment for more than 5 years without incident. The FROG offers a very reliable means of personnel access, where the passengers are not reliant on ‘holding on’ whilst wearing gloves and with cold hands. As FROG transfer is a standard means of access during winter months, the Operator had already adopted a policy of using full immersion suits during transfer. Despite this cold weather protection for passengers, the wind chill effect can have a significant influence on the speed of onset of hypothermia. As a result, the Operator asked Reflex Marine to develop an Arctic Thermal Pod which could be stored within the FROG 6 and deployed in the event of an interruption mid-transfer.

Photo: Courtesy of Reflex Marine

Oil & Gas industry warms to Reflex Marine’s cold weather device – ‘The Arctic Thermal Pod’

The Arctic Thermal Pod is made from heat-retaining Kevalar and flame-retardant PVC to provide a clear view. It is stored behind the seat assembly of the FROG 6 and is activated by pulling a lanyard and tucking the cover under the feet and sides. It has been designed for two men but can be used if only one is seated. In addition the pods are designed to be easily jettisoned if required. There are more than 500 FROG devices in service in all of the world’s major oil and gas regions, and there are currently 34 in service designed to withstand low-temperature conditions. The company has established a very strong market position for harsh climate operations, as operators realise that con-

ventional equipment does not address the key risks and needs for these types of operations. Arctic FROGs have been deployed for the last 10 years in Russia, Canada, Greenland, Norway, the Northern Caspian Sea, China and the Barents Sea, and are currently being used by more than 12 operators. Reflex Marine Operations Director, David Brittan said: “Our client posed a very valid question, with regard to transferring personnel at extremely low temperatures, and I am delighted to say that we were able to deliver an effective answer. We are extremely proud of our track record in the arctic, where we estimate hundreds of thousands of safe transfers are performed each year, in the most challenging conditions faced by the industry. However, we are not complacent and we recognise that our clients want the assurance not only that they can perform routine operations well, but also that they are well-prepared to deal with disruptions and emergencies when they do occur. “Crew transfer safety systems are making rapid advancements within the oil and gas industry, from high-rate transfers to low-temperature applications. The Arctic Thermal Pod is just the latest addition to that ongoing process. So far we have never had a stoppage while transferring personnel at low temperature but we are nevertheless pleased that we can now offer a well-designed contingency solution to our clients.”

Rolls-Royce

Rolls-Royce wins £15m Brazilian order for offshore supply vessels Rolls-Royce, the global power systems company, has won an order to design and equip two UT 735 SE offshore supply vessels for Brasil Supply. The order is worth £15 million to Rolls-Royce. The contract includes vessel design and an integrated Rolls-Royce equipment system including propulsion, deck machinery, bulk handling and vessel control systems. The vessels will be chartered by Brazil’s state oil company Petrobras and are designed specifically for carrying fluids and

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solid cargo to and from offshore oil and gas platforms. This is the second order from Brasil Supply this summer, and the company now has four Rolls-Royce designed offshore vessels on order, all of which will be built at Estaleiro Ihla S.A in Brazil. Atle Gaasø, Rolls-Royce, General Manager Sales - Offshore Service Vessels, said: “With this contract Rolls-Royce further strengthens its presence in Brazil, and we look forward to working with both the owner and the yard throughout

the construction of these custom made vessels.” The vessels will be ready for delivery in 2013. To provide support for a growing installed base of equipment in Brazil, RollsRoyce opened an advanced marine repair and overhaul facility in Niteroi in 2009. This forms part of an expanding network of Rolls-Royce Marine Service Centres, three having been opened already this year in Gdynia (Poland), Walvis Bay (Namibia) and Rotterdam (Holland).

Flexlife

Subsea Specialist Flexlife Expands in Brazil Flexlife, an oil & gas industry specialist in subsea project and integrity management, has expanded its operations in Brazil to increase its capacity across South America. The company is targeting initial revenue of approximately £4million per year, but that is expected to ramp up by 30-60% per year within two years. As well as investing in new office accommodation in Rio de Janeiro at Rua Assembleia, Flexlife is manufacturing its ground-breaking integrity management products locally and offering a full assembly, deployment and maintenance service by staff based in the region. The company has a suite of gamechanging products to identify breaches in flexible pipes and repair them without

interruption to production, a first in the 40 year history of the Oil & Gas industry. Flexlife Chief Executive Stuart Mitchell said: “Flexlife is experiencing a period of significant growth and our new South American operation will expand our capability to offer specialised support to clients. “Flexlife has continued to build on its reputation for offering a full subsea integrity and project management package, assisting clients to cost-effectively manage all of their subsea assets and infrastructure. We have built up high levels of expertise in deepwater markets and have a proven track record of providing a service that helps operators reduce risk in a cost-effective manner.’’ Leonardo Dias, Executive Manager Brazil, said: “Our aim is to establish ourselves in Brazil and also target work in Venezuela. We have recruited a team of engineering, technical and support staff who are all highly experienced in the Brazilian Oil & Gas market.’’

As part of a continuing global growth strategy Flexlife recently appointed Stephen Burgdorf as Vice President of Business Development for North America. Based in Houston, Texas, he will focus on promoting Flexlife’s award-winning offshore project and integrity management services to operators in the region. A Newcastle base has also been opened in the last few months and the plans are in place to open an additional base in Angola. Flexlife was Scotland’s fastest-growing young company in 2010 and estimates its total workforce in the UK and globally to rise to 120 by the end of 2011. Flexlife reported an increase in turnover of more than 50% for year ending 2010/11, with a rise from £4.8million to £7.5million. A further rise to circa £18million is predicted for 2011/12.

Converteam

Converteam to manufacture offshore drilling sytems in Brazil to serve booming local market Power conversion specialist Converteam has announced its readiness to commence manufacture of its variable frequency drilling drives and medium voltage switchboards at its production facility in Betim close to Belo Horizonte in Brazil. Preparations, which have been ongoing over a period of several months, have necessitated long term knowledge sharing between Converteam’s UK drilling equipment specialists and their Brazilian counterparts. Converteam, in operation in Brazil for thirty years, already has extensive manufacturing and application experience in power conversion systems including switchboards and variable frequency drive solutions for the metals and material handling businesses. In the offshore domain Converteam in Brazil is already engaged in the manufacture of their MV7000 propulsion thruster drives and medium voltage switchboards for international offshore projects. The move to now produce drilling drives is seen as

a natural and logical extension of these existing skills and capabilities. Speaking during the recent Brazil Offshore exhibition and conference in Macaé Converteam’s Business Director Paul English observed: “Our strategic objective is to better serve the Brazilian offshore sector with high quality, cost effective, locally manufactured/supported equipment and systems whenever possible. We’ve been

designing and manufacturing advanced drilling systems in the UK for around forty years and naturally we wanted to bring that expertise closer to one of the world’s fastest developing offshore markets. He added “The variable frequency drilling drive is a critical component in any offshore drilling unit. Our latest drive features responsive, high accuracy speed and torque control and excellent dynamic characteristics across the speed range – it makes a significant contribution to improving the overall efficiency and effectiveness of the offshore drilling operation.” Brazil is expected to become one of the major crude oil suppliers in the next decade and with most of Brazil’s production coming from offshore fields, the drilling spend is expected to increase significantly. According to GBI Research[i], Brazil alone is expected to attract offshore drilling spend of more than $80 billion in the period from 2009 to 2015.

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products and services

Seagull

Oslo-based BW Offshore, one of the world’s leading operators of Floating Production and Storage Offshore (FPSO) vessels, is switching to the new APRO online psychometric testing tool, introduced by computer-based training specialist Seagull AS earlier this year. The company is now using this tool as an integral part of its global recruitment programme, and the online APRO test will be undertaken as standard by all recruits, whatever grade and job function. APRO’s history dates back to the mid1980s, when it was developed as a psychometric ability test by the Norwegian Marine Technology Research Institute in a project supported by the University of Oslo, DNV and the Norwegian Shipping Association (NSA). APRO was developed in close partnership with Professor Roald Bjorklund, of The University of Oslo’s Department of Psychology, who was part of the original research and development team, and it remains the only psychometric test developed specifically for the maritime industry. Seagull has now upgraded the APRO test process and modified it so that it can be undertaken online. The web-based product, hosted by Seagull on one of its servers, only requires users to have a web browser. APRO comprises seven sub-tests, designed to assess how a candidate perceives, processes and acts on information, essentially measuring speed versus accuracy. The test, which takes about 1.5 hours to complete, has a standardised scoring method which allows results to be quantified and compared with other potential recruits taking the test. Arne K. Jorgensen, Senior Vice President, Global HR Operations for BW Offshore, has had considerable experience of APRO, having previously used the tool in connection with selection of maritime cadets from Russia, Latvia and the Philippines as a representative from the NSA. On taking his present post at BW Offshore in 2006, Mr Jorgensen introduced the manual version of APRO to assess all recruits in the selection process. “APRO has proved to be a valuable tool in the selection process and also in the process of identifying our future leaders,” he says.

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Photo: Courtesy of Seagull

BW Offshore adopts Seagull’s online psychometric tool

He adds: “We have achieved very good results with the manual version of APRO, which is a fantastic tool to use alongside the core interview process. But we are now migrating to the online version developed by Seagull and we have been very impressed with the experience so far. “The new web-based tool looks better, has more functionality and there are a lot of practical advantages compared with the manual system. Feedback from my HR team has been very positive.” Over the past five years, APRO has become a central tool in the recruitment process adopted by BW Offshore. Mr Jorgensen explains: “We want to have a long term relationship with our employees and we hope they will stay with us for many years, often rising up the ranks to positions of management. It is important that as a global company we have a standard method that can be applied to all recruits at an early stage to ensure that we recruit the right staff.” He adds: “APRO also helps us quickly determine who we definitely don’t want from a large group of applicants. When you want to reduce a group of 300 down to, say, the five you want to call for interview, APRO is a great tool.” BW Offshore is now in the process of training staff to use the online testing tool. So far five of its HR team members have attended Seagull’s assessor courses in Oslo and Singapore, and more will be trained as time goes

on. This one day training seminar for shore-based staff is a vital part of the overall APRO process. Seagull Training Content Director, Captain Bjarke Jakobsen said: “We have developed the assessor course from scratch and have made it compulsory for users of the system to attend. The course is not just about how to assess the results of the APRO test, but to understand the ethical guidelines as well.” From Seagull’s perspective, psychometric testing is not something that should be undertaken lightly. Mr Jakobsen says: “It is important that seafarers are protected from any potential abuse of this tool, and that is why we insist the assessor course is mandatory.” Aside from the courses Seagull has already run in Norway and Singapore, the company is planning to hold others in Cyprus and Manila in the near future. Since launching the online version in March this year, Seagull has experienced a significant level of demand for the new tool. “The feedback from the market has been very positive,” notes Mr Jakobsen. “Companies are realising it is a huge advantage to be able to sit in one location and set a test for someone in another part of the world.”

Dyneema

First use of Dyneema® Fibers for modu moorning lines in Brazil Brazilian oil giant Petrobras has specified ultra strong, lightweight Dyneema® fibers for a complete set of mooring ropes for a semi-submersible mobile offshore drilling unit (MODU). Headquartered in Rio de Janeiro, Petrobras has substantial interests in deepwater exploration. Petrobras specifically asked for the ropes to be made with SK78 grade of UHMWPE (ultra high molecular weight polyethylene) fibers from DSM Dyneema for its high strength at low weight properties. SK78 grade fiber was developed specifically for this type of mooring application and although it has a proven track record of success in Asia, US and European waters, the Petrobras order marks the first time they will be used for MODU mooring in Brazil. Petrobras is expected to use eight mooring ropes made with Dyneema® SK78 fiber on a MODU in its new Pre-Salt deepwater fields off the Southeastern coast of Brazil, site of one of the

largest recent oil discoveries in the Western Hemisphere. Petrobras plans to start using the ropes around mid-year. Petrobras has chosen to use ropes made with Dyneema® over polyester because of the lower weight and greater ease of handling. Polyester ropes with the same mechanical properties weigh around three times as much and are almost twice as thick as ropes made with Dyneema®. Steel ropes would weigh around seven times more than ropes made with Dyneema® fiber. Ropes made with Dyneema® fiber will allow Petrobras to moor the MODU more quickly, saving on equipment costs, as well as on support vessels, delivering lower operating costs and a positive return on the investment. Furthermore, ropes made with Dyneema® fiber take up half the space of those made with polyester. This is important because fewer resupply trips are required. Drilling locations in the Pre-Salt

province are around 200 km offshore, and rental rates for supply ships are high. DSM Dyneema and Petrobras worked closely together for several years on this project from fiber specification to comprehensive testing. “Petrobras tested the performance of SK78 grade from DSM Dyneema at both fiber level and in full-scale ropes,” says Jorn Boesten, Offshore Segment Manager at DSM Dyneema. “They were particularly concerned about the creep properties, and the ropes made with Dyneema® SK78 met all requirements,” he adds. “We are delighted with this order as it is our first in the Brazilian market. Working with Petrobras, a pioneer in the use of synthetic ropes, has been a rewarding and stimulating experience for us, and we look forward to continuing this successful collaboration and developing more opportunities in South America,” says Boesten.

Brookes Bell

Brookes Bell and Safety at sea merge Marine Scientific and Technical Consultants and Surveyors, Brookes Bell LLP, and leading Naval Architects and Marine Engineers, Safety at Sea Ltd, have announced that the two UK-headquartered companies have merged. The deal sees Glasgow-based Safety at Sea become part of the Brookes Bell Group, which has two offices in London, as well as offices in Liverpool, Shanghai and Hong Kong. Under the terms of the agreement, five directors of Safety at Sea have become partners of Brookes Bell, joining the existing eighteen partners.

Managing partner of the Brookes Bell Group, Colin Kershaw, said: “This union is a major step forward for both Brookes Bell and Safety at Sea. It strengthens the group and enables us to offer an even more comprehensive ser vice to clients, incorporating research and development and a cutting edge innovative approach to ship safety, as well as supplementing our existing forensic investigations”.

Managing director of Safety at Sea, Kieran Dodworth, said: “This merger provides Safety at Sea with a depth of practical expertise in ship and cargo operations to complement our state-of-the-art knowledge, software and design tools, enabling us to enhance our international reputation for applying advanced techniques for ship design, support and problem solving. This is an exciting time for our two organisations and we are all looking for ward to growing our consulting services, software products and worldwide client base”.

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products and services

Castrol Offshore

Castrol makes waves offshore Brazil’s fast-rising oil and gas sector has become the latest area of focus for Castrol Offshore. Critical to the reliable operation of both FPSOs and mobile drilling units is the use of high performance lubricants and subsea production control fluids. Describing Brazil as one of the offshore sector’s key geographic ‘hotspots’ for the company’s range of products, Carmen Pino, Castrol Offshore Regional Director, Americas, Middle East and Asia, says: “In Brazil we have historically managed the business from Houston and the UK, but last year we decided to set up local management in Rio. The operation is complemented by a customer service centre in Sao Paulo and a blending plant in Rio. This lines up with our strategic plan in Brazil to provide solutions to their challenges, such as tapping the Subsalt fields and broadening the reach of Castrol’s offshore-focused global network.” Phil Michaelis recently took up a new role as Castrol Offshore Regional Sales Manager, Americas. As one of four near-term priorities, he has identified the need to recreate in Brazil the position in the lubricants and subsea fluids markets that Castrol commands worldwide. “We’ve supplied subsea control fluids for the last decade in Brazil. Beginning this year, we are also supplying topside lubricants to our drilling and surface production 44 T&B Petroleum # 31

customers,” Mr Michaelis explains. “As Brazil is one of the key locations in the future for global E&P, Castrol Offshore needs to provide our offer/support where customers are themselves investing, with a focus on deepwater operations.” Castrol has been operational in Brazil since the 1950s, focusing on blending capability in the automotive and industrial sectors which provides the ability to access proven manufacturing resources immediately. As it builds up its involvement in Brazil’s offshore sector, Mr Michaelis says: “Because our subsea control fluid plant has been in place for several years, very little renovation has been required to build up quality production. Subsea fluid manufacturing is on site, as is the expertise to manage different packaging specific to E&P requirements, e.g. tote tanks.” “My ambitions for Castrol in Brazil revolve around the creation of a long-term legacy of trust in the company’s products and services. I will be closely involved in the strategic development of key accounts in the regional portfolio and I intend to develop the senior level relationships required with key account holders and distributors, with a focus on delivery of distributor sales in the region through an upgraded distributor offer.” Agreements in place Supply agreements already exist with the key players in Brazil. “Some products are distributed di-

rectly by Castrol,” says Mr Michaelis. “Others are delivered by our third party distribution partners. As a subsea vendor operating in subsea basins worldwide, Castrol Offshore has an in-house global supply chain, of which Brazil is now a part. Castrol Offshore is deepening its involvement in warehousing and distribution in Brazil and is soon to appoint a distributor to service the requirements from the main hub of Macae.” A key part of the new strategy has been bringing in expertise familiar with the local market, with the background to develop the personal relationships so highly valued by customers. Accordingly, Felipe Carvalho was appointed Castrol Offshore Sales Manager, Brazil in January, based in Rio. Felipe joined Castrol from Cameron, Brazil, where he was a Sales Account Manager for subsea equipment, bringing with him Oil & Gas experience. He holds a Production Engineering degree from the Universidade Federal Fluminense (UFF) and is currently completing his MBA in Marketing. “We are identifying the demand and the new opportunities, both in the subsea and surface production sectors,” says Mr Carvalho. “Our commitment to Brazil is long term.” “We are actively seeking experienced individuals from within the industry with a blend of relationship management, technical capability and offshore expertise,” says Mr Michaelis. “Building on that,

Challenges ahead Today’s offshore industry faces many challenges. As Brazil’s oil

Photo: Petrobras Agency

we can bring our dedicated training programme into play, starting with inductions to product technology at our global technology centre in Pangbourne, UK and using our close links with the OEMs. All of our product development is done in Pangbourne to ensure global consistency and the highest performance standards.” In addition to the existing Castrol Transaqua and gear and hydraulic oils that have been blended in Castrol’s Rio plant for years, now core engine oils are now being manufactured in Brazil. Specialist products such as Ultimax (performance lubricant) and Greenfield (environmentally-responsible lubricant) are currently sourced from other blending locations and stored locally. Castrol Labcheck is another key offer on the agenda for Brazil. This is a dedicated service designed to offer customers more control of maintenance tasks, so that schedules can be planned with confidence, failures anticipated and avoided, and operational costs can be reduced.

and gas exploration and production expand into deeper waters, operators are encountering higher temperatures and pressures, and greater distances to export back to host installations. An increasingly varied range of equipment is required to enable extraction, while subsea processing is rising. Furthermore, increasingly stringent environmental legislation poses a challenge to operators as they begin to explore in environmentally sensitive areas. Mr Michaelis says Castrol Subsea control fluids must be ca-

pable of operating under these ever more demanding conditions while providing the offshore industry with a means to manage compliant operations. “As elsewhere, our overriding objective in Brazil is to assist our clients in attaining excellence in their subsea operations,” he said. “We focus on our expertise in subsea control fluid, on improving system reliability, reducing environmental impact and providing best-in-class service and support.”

Offshore research and development

Pangbourne supports deeper thinking Pangbourne, UK, the headquarters of Castrol Lubricants Technology, is making a key contribution to the company’s efforts to ramp up its presence in the Brazilian offshore market, drawing on Castrol’s wider investments in physical testing equipment, which the company believes is unique to the industry. Pangbourne is the central hub of the organisation’s global network of thirteen Technology Centres, which enables pioneering research and development of lubricants, plus offering technical support to customers. With a full suite of capabilities in its laboratories, Pangbourne represents Castrol Offshore’s commitment to the analysis, formulation and, chemical testing required to sustain Castrol Offshore’s vision to be the undisputed leader in the

markets where it operates. The state-ofthe-art analytical labs, extensive testing equipment, fluid blending facilities, among other valuable assets, are located on site. In fact, many of the function performed at Pangbourne can only be conducted there. The company runs around 70,000 individual tests every year using more than 100 different test methods. These include elemental analysis to quantify additives and contaminants; physical testing of density, rheology and other properties; wet chemistry; thermal analysis, oxidation and corrosion. More specifically: Pangbourne offers materials mapping facilities, allowing every metal, alloy, seal etc to be subject to testing with Castrol products. Many of the test rigs for product performance used at Pangbourne have

been developed internally and are unique within the industry. Exemplary are Pangbourne’s Directional Control Valves (DCV) - one specifically for synthetic oils (subsea) and one for water based (subsea) - which are involved in highly repetitive tests, in the search for trends and to ensure high performance. Again, research into hydraulic fluids for Ultra High Pressure and High temperature deployment in deepwater has led to the development of the ‘SSSV’ subsea test rig, to simulate future real life operating environments that push the boundaries of current operating conditions. Current research is focused on reducing lubricant inventories on rigs and vessels by reducing their complexity, with a view to introducing multi functional products.

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products and services

Hamworthy

New service centre in Brazil The new service centre represents a direct investment in a market that has offered sustained growth for the company’s oil and gas handling systems and pump systems businesses in recent years. With offices in Rio and planned workshops and warehousing operations in Macae, it will support customers through easy access to spare parts from a domestic warehouse and qualified service personnel for all Hamworthy products, as well as related products and equipment installed onboard. The service centre will also offer assistance to domestic yards during the installation and commission stages of construction. The move, which highlights the company’s commitment to Brazil’s growing marine and offshore sectors, supports a string of recent orders won by the company. Hamworthy Oil & Gas Systems was recently awarded a major contract by Brazilian shipyard Estaleiro Promar SA for the design and supply of cargo handling systems for eight liquefied petroleum gas (LPG) carriers destined for operation by Transpetro, a subsidiary of Petrobras. The vessels will be designed

by Hamworthy’s specialist naval architecture consultancy in Poland, Hamworthy Baltic Design Centre, along with the cargo tanks and cargo handling system.

Hamworthy Oil & Gas Systems recently completed installation of its VIEC (vessel internal electrostatic coealescer) system in the oil separator on Petrobras’ Siri offshore

Hamworthy launches Training Academy Leading marine and offshore fluid handling specialist Hamworthy has launched a new learning initiative aimed at offering tailor-made training packages for its end users. The service, Hamworthy Academy, includes a range of courses which are designed to provide training for the company ’s equipment and comprise e-based learning packages backed up by a significant investment in hands-on facilities. Hands-on training is currently available from Hamworthy ’s

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Norway-based facilities in Moss, which includes performance testing of its largest inert gas systems. The company has also developed crew training simulators for its LPG cargo handling system, LNG reliquefaction system and VOC recovery system. Simulator-based training can be arranged in training centres around the world. Via the Academy ’s new purposebuilt website, existing customers will be able to administrate their own learning and development by

downloading learning material, supported by tests and verified through certification. Courses can be delivered in the classroom or via e-learning. The learning portal can be accessed via Hamworthy ’s website or directly at: http://training.hamworthy.com Initially training will focus of the company ’s range of oil and gas products. To find out more about Hamworthy ’s online training packages.

installation. Hamworthy was also contracted to supply a complete VIEC system for Brazilian FPSO operator OSX for the OSX-1 FPSO, which will be chartered by owner OGX Petróleo e Gás Ltda for redeployment on Waimea (Block BM-C41) in the Campos Basin. Gusto BV (the design, engineering, procurement, project management and consultancy services arm of SBM Offshore,) recently specified seawater lift pumps and electric fire pumps from Hamworthy Pump Systems for installation onboard the Cidade de Paraty floating production storage and offloading (FPSO) vessel, due for delivery in Brazilian waters in 2013. Gusto will operate the FPSO on behalf of Petrobras in the Santos Basin pre-salt area. Meanwhile, Hamworthy has received an order covering electrically-driven cargo pump systems for eight FPSOs from Brazilian shipyard Engevix Construcões Oceânicas S.A. The equipment will be delivered between 2012 and 2014. These vessels, each with capacity to store 1,600,000 barrels of oil, will be assigned to various field developments in the pre-salt area of Santos Basin. Hamworthy’s deepwell cargo offloading pumps and fire water pump systems were ordered recently by Teekay Corporation for an FPSO to be constructed at Samsung Heavy Industries. With

capacity to store 800,000 barrels of crude oil, the newbuilding FPSO will enter operation during the first quarter of 2014 in the North Sea’s Knarr oil and gas field. The run of contracts for Brazilian customers has also seen Hamworthy selected to supply equipment for the Papa Terra FPSO for BW Offshore. The company will deliver cargo pump room systems, seawater lift and firewater pumps for the FPSO, which is under conversion at COSCO Dalian, for delivery towards the end of 2011. “Brazil is a key market for technology companies involved

in marine and offshore,” said Hans Jakob Buvarp, Managing Director, Hamworthy Brazil. “It is why we are extending our capabilities in terms of local service support and increasing local content supply.” Hamworthy has been present in Brazil since the 1970s, offering products and services through its local partner Tridente. Its new dedicated service centre will provide essential assistance to ship and offshore operators including the provision of spares and service to the growing Brazilian market. Hamworthy continues to develop its technologies and solutions for offshore applications with its strong marine background, and many of its products are already operating in harsh conditions around the world in missioncritical upstream conditions.Last year, Hamworthy delivered a fuel gas system to the Statoil operated field, Peregrino, also operating in Brazilian waters.The company said it was also experiencing increased interest from oil companies operating in Brazilian waters for its flare gas recovery and ignition systems that result in reduced emissions.

BMT Scientific Marine

Service contract for Petrobras Cascade & Chinook BMT Scientific Marine Services (BMT), a subsidiary of BMT Group Ltd, the leading international maritime design, engineering and risk management consultancy, has been contracted by Petrobras America Inc., a subsidiary of Petrobras, to provide support maintenance and repair for the Cascade and Chinook Free Standing Hybrid Riser Tower (FSHR) Monitoring System. This agreement includes five years of operation to support maintenance and repair of the FSHR monitoring system, including equipment replacement,

change-out of batteries, repair of equipment, preventative maintenance, equipment refurbishment, freight and transport. The monitoring system was originally supplied by BMT with

subsea installation completed in 2010. It was designed to monitor the stabilizing uplift forces on five Riser Towers and record Riser, Turret Buoy and FPSO position, motion and mooring data. The BMT Service Team has provided service to platforms and vessels around the world that utilize its monitoring and control systems. BMT offers pro-active maintenance, unscheduled or emergency service visits, remote support, and both onsite and shorebased training.

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legislation

local Content Understanding the issues through a geological metaphor

The Local Content issue is interdisciplinary: it has legal, accounting, technical and regulatory contours. For this reason, it perhaps the single issue that raises most doubts in the oil industry, and the one with regards to which we have most frequently been consulted these past months.

Heller Redo Barroso is HRB Associates lawyers, specializing in oil and gas.

Marcos Macedo is HRB Associates lawyers, specializing in oil and gas.

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ts complexity is heightened most notably due to the fact that it has been treated differently through the succession of bid rounds held so far. To facilitate its understanding, we propose to analyze the Local Content through a geological metaphor, drilling through the Local Content layers until we get to the first bidding round. At the first Local Content layer (from nowadays down to the Seventh Round), we find a well-established and stable regulatory environment. Most of this stability has been achieved as a result of the combined efforts of the National Agency of Petroleum (ANP), industry representatives and the Ministry of Energy in its development of the PROMINP. The first issue that we notice in this layer is that Local Content represented 20% of the bid proposal. Also, the bidding documents established minimum and maximum percentages for local content commitments. The Local Content in this first layer is more encompassing than the other layers, including a global percentage for each phase (Exploration and Development), as well as a specific local content for each item enrolled in a list (“Cartilha”), annexed to the Concession Contract. Another peculiarity of this layer is the local content certification for goods and services by companies approved by ANP, improving the audit system and the local content verification. In this layer we also find four major ANP resolutions, all issued in 2007, and applicable only to this layer, which regulates the local content certification and calculation, as well and provides the rules for the Concession quarterly investment report.

After getting through the first layer, we face a more unstable environment, subject to strong geodesic pressures and high risk of wash-out. In the second layer (from the Sixth to the Fifth Round), the Local Content represents 40% of the bid proposal. Many bids exaggerated the amount of local content, which will probably result in future fines as the local industry did not evolve so as to accommodate such the commitments made by the concessionaires. In the second layer, the bidding documents established minimum percentages for the bid proposal. The Local Content in this layer included a global percentage for each phase (Exploration and Development) and specific percentages for some activities in each phase. At the time of exploration of this second layer ANP issued the ordinance 180/2003, which established rules for the quarterly expenditures report (not investments!). Curiously, this rule was identical to the one applicable to the blocks of the very initial bid rounds: first through fourth. As well as the investment report, the expenditures report is also quarterly. The main differences of the expenditure report are: (i) the inclusion of Production expenditures report; and (ii) its importance in the evaluation of Local Content fulfillment, since there was no certification system in the second layer. Finally, arriving in the last layer (from the Forth up to the First Round), we notice a yet posturing regulation of Local Content. At this last layer Government initiated the studies and analyses regarding the Brazilian market and its development capacity. At this last layer, the Local Content represented 15% of bid proposals. There was no minimum percentages, just maximum (50% Exploration and 70% Development), and there

was only a global commitment for each phase, no sub-items. It was also in this last layer that the guidelines for the classification of whether a cost would be included in production or development phases were issued, by means of the rules regarding the concessionsâ&#x20AC;&#x2122; Development Plan (Ordinance 90/2000) Concluding, the Local Content has blossomed in importance and gained a more strict ruling along the years, however there are many changes yet to be made, such as: (i) synergy between fiscal incentives and Local Content; and (ii) expansion and detailing the spreadsheet items for Local Content.

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legislation

THE ROYALTIES effect and the exploration of Brazilian petroleum

The lack of objective concepts concerning the Unionâ&#x20AC;&#x2122;s exclusive ownership over the continental shelf is a fact that has originated serious imbalances, now contributing to uncomfortable dissent among States regarding the appropriation of petroleum exploration proceeds.

Antonio Bastos Sarmento is a partner to Tauil & Chequer Advogados in association with Mayer Brown LLP.

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sum of circumstances faraway from any commitment to the national interest to strengthen the federal pact remains in the root of a harmful and consuming deadlock that prevents the continuation of a wider attraction of investments in petroleum exploration and production and the security of an energy policy essential for the performance of the Brazilian economy. For how long? Heir of legal Lusitanian traditions regarding rights over fisheries and sea neighboring areas, recurrent since the 1475 Ordinations up to the 1818 Kingâ&#x20AC;&#x2122;s Advices, the independent Brazil has always had the sea resources as a national asset. Even though the continental platform was absent in an express manner in the 1824 Imperial Constitution, as well as in the Constitutions of 1891, 1934, 1937 and 1946, the goods originated from the sea have always been the State property whether in the form as Crownâ&#x20AC;&#x2122;s royalty or by legal command, as is the case of rights to marine coastal lands. The perception of the continental shelf and territorial sea as an essential economic value has only entered the constitutional context on 1967 and 1969, respectively. It must be emphasized that the Constitution of 1988 added content in such respect as it included the resources of the Exclusive Economic Zone in this category. Unlike federative models like that adopted by the United States, the Brazilian States have never been granted dominion over the sea submerged lands or title holders of tax benefits in respect thereof (unless for punctual and very brief exceptions between 1831 and 1928). This concept was first revisited when the subsea exploration for petroleum became a paramount factor to the economic life of the country. The contemplation of politically privileged sectors with questionable advantages was only possible as an effect of the original debility of the federative pact fundamentals. Such deficiency provided lawmakers with the pretext to recognize to certain States some form of access to those resources, even though

Photo: Petrobras Agency

they have never been given the right to incorporate any portion of such areas into their territories. The lack of objective concepts regarding the Union’s exclusive ownership over those assets resulted in serious imbalances, which now contribute to uncomfortable dissent among States regarding the appropriation of the results from the exploration for petroleum. Aside the conflicts of interests and their reasons (or lack of reasons) relative to the sharing of the royalties, the analysis of the legal solutions propitiated in the past six decades, if not the appeasement of the current quarrels, could at least contribute to provoke a little bit of serenity in the disputes unleashed after the government hesitation to sponsor a round of discussions centered on the notion that Brazil intends to be a federation of states, and not the arena for ambitions devoid of objectivity. The recent history of our legal oil web, counting from 1953 with law 2004/53 that by incorporating the state company Petróleo Brasileiro inaugurated the petroleum legal monopoly (which would only achieve constitutional shelter under Constitutional Amendment no. 1 of 1969), gave breath to the sharing of exploration results when decided to distribute an initial 4% of onshore petroleum tax revenues as indemnification to the States and 1% to Municipalities, with a puzzling reference to their petroleum producers condition.

In 1957, law 3257 expressly kept the production sharing system on the basis of 4% for States and 1% for Municipalities (law 7453/85 modified the wording but did not changed its contents). Subsequently, Decree-Law 523/69 amended law 3257 (which changes were ratified by Legislative Decrees, the last of which was LD no. 100 – Official Gazette of October 13, 1980) and provided that the same 5% from the petroleum revenues contemplated under article 27 of law 2004/53 (successively modified) – when produced from the continental shelf – were to be apportioned among the Ministry of Education, the DNPM (National Mineral Production Department) and the MME (Ministry of Mines and Energy) with the purpose of forming a National Mining Fund. Under the effects of tensions caused by the oil crisis, Decree-Law 1288/73 transferred the destination of such funds to the CNP (National Petroleum Council) then in charge of keeping fuel stokes aiming at the country’s energy security. Those action led to the immediate conclusion that the Union regarded petroleum revenues as a source of funds open to multiple and widespread national interests, and not only as a premium to be sliced in favor of personal and less transparent arrangements. However, the States, Municipalities and Territories facing the continental shelf were gifted by law 7453/85 with 5% of the oil production at the rate of 1.5% to States and Territories, 1.5% to Municipalities and 1% to a “Special Fund” to be mutually shared among all States, Territories and Municipalities (such “fund” saw its share reduced to 0.5% under law 7990/89). It is to be noted the specious wording of the law given that in reality such 5% were not provided solely to producing States and Municipalities as the Navy was entitled to 1% to cover costs for patrolling and protecting the pertinent areas. The gratuity contained in law 7453 was not, however, free of charges as it maintained the destination of such funds in line with law 2004/53. One year later, law 7525 of July 22, 1986, would specify the apportionment of the 1.5% indemnification dedicated to States and Municipalities; Decree 93189/86 would complement the demarcation of the producing zones corresponding to each beneficiary State and Municipality and set rules to define the facing status regarding States and Municipalities adjacent to the offshore location of oil wells, according to the projection of their seashore borders onto the corresponding field areas, T&B Petroleum # 31

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in view of the payment of the indemnification due by Petrobrás. It must be noted that until 1989 the portion of petroleum revenues transferred to States, Territories and Municipalities was characterized as indemnification, which assumed the condition of compensation after the enactment of law 7990/89. A factor that seemingly has not been taken into account in the discussions currently linked to this subject. An indemnification is provided to a person who sustains or is threatened of sustaining a loss. Compensation is paid to a person in exchange for something valuable so that such person is not deprived of something it already owned. The idea of indemnification was fair given the negative impacts that the oil industry should certainly bear to the geo-economic area of the Municipalities. Compensation was a euphemism to conceal a gift made to the detriment of the common interests of a staggering federal pact. While braking out a radical change to the petroleum policy, without wounding the state monopoly, law 9478 of August 6, 1997, brought new concepts in relation to the exploration revenues, fragmenting them, perhaps due to the lack of experience in taxing the oil exploration and production industry and misinterpreting the tax practices in effect in other countries, a clear taxation mistake as if they were separate items of the tax collection system. Among the latter, stands out the portion called royalties, rated at 10% of the value of the product and established not in function of the market, but of situational policies. In any event, the royalties (a completely unnecessary Anglicism since the word “regalia” is long seated in the ancestral tax uses of the Portuguese language) relating to onshore production were treated in the same manner as provided under law 7990. The same amounts representing 5% of the production were to be paid to States and Municipalities facing the continental shelf and the Municipalities hosting facilities used to move the product. Such 5% were distributed on the basis of 22.5% both to States and Municipalities. As a consolation prize, 0.5% was to be allocated to a fund shared among all other States, Territories and Municipalities. Other allocations are unrelated to the subject matter of this comment. The discovery of the so praised pre-salt possibilities highly escalated the ambitions of the beneficiaries of offshore production revenues driving at the appropriation of so phenomenal funds. Law 52 T&B Petroleum # 31

12351, of December 22, 2010, however, induced angry reactions on those who nurtured such expectations, even when harnessed on some facts, the explanation of which remain due. Deprived of political consensus, the proposed sharing scheme approved by the Congress was abated by Presidential veto. Facing the legal disarray that beat it, the sharing of pre-salt tax proceeds suffered a dramatic blow when article 46 was vetoed, a merely political fact leaning on the lack of logical reasons, although article 46 suffers from inaccuracies exceeding the limits normally found in recent legal texts. However, it was not impossible to establish the compensation value (to which special participations were added), if linked to the origin of the royalties contemplated by line d, item II, of article 49 of law 9478/1997. The law also charged the government with the payment of compensation to States and Municipalities neighboring the offshore production for a decrease in their current revenues, until an increase in the volume of petroleum produced from the pre-salt could make up for such deprivation. In addition to disfeaturing the partition of the royalties under the current historical system, the law spread the regulatory authority over the different phases of the pre-salt exploration and exploitation among entities with conflicting, poorly defined and vaguely structured jurisdictions, jeopardizing the substantiation of projects and the accomplishment of administrative and industrial phases, which will be indispensable if any approved plans are to materialize. The classification of the revenues of this economic activity as “governmental” resources, to be allocated for extra-fiscal purposes, was the necessary step to converting them into funds susceptible to extensive manipulation by the executive branch, earmarked for inaccurate destinations and even less transparent objectives, outside the political control of the Congress, who became just an addressee of performance reports of a social fund managed by bodies to be created on the basis of odd criteria and obscure purposes. A sum of circumstances faraway from any commitment to the national interest to strengthen the federal pact remains in the root of a harmful and consuming deadlock that prevents the continuation of a wider attraction of investments in petroleum exploration and production and the security of an energy policy essential for the performance of the Brazilian economy. For how long?

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2011

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Survival Craft

Training Using Simulators

In the unlikely event of an incident at sea, offshore workers must be prepared to deal with the emergency, and – if required – abandon their platform and survive until rescue. Since such instances of distress are rare, offshore workers must rely on training and continual practice (through drills) to ensure that they are prepared should an incident occur.

Anthony Patterson is a graduate of the Canadian Coast Guard College, holds a diploma in Nautical Science, a Coast Guard Command Certificate, a Master Mariner’s Certificate and a Bachelor’s Degree in Maritime Studies. Virtual Marine Technology Inc., St. John’s, NL, Canada Philip McCarter, Virtual Marine Technology Inc., St. John’s, NL, Canada Scott MacKinnon, Memorial University of Newfoundland, St. John’s, NL, Canada Brian Veitch, Memorial University of Newfoundland, St. John’s, NL, Canada Antonio Simões Ré, Institute for Ocean Technology (National Research Council), St. John’s, NL, Canada

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he ability to launch survival craft under a variety of conditions, including high sea states, is one of the competencies required under international standards. There has not been any safe means for offshore workers to demonstrate their competence to launch under adverse conditions using real equipment. In addition, recent accidents have highlighted the dangers of conducting practice launches using real equipment even under calm conditions. Notwithstanding the difficulties in providing practical training for offshore workers to operate lifeboats under adverse conditions, it is part of their duties that they are able to do so. In the worst case, they will be asked to launch under extremely hazardous conditions in which they have never operated and are ill prepared. The purpose of this paper is to describe how virtual environments can be used to train crews to launch and operate survival craft. Indeed, we will argue that the virtual environment, when presented though a high fidelity simulator, exposes trainees to a more ‘realistic’ learning experience than can be achieved through current training methods. We will conclude the paper with our suggestions for amendments to existing training standards, which would implement recent changes to international training regulations and permit simulation to be used for the training and assessment of offshore workers.

The Use of Survival Craft in Emergencies Survival craft are the primary means of evacuation from platforms and vessels in the event of a rapidly escalating distress scenario. While orderly evacuation using helicopters is the preferred evacuation strategy, helicopter evacuation is not always possible or appropriate in all scenarios. Incidents which are characterized by rapid escalation, poor weather conditions, remote locations or toxic environments require an evacuation strategy which relies upon survival craft carried onboard the platform. The need to evacuate a platform or vessel by survival craft is a rare occurrence. The industry expends significant efforts to ensure that risks are managed to prevent incidents from occurring in the first place and to mitigate

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the impacts of an incident so that it does not escalate to the point where evacuation is necessary. Notwithstanding the low incident rates, safety management regimes require that crews are prepared at all times for survival craft evacuation. When an incident does occur, evacuation by survival craft has been observed to be a high risk operation. In 2000, the Oil Companies International Marine Forum (OCIMF) observed that there were 75 accidents with the use of survival craft over a one year period1. Most accidents occurred during drills or inspections and the primary risk was during the launch phase. Drills and inspections are conducted in calm conditions or in protected waters. The lessons learned from evacuations in rough weather highlights the hazards during the launch phase and the subsequent survival and rescue phases. In a study conducted by Memorial University in 2006, it was noted that the launch sequence alone is comprised of 29 specific tasks, which branches into many fault conditions. A subsequent workshop jointly conducted by DNV in collaboration with Memorial University in 2008 identified over 250 competencies required for a lifeboat coxswain for all phases of the embarkation, deployment, evacuation and rescue process. In both cases, the skill of the operator was identified as a prerequisite for a successful evacuation by lifeboat.

Current Methods to Prepare for the Use of Survival Craft The requirement for competent survival craft operators has long been recognized. Lifeboatmen certificates were required as early as 1914 through the International Convention for Safety of Life at Sea. The international standards have continually evolved and are now contained

in Section A-VI/2 of the Standards of Training Certification and Watchkeeping Convention (STCW). Some jurisdictions extend STCW survival craft competence standards, which are intended for seafarers on merchant ships, to the offshore oil and gas industry through the adoption of voluntary training guidelines issued by the International Maritime Organization2 (IMO). In addition to the standards established by the IMO, the offshore oil and gas industry has created specialized training standards for survival craft operators. The most notable amongst the offshore specific training standards are the ones established by the Canadian Association of Petroleum Producers (CAPP)3, the Offshore Petroleum Industry Training Organization (OPITO)4, and the Norwegian Oil Industry Association (OLF)5. While the specific requirements of each of the training regimes are different, they share the basic philosophy that safety training is fundamentally a learn-by-doing process. In describing learning-by-doing, David A. Kolb indicates that â&#x20AC;&#x153;learning is the process whereby knowledge is created through the transformation of experienceâ&#x20AC;? 6. In other words, the learner must make the link between theory and action by planning for that action, carrying it out, reflecting upon it, and relating what happens back to the theory. (1) http://www.ocimf.com/view_document.cfm?id=340 (2) www.imo.org/includes/blastData.asp/doc_id=2480 /A21res891.pdf (3) www.capp.ca (4) www.opito.com (5) www.olf.no/en/

(6) http://www.learningfromexperience.com/images/ uploads/process-of-experiential-learning.pdf T&B Petroleum # 31

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Table 1 â&#x20AC;&#x201C; Major Topics in IMO Model Course 1.23 Proficiency in Survival Craft and Rescue Boats (other than Fast Rescue Boats) Subject Area 1. Introduction & Safety 2. General 3. Abandon Ship 4. Survival craft and rescue boats 5. Launching arrangements 6. Evacuation and recuperation of the survival craft and rescue boats 7. Actions to take when clear of the ship 8. Lifeboat engine and accessories 9. Rescue boat outboard engine 10. Handling survival craft and rescue boats in rough weather 11. Actions to take when aboard a survival craft 12. Methods of helicopter rescue 13. Hypothermia 14. Radio equipment 15. First aid 16. Drills in launching and recovering boats 17. Drills in launching liferafts 18. Drills in launching and recovering rescue boats 19. Practical exercises and evaluation

For survival craft training, the learn-by-doing philosophy is incorporated into the training standards through three key features. The first feature is the requirement for a practical demonstration of abilities to operate a survival craft before a person is deemed competent. The second feature is the requirement for routine practice through training exercises and drills. The third feature is the requirement to use real equipment for training. The vast majority of lifeboat coxswains are trained in accordance with the STCW Code. The specific standards arising from the STCW Code are contained in the IMO Model Course 1.23 Proficiency in Survival Craft and Rescue Boats (other than Fast Rescue Boats). The recommended duration of the Model Course is 31.5 hours and is followed by a practical evaluation. Table 1 provides a listing of the major topics contained in the Model Course. One of the key differences between the IMO training standard and the offshore specific standards is the amount of training conducted in liferaft and rescue boat operations. 56 T&B Petroleum # 31

Both the maritime and oil industry standards recognize the need for regular practice once the initial training has been completed in order to maintain safety critical skills. In 2010, as a result of a comprehensive revision of STCW, there is now a requirement for seafarers to provide evidence once every 5 years that they have maintained their competence to operate survival craft required under the STCW Code. While regulators may accept onboard training and drills to maintain some of the competencies, there is an expectation that those tasks which cannot be safely practiced at sea will become the subject for shorebased refresher training. Under the IMO regime, the frequency of drills for merchant seafarers is mandated under the Regulation III/19 of the Safety of Life at Sea (SOLAS) Convention. For offshore jurisdictions who adapt IMO standards, the requirements for drills are contained in IMO Resolution A.891(21) and the MODU Code7. The specific training standards for the offshore oil and gas industry have long recognized the practical difficulties of performing practice launches in the exposed waters offshore, particularly in the recovery of boats once the drill has been completed. All of the offshore standards have defined shore-based refresher training programs for those skills which are impractical or unsafe to practice offshore8. The frequency of refresher training varies by jurisdiction, but in Canada, for example, the lifeboat coxswain refresher interval is three (3) years. As with the majority of safety training, the survival craft training standards require that real equipment be used to the extent possible in the training program. The requirement to use real equipment ensures that trainees are able to provide a practical demonstration of their competence to evacuate a platform. Under the STCW Code, knowledge-based learning methods, such as lectures and quizzes, are not recognized as valid training and evaluation techniques for survival craft coxswains.

Challenges with Current Methods The first, and most obvious, challenge with existing training methods is the ability to prepare lifeboat coxswains and lifeboat crews for operations in rough weather. It is interesting to take note of the specific STCW Code requirement that coxswains must demonstrate their ability to launch and operate survival craft in rough seas. IMO Model Course 1.23, however, only requires that a candidate explain how to launch into rough seas. Moving rough weather operations from a skills based assessment to a knowledge based assessment is understandable from a safety point of view. No training institution has been able to safely meet the require-

Survival Craft Training Using Simulators

ment to have candidates demonstrate their abilities to operate in rough weather using real equipment. The authors, however, note the comments of the International Association of Drilling Contractors (IADC) when they state in the August 13, 2009 memorandum on lifeboat safety: “...training and drills should provide all personnel with realistic expectations regarding the conditions they may encounter during preparations for abandonment, within the survival craft itself, during recovery operations, and the need for discipline in each instance. Lack of appropriate training and discipline can have tragic consequences.” 9 The second challenge with existing training methods is the ability to prepare coxswains to launch the particular survival craft which are onboard their platform or vessel. In light of the number of accidents which have occurred during inspections and training drills, IMO has relaxed the requirement that the assigned crew must be onboard the survival craft during the launch phase of the drill10. The decision to place the crew onboard the survival craft is now placed with the Master who must consider the risks involved as required under the International Safety Management (ISM) Code. Most Masters view the new requirements as a de facto ban on practice launches with the assigned crew on-board. If onboard drills are no longer used for refresher training, then there is an outstanding issue with equipment familiarization. While computer based training (CBT) can be used to familiarize workers with layouts and procedures, it does not provide essential practice in obtaining the ‘feel’ of how the equipment is actually used. Removing the ‘feel’ of the equipment violates the fundamental learn-by-doing philosophy behind safety training. As articulated by the IADC, the learning experience must match the conditions to be encountered during an emergency. Finally, the use of knowledge based techniques does not conform to the regulatory requirement that workers must provide a practical demonstration of their competence using real equipment. Training providers are limited in their ability to replicate the wide variety of lifeboats which are fitted in the offshore and merchant fleets. If the training provider does not have the particular model of survival craft that the trainee will be using in the fleet, how will the trainee become familiar with its operation?

The Use of Simulation for Emergency Training The need to prepare workers to perform tasks which are high risk with a high consequence of failure is not confined to the operation of survival craft in the marine and offshore industries. The use of simulation to improve performance and increase safety has been incorporated

into a number of industries including aviation, medicine, and the nuclear industry. In all cases, the use of simulation is viewed as equivalent to real world experience and has become a key element in their safety training programs. Indeed, simulation is currently used in a variety of offshore applications including the training and evaluation of Offshore Installation Managers (OIM) to manage a crisis. A 1994 UK study by Rhona Flin and Georgina Slaven noted: ‘The use of realistic and well managed simulated emergency exercises are clearly the most important element of training and competence assessment for OIMs.11 A major element of the success of simulation is that educators are able to enhance and expand the practical training beyond what is possible through the use of real equipment. For example, it is possible to simulate rough sea conditions, night launches, equipment failures, and evacuation in ice fields all of which could not be adequately replicated using real equipment. The main success of introducing simulation into survival craft training is that it can create ‘artificial experience’ faster, better, cheaper and safer than would otherwise be possible using real equipment. Once artificial experience has been created, the remainder of the training process, which is currently used by safety and survival training providers, transforms the experience into competence. In order to be useful in practical training, the capabilities of the simulator must be able to induce an appropriate level of suspended disbelief in the mind of the trainee to enable them to accept the simulation as realistic enough from which they can draw learning experiences. Artificial Intelligence and Robotics pioneer Marvin Minsky, describes this effect as telepresence, or “the subjective experience of being in one place or environment, even when one is physically situated in another”12. In other words, the student must have the experience of being in the scene of the emergency while physically being located at a safe training facility. Research has identified involvement and immersion as the two primary determinants for the creation of tele(7) http://www.directemar.cl/dai/dai-esp/r-omi/sub-comites/DE/DE%2052-21-Add.1.pdf (8) http://www.opito.com/library/documentlibrary/international_er_guidance.pdf (9) http://www.iadc.org/committees/offshore/Documents/20090813%20Lifeboat%20safety.pdf (10) www.crclass.org.tw/images/c-index-news/ MSC1326.pdf (11) http://www.hse.gov.uk/research/othpdf/200-399/ oth374.pdf

(12) http://mitpress.mit.edu/journals/PRES/ps00734.pdf T&B Petroleum # 31

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a large fleet of survival craft and launching arrangements for training purposes.

Summary of Research into Survival Craft Simulation

Figure 1 – Exterior view of davit launched lifeboat simulator showing instructor station, computer system and student station.

Figure 2 – Interior view of student station showing hook release system, cabin controls and visual channels. presence. Involvement is the degree in which the virtual environment engages the attention of the participant, while immersion is the perception of being included within and interacting with the virtual environment13. Even though traditional survival craft training employs real equipment, it is limited in its ability to provoke the same type of experience that one would feel during an actual emergency evacuation at sea. For safety reasons, training exercises with real equipment are limited in their ability to ‘immerse’ the students in the stress, uncertainty and heightened emotional arousal of an actual emergency. Simulation systems can provide both involvement and immersion for emergency training and, paradoxically, can provide a more compelling representation of emergency conditions than could otherwise be accomplished with real equipment. Simulation also offers new possibilities for training systems since the full range of boat types and launching systems can be emulated within a single device thus avoiding the logistics problem of maintaining 58 T&B Petroleum # 31

Memorial University of Newfoundland, including the Fisheries and Marine Institute, the National Research Council of Canada, and Virtual Marine Technology Inc. have conducted research into the development of survival simulators which are effective for survival craft training. The capabilities of marine evacuation systems have been investigated extensively using systematic series of model experiments in large test facilities. This work aimed to address long-standing knowledge gaps by providing objective, empirical data that can be used by designers, regulators and others in their decisions concerning safety. Tests have been done with conventional davit launched twin-falls lifeboats, a similar system with the addition of a flexible boom14 [1-9], and a free-fall lifeboat system [1,10-11]. The performance of each system was evaluated as a function of weather conditions, ranging from calm conditions to severe storms. The effects of the configuration of the evacuation station were also examined. Additional experiments and full-scale trials investigated the performance of lifeboats in ice and related design and operability issues [12-16]. Results of this research campaign have been applied to practical emergency preparedness planning and evacuation system design, as well as regulatory renewal. The research has also been applied to the development of simulation training [17-20] where the wealth of empirical information concerning the performance of various small craft in adverse conditions constitutes an unparalleled benchmark for the validation of simulation models. Indeed, it was observations made during the experiments that inspired the development of simulation training solutions. The research team evaluated the task of launching and operating survival craft in rough seas and the associated training objectives to determine the degree of realism demanded by simulator. The team concluded that a full replica of the coxswain’s position is required to achieve the realism appropriate for the training objectives. In addition, for freefall simulation, the team determined that the training device requires capacity to accommodate some of the crew positions to permit practice in securing passengers prior to launch as well as to practice alternate methods in releasing the freefall lifeboat. Following an analysis of the training requirements, the research team embarked upon a program to develop advanced mathematical models based upon the data derived from the empirical information and to incorporate

Survival Craft Training Using Simulators

the math models into a simulation network which is based upon aeronautical and military technologies. The research program produced lifeboat simulation technology which can emulate davit and freefall variants of survival craft launching in Beaufort 8 conditions with seas from any direction. Moreover the components within the simulator, such as the hydrostatic release, can be reconfigured without the need of tools or specialized technicians to provide for individualized familiarization as per SOLAS and STCW requirements. In order to be used in training programs, an instructor station was developed which enables the creation of realistic scenarios with realtime control of target and environmental variables. The instructor station also provides the capability of providing immediate feedback to the candidate. Once the technology was completed, Transport Canada, the Canadian Maritime Administration, sponsored an evaluation of lifeboat simulators from a human factors perspective to determine the extent in which the simulator immersed the student and produced the desired behavioural responses15. Evaluations by experienced survival craft coxswains and trainers indicate that high levels of immersion are achieved and the simulator produces a more effective training experience than is currently available with real equipment. Human factors testing is still ongoing to determine methods to enhance the experience within the simulator to achieve even higher perceptions of immersion. It is interesting to note that a lifeboat simulator was successfully used to train a group of naive subjects (i.e. - no previous experience in operating boats) how to navigate a survival craft through ice fields16.

Inclusion of Survival Craft Simulation into Training Programmes As a result of the research program, the Government of Canada submitted a proposal to add simulation to the approved list of training methods for lifeboat coxswains. In their submission, the Canadian Government noted the “impossibility of safely using real equipment to assess the competence of seafarers to launch into a rough sea”. In 2010, the proposal by Canada was accepted and STCW Table A-VI/2-1 was modified to permit the use of “approved simulation training, where appropriate” in the training and assessment of lifeboat coxswains. This amendment is significant since the control procedures in STCW A-I/4 constrain training providers to only use the training and assessment methods authorized by the STCW Code. The amendment in 2010 opens the door for individual Administrations to authorize the use the simulation in their domestic training programs.

It is interesting to note that CAPP accepted the use of simulation for the delivery of elements of their offshore oil and gas specific refresher training program shortly after the acceptance of simulation by IMO. Efforts are ongoing to have other offshore regulators to permit the use of simulation in lifeboat coxswain training programs. Before simulators can be used in IMO training programs, they need to conform to Section A-I/12 of the STCW Code which outlines the general performance requirements for simulators used in mandatory training programs. Common practice within the marine industry is for Classification Societies, most notably Det Norske Veritas (DNV), to evaluate training simulators to verify that they conform to IMO requirements. DNV has conducted an independent verification of the simulators produced through the Canadian research program and have issued Statements of Compliance for both the davit launched and freefall launched variants of the lifeboat simulator. The DNV verification of the lifeboat simulators indicates that they are suitable to meet the training requirements contained in STCW. Within the marine industry it is common, but by no means necessary, to use an IMO Model Course as a guidance document to structure domestic training programs. Unfortunately the Model Course for survival craft operators was last updated in the year 2000, well before the invention of survival craft simulators. As a consequence, the existing Model Course does not include a provision for the use of simulation. A useful next step would be an amendment to the Model Course which would provide guidance on how to incorporate simulation into survival craft training. As part of conducting the human factors test sponsored by Transport Canada, the research team identified specific competencies which could be delivered by simulation. This step was necessary since the general performance standards in STCW A-I/12 require the simulator to be “suitable for the training tasks and objectives”. In addi(13) Ibid. (14) Due to the extensive references included in this section, they have been consolidated into endnotes and presented at the end of the paper. (15) Simulation Based Training Program for Lifeboat Launching. (2010). Final Report for National Research Council of Canada. (16) Power MacDonald, Stephanie; Mackinnon, Scott; Simoes Re, Antonio; Power, Jonathan. (2011) Performance Measurements of the Effect of Simulator Training on Novice Operators in Simulated Ice Conditions. Submitted for presentation at the 21st international Conference on Port and Ocean Engineering under Arctic Conditions, Montreal, Canada. T&B Petroleum # 31

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tion, the DNV evaluation required the specific training context be identified by the manufacturer, Virtual Marine Technology Inc., to determine if the simulator was suitable for the intended training tasks. An analysis of the human factors study has resulted in the drafting of a simulator variant of Model Course 1.23 for consideration by IMO as part of the comprehensive modernization of maritime training standards arising from the Manila Amendments to the STCW. Amendment of Model Course 1.23 to incorporate survival craft simulation will undoubtedly accelerate the acceptance of the technology as a training method.

Summary and Conclusion Operating survival craft in rough conditions is a hazardous operation and both the offshore and maritime industries have included mandatory elements related to rough weather operations in their training guidelines. Until recently, it has not been practicable to have students demonstrate their ability to operate in rough conditions using real equipment. With advances in simulation technology, however, it is now possible to have students demonstrate their competence in a virtual environment. Indeed a range of survival craft simulators have been developed and accredited for that purpose. IMO has formally accepted simulation as a valid training method for survival craft training through the Manila Amendments to STCW in 2010.

With the amendment to STCW we foresee that training for rough weather operations will be accomplished through the use of simulators. The same simulators will have important applications in launch and recovery training; maintaining proficiency in emergency situations; and developing proficiency in specific survival craft. The authors believe that accelerating the implementation of simulation technology into survival craft training programs will significantly improve the preparedness of personnel to evacuate in emergency conditions as well as address the concerns of using real equipment in drills and exercises for recurrent training. In order to achieve the benefits of simulation, the key activity to be pursued over the immediate future is to incorporate a simulation option into the detailed training guidelines used by the shipping and offshore industries. Specific actions include: 1. Amendments to IMO Model Course 1.23 should proceed without delay; 2. Maritime Administrations should consider early implementation of simulation into their accredited training programs based on the research conducted in Canada; and, 3. Custodians of alternate training guidelines used by the offshore oil and gas industry (e.g.: OPITO) should review the initiative by IMO to enable the use of simulators to demonstrate competence of operating survival craft, especially for launching and operating in rough seas.

Endnotes [1] Simões Ré, A. and Veitch, B. 2007. Comparison of three types of evacuation system. Transactions, Society of Naval Architects and Marine Engineers, 115:119-139. [2] Simões Ré, A., Power, J., Kennedy, E., Akinturk, A., Veitch, B. MacKinnon, S., Brown, R. and Boone, J. 2007. Liferaft performance in wind and waves: an experimental evaluation. Proceedings, RINA Design and Operation of Passenger Ships, London, 7 p. [3] Simões Ré, A. and Veitch, B. 2004. Evacuation performance of davit launched lifeboats. Proceedings, Offshore Mechanics and Arctic Engineering, OMAE2004-51528, American Society of Mechanical Engineers, Vancouver, 8 p. [4] Simões Ré, A., Veitch, B., and Pelley, D. 2003. Evacuation performance. Proceedings, Offshore Technology Conference, Society of Petroleum Engineers, Houston, 9 p. [5] Simões Ré, A., Lam, E., Igloliorte, G., and Veitch, B. 2003. Quantitative assessment of escape and evacuation. Proceedings, Passenger Ship Safety Conference, Royal Institution of Naval Architects, London, 7 p. [6] Simões Ré, A., Veitch, B., and Pelley, D. 2002. Systematic investigation of lifeboat evacuation performance. Transactions, Society of Naval Architects and Marine Engineers, Vol. 110, 20 p. [7] Pelley, D., Simões Ré, A., Veitch, B. 2002. Evacuation by lifeboat in extreme seas. Proceedings, Safety at Sea Conference, Amsterdam, 17 p. [8] Woolgar, R., Simões Ré, A., Veitch, B., and Pelley, D. 2002. Safe evacuation from offshore petroleum installations. Proceedings, Offshore Technology Conference, OTC14161, Society of Petroleum Engineers, Houston, 10 p. [9] Simões Ré, A. and Veitch, B. 2001. Experimental evaluation of lifeboat evacuation performance. Transactions, Society of Naval Architects and Marine Engineers, Vol.109, 18 p.

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Survival Craft Training Using Simulators

[10] Simões Ré, A. MacKinnon, S. and Veitch, B. 2008. Free-fall lifeboats: experimental investigation of the impact of environmental conditions on technical and human performance. Proceedings, Offshore Mechanics and Arctic Engineering, OMAE-2008-57071, Estoril, 8 p. [11] Simões Ré, A. and Veitch, B. 2007. Experimental investigation of free-fall lifeboat performance. Proceedings, International Offshore and Polar Engineering Conference, ISOPE, Lisbon, 8 p. [12] Simões Ré, A., Kuczora, A. and Veitch, B. 2008. Field trials of an instrumented lifeboat in ice conditions. Proceedings, International Offshore and Polar Engineering Conference, ISOPE, Vancouver, 1:665-670. [13] Simões Ré, A. and Veitch, B. 2008. Escape-evacuation-rescue response in ice-covered regions. Proceedings, International Offshore and Polar Engineering Conference, ISOPE, Vancouver, 1: 659-664. [14] Simões Ré, A. and Veitch, B. 2007. Lifeboat operational requirements in cold environments. Proceedings, Design and Construction of Vessels Operating in Low Temperature Environments, Royal Institution of Naval Architects, London, 6 p. [15] Simões Ré, A., Mak, L., Kennedy, E. and Veitch, B. 2006. Performance of lifeboats in ice. Proceedings, Icetech, Banff, 4 p. [16] Simões Ré, A. and Veitch, B. 2003. Performance limits of evacuation systems in ice. Proceedings, Port and Ocean Engineering under Arctic Conditions, Trondheim,10 p. [17] Veitch, B. Billard, R., and Patterson, A. 2009. Evacuation training using lifeboat simulators. By invitation, Sea Technology, April 2009. [18] Veitch, B., Billard, R. and Patterson, A. 2008. Evacuation training using immersive simulators. Proceedings, International Offshore and Polar Engineering Conference, ISOPE, Vancouver, 1:223-227. [19] Raman-Nair, W., Billard*, R., Veitch, B., and Simões Ré, A. 2005. Trajectory of a lifeboat on a surface wave. Proceedings, Canadian Marine Hydromechanics and Structures Conference, Halifax, 6 p. [20] Raman-Nair, W., Simões Ré, A. and Veitch, B. 2005. Dynamics of lifeboat and boom in deployment from a moving

Photos: Stock.xcng Image Bank and Petrobras Agency

support. Multi-Body System Dynamics, 13:267-298.

T&B Petroleum Newsletter

Every week, on your computer screen, the news from the shipbuilding and offshore industry. Subscribe at www.tbpetroleum.com.br T&B Petroleum # 31

higher education

A step up for

oil intelligence The transfer of the Course of Petroleum Engineering of the University of São Paulo (USP) to the city of Santos – a major center of oil production where Petrobras has a technology center – was an important referendum of the Administration Council of the University. Besides the relocation, the number of placements in the college will be increased from ten to fifty.

João Guilherme Sabino Ometto is engineer (EESC/USP), and vicepresident of Grupo São Martinho and of FIESP, coordinator of the Committee on Climate Change. Member of the Administration Council of USP.

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othing could have been more timely: when the college was founded, Brazil was producing a mere 250,000 barrels of oil per day; today, the country produces 2.5m, and the forecast is to produce 8m by 2020 – according to professor José Roberto Cardoso, director of Poli, an institution that is a reference in Brazilian higher education. Also a member of the Administration Council, the professor pointed out the Brazil graduates 38,000 engineers per year, but only a quarter of which are sufficiently qualified. However, the market demand is for nearly 60,000 engineers, especially with the advent of the oil industry and the pre-salt. Today, practically a third of Brazilian engineers work for Petrobras, not only directly, but all along the supply chain. Last year, 21,500 professionals in the technology area entered Brasil with a visa from Denmark, in what seemed a “blackout” if human resources in the country. In the case of the oil industry, the tendency is for the situation to get worse, since Petrobras should increase its headcount from 75,000 today to 200,000 by 2020 – of which 40,000 will be engineers. As if the situation to find a qualified workforce was not enough, professor Cardoso pointed out that Petrobras created a technology center in Santos with 2,000 employees, several of which are foreign, working in the pre-salt industry complex. It is exactly within this structure that the Course of Petroleum Engineering of the Polytechnic College will be placed. The transfer meets the needs of São Paulo and the country, considering the proximity to the industry and the direct interaction with the productive practice and applied technology. The initiative of USP to make the change was opportune and welcomed, as well as reflects the state’s focus on the question of petroleum, since the state of São Paulo is a great oil producer. However, there are still challenges in acquiring the personnel who have the know-how for the industry. All the intelligence in the oil industry is concentrated in Rio de Janeiro, where Petrobras has its headquarters, together with its Leopoldo Américo Miguez de Mello Research and Development Center (Cenpes),

Photo: Petrobras Agency

where the local universities are amply taking advantage of the opportunities, while major enterprises are placing centers for innovation and technology nearby. Naturally, nothing against Rio de Janeiro, since all together it is an important step for the country. However, São Paulo needs to advance in this industry – and quickly! The country will be taking most of oil from the bottom of the sea, and no state should be left behind. Major refineries are being constructed in the Northeast of the country, which brings an intricate question of logistics: oil will be produced in the Santos Basin, refined in the Northeast, and then transported back to São Paulo, the nation’s main consumer. It is an unnecessary cost that will surely compromise the competitiveness of the entire production chain. We simply cannot ignore this scenario, which is against all the interest of not only Paulistas, but of all Brazilians, considering just how important oil is to the entire national economy. Therefore, the decision to relocate the Course of Petroleum Engineering of the Polytechnic College to Santos places the University of São Paulo, once again, at the helm of the nation. It is an example of how taking the long-look of education, considering the economic reality at the time, can contribute to the progress of the nation.

T&B Petroleum # 31

Museu de Arte Moderna do Rio de Janeiro

Foto: Vicente de Mello

coffee break

Louise Bourgeois. 2

the intense and original work of the spider woman

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Photos: ÂŠ Louise Bourgeois Trust

by Orlando Santos

5 Louise Bourgeois: o Retorno do Desejo Proibido Museu de Arte Moderna do Rio de Janeiro (Espaço Monumental) Opening: September 15, 2011 Exhibition: September 16 through November 13, 2011 Tuesday to Friday, 12:00 to 18:00 Saturdays, Sundays and holidays, 12:00 to 19:00 Address: Av. Infante Dom Henrique, 85 Parque do Flamengo, Rio de Janeiro/RJ – CEP 20021 140 Telephone: (21) 2240 4944 www.mamrio.org.br

6 (1) MAMAN, 1999 (2) ARCH OF HYSTERIA, 1993 (3) MAMELLES, 1991 (4) UNTITLED, 1970 (5) Louise Bourgeois trabalhando no SLEEP II, Itália, 1967 (6) FEMME MAISON, 1946-1947

T&B Petroleum # 31

meeting

September

5 to 7 – Australian 6th Annual LNG World 2011 Local: Perth, Australian Phone: 00 603 2723-6736 Fax: 00 603 2723-6699 estherw@marcusevanskl.com www.lngworld-lse.com 8 to 9 – Kazakhstan Caspian Offshore 2011 Local: Aktau Phone: 007 727 239-6960 Fax: 007 727 239-6960 www.caspian-events.kz/mclass. php?sort=2 19 to 21 – Swiss 21st World Upstream Local: Genebra Phone: +31 70 324-6154 babette@glopac.com www.petro21.com/events/?id=700 19 to 22 – Singapure 12th Annual FPSO Asia Congress 2011 Local: Singapure Phone: 00 65 6722-9388 enquiry@iqpc.com.sg www.fpsoasia.com 20 to 22 – Brasil Rio Pipeline Conference & Exposition 2011 Local: Rio de Janeiro Phone: +55 21 2112-9077 Fax: +55 21 2220-1596 congressos@ibp.org.br www.riopipeline.com.br 21 to 22 – Poland European Base Oils & Lubricants 2011 Local: Kracovy Phone: 0044 20 7981-2502 Fax: 0044 20 7593-0071 amichael@acieu.net www.acius.net/aci/conferences/euebl3.asp 23 – Norway Oil & Gas Briefing Local: Stavanger Phone: +44 (0) 20 7596 5076 www.oilgas-events.com evgeny.makushin@ite-exhibitions.com

28 to 30 – Singapure 16th Asia Oil Week Local: Singapure Phone: 27 11 880-7052 amanda@glopac-partners.com www.petro21.com

October

2 to 4 – EAU Middle East Petroleum & Gas Conference MPGC 2011 Local: Dubai Phone: 0065 6338-0064 Fax: 0065 6338-4090 www.cconnection.org 3 to 5 – Netherland LNG Tech Global Summit 2011 Local: Roterdan Phone: 0044 0 20 7202-7574 Fax: 0044 0 20 7202-7600 www.lngsummit.com 4 to 6 – Brazil OTC Brasil 2011 Local: Rio de Janeiro Phone: 1 281 491-5908 Fax: 1 281 491-5902 info@otcbrasil.org www.otcbrasil.org 4 to 6 – Brazil Petrotech 2011 Local: São Paulo Phone: 55 11 5585-4355 www.petrotech.com.br 9 to 11 – Saudi Arabia Petrochem Arabia Conference Local: Damman Phone: 0044 203 328 6521 Fax: 0044 207 022 1722 www.petrochem-arabia.com

24 to 26 – Brazil Vitória Oil & Gas 2011 Local: Vitória, ES Phone: +55 21 2112-9000 ibp@ibp.org.br www.ibp.org.br 25 to 27 – USA Latin Oil & Gas 2011 Local: Miami Phone: +44 20 7978 0081 garanda@thecwcgroup.com www.thecwcgroup.com

November 7 to 10 – Brazil NNO – Niterói Naval Offshore Local: Niterói, RJ Phone: (55 21) 2215-3207 maria.jose@nno.com.br www.nno.com.br/ 10 to 12 – Argentina V ExpoGNC 2011 Local: Buenos Aires Phone: +54 11 4300 6137 info@expognc.com www.expognc.com

11 to 12 – Netherland Offshore Energy 11 Local: Amsterdam Phone: +31 (0)10 2092600 Fax: +31 (0)10 4368134 www.offshore-energy.biz

24 to 25– Brazil 8º Seminário sobre Meio Ambiente Marinho Local: Rio de janeiro, RJ Phone: (21) 2283 2482 www.sobena.org.br

10 to 13 – Argentina Argentina Oil & Gas – AOG 2011 Local: Buenos Aires Phone: +54 11 4322-5707 Fax: +54 11 4322-0916 aog@uniline.com.ar www.aog.com.ar

28 to 30– Brazil Brazil Onshore 2011 Local: Natal, RN Phone: (21) 2112-9000 ibp@ibp.org.br www.ibp.org.br

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

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18 to 20 – Brazil Pernambuco Business 2011 Oil & Gas, Offshore, Shipbuilding Local: Porto de Galinhas, PE Phone: +55 21 2112-9077 Fax: +55 21 2220-1596 congressos@ibp.org.br www.ibp.org.br

opinion

of Goret Pereira Paulo is the adjunct director and coordinator of the Energy Unit of the Fundação Getúlio Vargas.

Running against the clock

The lack of qualified human resources in the oil and gas industry is not a problem specific to Brazil. In California, for example, local industries are desperate to find young talent to substitute the engineers and geologists that are about to retire, or were dismissed more than ten years ago when the price of the oil barrel collapsed – and many of whom have no interest in returning to the industry after having started other careers.

n the United States, besides perfecting their selection process and offering bigger salaries with more benefits to try to fill their empty positions in the short-term, some organizations have their eye on the Brazilian market for the next five years: they are starting to publicize the positions available in oil and gas to high school students that show interest in mathematics, sciences and engineering. In Europe, despite giving preference to local professionals, the companies are trying to recruit people from other countries that have the expertise and technical knowledge that not only add value to projects, but also serve to educate fellow collaborators. According to research by Manpower, a world leader recruitment and professional placement, less than 10% of North-American students are choosing engineering courses – a profession that has become one of the ten most rare in the United States. Here in Brazil, the scenario is much different: for every 100 people that graduate, eight have graduated in engineering. A study by the National Confederation of Industry (CNI) has alerted that there is a demand for 150,000 engineers per year. If focusing specifically on the oil and gas industry, according to a study by PROIMP, there is a need for more than 285,000 professionals to graduate in the next three years to meet the demand of the industry. The pre-salt alone should generate more than 500,000 jobs by 2020, according to the Brazilian Institute of Petroleum (IBP).

We have been commemorating for some time now the discoveries of the pre-salt and several specialists have done the math on the expected revenues this oil will bring to the companies and the nation. One of the latest forecasts is that the reserves should reach 6bn barrels. Petrobras has already announced that it plans to invest US$ 224.7bn between 2011 and 2015. From a total of 688 projects, almost 60% are for exploration and production. The projection of the International Energy Agency is that Brazil will produce 2.4m barrels of oil per day by next year The numbers themselves are in fact impressive. Meanwhile, the qualification of professionals that perform and will perform in this industry must be a made a priority. North American and European organizations are already trying to make up for time lost, and are apt to contract inexperienced professionals and train them. So what are we doing here in Brazil? Exploration of the pre-salt requires a much more sophisticated and experimental technology – wich has not been completely developed – than that which has been used until today in the oil fields under deserts, in shallow waters and

T&B Petroleum # 31

opinion

onshore areas. Therefore, the first priority is for professionals in research and technology, in the areas of petroleum engineering, naval engineering and exploration. The pre-salt will also demand the construction of platforms and refineries that, when ready, will need to be operated by specialized personnel. The whole industry is in need of qualified professionals in the areas of project management, regulation, transport, derivatives, environment, seismics, occupational health and safety, logistics, offshore support, distribution and sales, processing and refining, among others. In general, we can say that the industry involves the most diverse activities, form administration to medicine, from law to engineering, which is the scarcest of all. Training cannot be seen as a cost, but rather as in investment to increase productivity. While contracting a consulting

firm may be an emergency measure for the short-term to solve a specific problem, adopting an educational program brings results in the short-, mid- and long-term, since it prepares professionals and capacitates them to find the solutions for the challenges the market faces daily. The estimates are that the oil reservoirs are more than 7,000m below the sea level. This depth is much greater than a simple question of geography; it is intellectual and practical: we need a staff ready to face the challenges of the industry, and capable to make decisions. That is our challenge. It is the companies that must now assume the responsibility of investing in education, specifically focused on the industry and its present and future managers while there is still time. If not, there will be no use crying over lost opportunities.

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The 20th World Petroleum Congress 4-8 December 2011, Doha, Qatar www.20wpc.com

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Photos: MCS Image Bank and Petrobras Agency

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, mooring services on onshore terminals; oil spill booms; oil spill recovery. MCS is authorized to operate as a Brazilian shipping company by Antaq – The National Agency of Maritime Transportation.

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CEP 20.020-100 – Rio de Janeiro – RJ – Brazil Phone: +55 21 2524-0296 – Fax.: +55 21 2532-4671 mcs@mcsengenharia.com – www.mcsengenharia.com