Brazil CSN Negotiating New Iron Ore Port With Gerdau, Petrobras

RIO DE JANEIRO – Brazilian steelmaker Companhia Siderurgica Nacional SA (CSNA3.BR, SID) said it is discussing construction of a new iron ore export port in Brazil with steelmaker and mining company Gerdau SA (GGBR4.BR) and oil and gas producer Petroleo Brasileiro SA (PBR, PETR4.BR), or Petrobras.
The new port with the partners may be ready to emerge in 2015, CSN's new businesses director Juarez Saliba told analysts on a conference call Tuesday.
The port project, named Porto da Pedra, will be sited at Itaguai in Rio de Janeiro state, southeast Brazil, alongside CSN's existing Tecar iron ore export and coal import port, and its Tecon containers port, Saliba said, without giving an idea of the likely investment required nor the planned capacity of the new port.
However, CSN doesn't depend on construction of the new port to meet its iron ore export commitments, which may be handled from Tecar, currently under expansion, the CSN official said.
CSN is expanding output of iron ore which currently gives a better return than steel as high Chinese demand for the steelmaking raw material has inflated iron ore prices in recent years. CSN's net revenues from iron ore reached a record 5.94 billion Brazilian reais ($3.28 billion) in 2011, up 64% on 2010, due to higher sales volumes and market prices which averaged $169 a metric ton in 2011, an annual record and 15% higher than in 2010, according to Platts.
Mining last year contributed 35% of CSN's net revenues, from 24% in 2010, it said.
In 2011 CSN sold 29.3 million tons of iron ore from its Casa de Pedra and Namisa operations, up 16% on 2010. Of the total, 27.9 million tons were exported. Output should rise to 40.8 million tons in 2014 and as much as 100 million tons in 2015, of which 84 million tons could be made available for export. CSN already supplies its own steelworks in Brazil with ore from its own mines in Minas Gerais state. Gerdau is also expanding its iron ore output in the same state and may reach self-sufficiency in iron ore output this year, freeing up the rest of its output for export.
CSN mining director Daniel dos Santos said on the call that operations at CSN's iron ore mines and plants in Congonhas, Minas Gerais state, aren't being affected by a preservation order which has been slapped on a nearby area by environmental agencies.
The curbs affect the Morro do Engenho area where CSN doesn't have any installations, dos Santos told the analysts.
CSN also plans to make a bid for the so-called Area do Meio ("middle area") port terminal area which will be put up for auction by the Rio de Janeiro federal port authority this year, Saliba said. This area lies between CSN's existing port at Itaguai and an iron ore export port owned by mining company Vale SA (VALE, VALE5.BR).
Steelmakers ArcelorMittal (MT) and Usinas Siderurgicas de Minas Gerais SA (USIM5.BR, USZNY), or Usiminas, last week said they are planning to bid jointly for the Area do Meio. Usiminas owns a landlocked area adjacent to the Area do Meio which could be used for a storage area or downstream industrial development, the company said recently.

For more information about brazilian projects please contact us at ahansen@khen-group.com

SN Power will form a Joint Venture with Desenvix´ current owners Jackson and Funcef.

SN Power and Jackson will have joint control of Desenvix with a 40.65% shareholding each, while Funcef will retain a minority shareholding of 18.69%.
“This partnership in Desenvix represents a match with the strategy of SN Power for Brazil, as it provides solid partners, sound operating assets, and an experienced local organization with a proven track record”, Mr. Torger Lien, CEO of SN Power says.

About Desenvix

Desenvix has a portfolio of renewable energy assets of 221 MW in operation, 116 MW under construction, as well as a large portfolio of projects under development of about 1600 MW.
The assets are mainly hydropower, located in the South and Southeast regions of Brazil, but also include two wind farms and a biomass plant under construction.
The transaction also includes Desenvix´ 100% shareholding in Enex, a company specializing in Operations & Maintenance of small and medium sized hydroelectric plants.

Focus for the Joint Venture

The main target for the Joint Venture will be to focus on further hydropower development in Brazil, with the aim to reach 1,000 MW by 2018.
“The development pipeline of Desenvix represents enough quality hydropower projects for SN Power to reach its growth objectives in Brazil in the short term and to create value going forward”, Mr. Lien continues.
The transaction represents a capital injection for SN Power of MBRL 705, which is the largest transaction SN Power has undertaken to date, and positions SN Power in the fast growing Brazilian energy market - a target market for the company.

The partners
Jackson is the owner of the Brazilian engineering company Engevix, and Funcef is Brazil´s 3rd largest pension fund.

SN Power
SN Power is a developer and operator of hydropower, operating exclusively in emerging markets in Africa, Latin America and Asia. The company is a joint venture between the Norwegian state entities Statkraft and Norfund. SN Power is working to develop a portfolio in the range of 3000 MW of hydropower plants by 2015, while combating climate change and contributing to sustainable development. SN Power has close to 500 people employed in fourteen countries around the globe. Its headquarters are in Oslo, Norway.

AVEVA presents solutions for natural gas industry at the Rio Gas Forum

AVEVA to showcase software technology and integration services currently used in important gas projects in Brazil

Rio de Janeiro, Brazil: AVEVA (LSE:AVV), today announced it will present a series of customer case studies to highlight design and engineering software solutions currently being applied in some of most important projects underway in the Brazilian natural gas sector 3rd Rio Gas Forum, hosted by Petrobras, to be held at the Copacabana Palace in Rio de Janeiro 20-22 March. During the panel session, "Technologies to Optimise Gas Resources of Brazil," scheduled for Wednesday 21 March, at 2pm, Santiago Pena, Senior Vice President - Latin America, AVEVA, will detail the business benefits that AVEVA technology has brought to a number of high profile projects.

"AVEVA solutions are present in some of the most important developments in the areas of shipbuilding, offshore installations and across a range of process plant environments. We will explore customer case studies during the Rio Gas Forum focusing the tangible business benefits on offer to the natural gas industry through our 3D engineering design and information management strategies", said Santiago Pena.

One of the case studies includes, SETAL - Oil and Gas who was responsible for the expansion project of Duque de Caxias Refinery (Reduc), as part of the Plan of the Gas Production Anticipation (Plangás). The initial phase of the project concluded last year using a range of integrated applications from the AVEVA Plant portfolio. The company was already using AVEVA PDMS for projects in refining. The decision to use the AVEVA Plant portfolio was taken after conducting a simulation that demonstrated a significant gain in project efficiency.

For more information about this and other projects in Brazil contact Khen Group at ahansen@khen-group.com

Saipem Sees Oil Services Growth in Brazil With Petrobras, OGX

Saipem SpA (SPM), the Milan-based oil services contractor, expects to increase business in Brazil with companies including Petroleo Brasileiro SA (PETR4) and OGX Petroleo e Gas Participacoes SA as the South American country seeks to more than double oil output in the next decade.

Saipem expects to help Petrobras, as the Rio de Janeiro- based producer is known, develop this decade’s largest discoveries on earth in the Atlantic Ocean’s deep waters, said Pietro Varone, the company’s chief operating officer of its engineering and construction unit. Saipem has four contracts with Petrobras to install pipelines that will transport natural gas to the coast from Brazil’s largest oil fields, he said.

“Our vision is for many, many more,” Varone said late yesterday in an interview in Rio de Janeiro. “We need to be ready with the right tools, equipment, people and fabrication to serve the development. OGX is a potential client of ours, we’re talking to them.”

Saipem also expects to compete for contracts with Royal Dutch Shell Plc (RDSA), BP Plc (BP/) and BG Group Plc (BG/), which are expanding production in Brazil. Saipem is building a $300 million logistics, construction and engineering center on the coast of Sao Paulo state to help supply offshore projects, he said.

OGX, controlled by billionaire Eike Batista, plans to boost output to 1.4 million barrels a day in 2019 from 12,000 barrels a day.

To contact our group regarding more details about this project please email Khen Group at ahansen@khen-group.com

OSX awarded $732 mln oil-tanker order from Kingfish

* Contract is OSX's biggest from non-Batista company
* Ships will be leased to Petrobras for cabotage trade
* Kingfish expects to get Brazil Marine Fund financing
Brazil's OSX , which is building the Southern Hemisphere's largest contract to

 build 11 oil and fuels tankers for the Brazil unit shipyard, said on Monday that it won a $732 million of London-based Kingfish Trading. 
    The order boosts the value of contracts for OSX's shipyard
with Korea's Hyundai
. OSX expects to start building its to $5.80 billion. The yard is under construction at the Port of Açu north of Rio de Janeiro in partn first ship in the
first quarter of 2013. 
    Kingfish do Brasil will lease the 45,000 deadweight tonne
Managing Director of Kingfish Trading, told Reuters. 
"medium range" crude and clear-products tankers to Brazil's
state-led oil company Petrobras, Mark Slemeck
,first ship is scheduled to be delivered in 2014. 
    The ships are designed for the cabotage trade, or Brazilian
in 2017. 
    Kingfish and OSX are looking to cash in on costal service, and will be used by Petrobras' refining and supply unit, he said. The last ship is to be delivered
the discovery of giant new oil reserves off the coast of Rio de Janeiro.
Brazilian government rules require that companies developing the and Santos basins
the biggest offshore oil frontier in the resources build much of the equipment and source many of the services they need in Brazil. 
New discoveries have made Brazil's Campos world and suggest that the areas 

hold about 100 billion barrels of oil and natural gas.
That's enough to supply the United States, the world's largest
oil consumer, for more than 14 years. 
    The Kingfish contract with Petrobras is part of the oil
company's fleet renewal program and Kingfish has received
preliminary approval for low-cost loans to finance construction
from Brazil's Merchant Marine Fund, Slemeck said. 

On Feb. 28 OSX signed a contract with the Brazil unit of
Malaysia's Sapura to build a pipe-laying support vessel for $263
million.

DEFINING A BRAZIL ENTRY STRATEGY

DEFINING A BRAZIL ENTRY STRATEGY

In general, the market opportunities for oil/offshore/maritime related goods and services are excellent in Brazil as it will be perceived throught this report. Market and regulatory issues specific to Brazil often dictate a different strategic angle than what would seem obvious in other markets.

Business set-up

The ideal business setup  will of course vary, and a thorough pre-entry analysis is

indispensable.

Such research should be adapted in line with the main available setup options:

1.    Serving the Brazilian market from home country

2.    Selling through a Brazilian agent/representative

3.    Establishing a Brazilian entity

a) Establishing a fully owned subsidiary

b) Establishing a joint venture with a Brazilian company

c) Acquiring an existing Brazilian company

1. Serving the Brazilian Market from Headquarters – Home country

It is possible to serve the Brazilian market from overseas but in practice, it is very

difficult to successfully develop sales in Brazil without a continuous physical presence.

Even frequent visits to Brazil will generally not be sufficient to pick up opportunities,

keep, maintain and build relations with customers, or handle the necessary on-the-ground coordination.

In addition, invoicing from outside of Brazil generally adds up to 25% in extra taxes . Furthermore, the main purchaser in the Brazilian market, Petrobras, demands that all its certified suppliers for supplies to Brazil also must have a legal representative in Brazil.

2. Selling through a Brazilian Agent/Representative

A number of foreign valve companies commercialize their products (and in some cases also services) through a Brazilian agent or representative. This can work out well for suppliers that manage to become an important part of the portfolio of a focused and efficient agent.

Advantages:

􀁳Lower investment costs

􀁳The agent already has an established industry network, can follow up on opportunities and is familiar with Brazilian regulations, requirements and business practices.

Disadvantages:

􀁳 Many agents carry a (too) high number of representations, and principles limiting the attention they are able to give to your products/services.

􀁳 Coordination and reporting issues.

􀁳 Invoicing from outside of Brazil generally adds at least 25% in extra taxes

3. Establishing an Entity in Brazil

Establishing own operations in Brazil is increasingly becoming a business necessity, for various reasons:

􀁳 A continuous presence is necessary to maintain and develop client elationships.

An agent might not be able to give enough attention to your company.

􀁳 Increased political pressure for local content (a part of the product must be produced in Brazil) makes it an advantage, and in some cases a requirement, for foreign suppliers to have production or assembly functions in Brazil.

􀁳 Invoicing from Brazil saves at least 25% in taxes levied on invoices from abroad.

􀂬 In order to qualify most goods/services for the Petrobras Master Vendor List, a legally established local presence is necessary and in some cases a requirement.

The main establishment options are:

a) Establishing a fully owned subsidiary (most common)

b) Establishing a joint venture with a Brazilian company

c) Acquiring an existing Brazilian company.

Options b) and c) may pose additional sets of challenges, and should always be based on a solid due diligence process. The increased attention needed for coordination and control should not be underestimated. Because of the managerial and cultural challenges involved, it is necessary to put in place specialized transition management until operations and procedures are aligned.

Foreign companies are often offered to buy an existing, sleeping company in order to get started more quickly. However, the bureaucracy around necessary alterations of bylaws and registrations generally makes this just as time consuming and costly as starting a new company from scratch. In practice, this normally saves neither time nor money, and can add potential risks.

SUPPLIER REGISTRATION – PETROBRAS CRCC

OVERVIEW
In order to supply products to Petrobras, a company has two options: direct or indirect sales. The direct way consists in selling products without third parties between the company and Petrobras. Indirect sale is when you have a third party (EPC - Engineering, Procurement and Construction) between the company and Petrobras.

A prerequisite to supply to Petrobras in either of the ways mentioned above is that the company is registered in Petrobras’ Corporate Reference file with a valid Certificate of Registration and Record Classification (CRCC, Certificado de Registro e Classificação Cadastral).
For the cases where the company desires to supply indirectly to Petrobras, it is necessary, additionally to the CRCC, that the supplier product is included in the project Vendors List (VL). This Vendors List is a list of vendors associated to their respective products or items (equipment, materials, and services) which are included in EPC type contracts or Global Cost agreements, to instruct the contracted company with regard to the acquisition of equipment and critical materials for a unit to be built and, later, delivered to Petrobras.

Therefore, the Vendors List for a specific project is an attachment to a contract that third-party companies hired by Petrobras use to find these products from pre-qualified vendors. The Master Vendors List (MVL) is the reference database to prepare the Vendors List, as mentioned above. Petrobras’ business areas, new facility operators, have distinct MVLs, which are characteristic of the culture and specificities of their performance area.

The estimated execution time for the registration process is approximately eighteen months – six for CRCC registration and 12 for Vendor List registration. It is important to have in mind these are estimated schedules, which can be improved or delayed depending on the Client’s agility. The process is bureaucratic, and the documentation has to be sent by the Client to the legal representative in Brazil, who will review it before forwarding to Petrobras. The Client’s participation in the process has a large impact in terms of achieving or not the estimated schedule of 18 months for the complete registration process.

Therefore, companies interested in supplying to Petrobras indirectly shall include their products in one or more of the MVLs -

REQUIRED DOCUMENTATION FOR DIRECT AND INDIRECT SALE
The process can be theoretically separated in two blocks: the first phase is finished when the CRCC is issued, and the second phase ends with the inclusion of the company in one or more of the Vendor Lists applicable. As already explained above, to be allowed to apply for the Vendor List, it is necessary that the company has the CRCC already issued.

For the first phase – to get the CRCC – due to the importance of the Corporate Reference File for Petrobras’ quality system, the registration process is a very detailed procedure that involves not only technical aspects, but also legal, economical, managerial, health, safety and environmental aspects. For this phase, the registration process is divided into two basic steps, as described below:
a) Step 1 – Pre-registration
The pre-registration is made online on the following link (http://cadastro.petrobras.com.br/), but it is necessary to send the original documentation to Petrobras. To start the pre-registration the company needs to be established in Brazil or have a legal Brazilian representation (person or company to be legally responsible for the process). The pre-registration is the first contact between the company and Petrobras, and consists of informing Petrobras the company’s principal data, specifying the person who will represent the company in front of Petrobras, selecting the services and/or products that the company intends to supply to Petrobras and sending the preliminary documents proving technical capacity;
b) Step 2 – Questionnaire Completion
The questionnaires are composed by technical, economical, legal, management and HSE criteria,
and, since not all criteria apply to all companies, they are defined according to the type of supplier, type of supply and the goods and services selected in Step 1.
The information provided in the questionnaires shall be demonstrated by attaching evidence. If the company does not attach the necessary evidence, it may impair the outcome of the company
evaluation, and may even prevent it in some cases.

The second phase consists in, with the CRCC in hands, applying to participate in one or more Vendor Lists. For more information please visit us at www.khen-group.com and contact us if you have any questions.

Sembcorp Marine Secures Foothold in Brazil With New Drillship Order

SINGAPORE (Dow Jones)–Sembcorp Marine Ltd. (S51.SG) Monday said it has secured a US$792.5 million drillship design and construction order, a significant step in its ambitions to service Brazil’s burgeoning demand for deep water rigs.

The contract was awarded by Guarapari Drilling BV, Netherlands, a subsidiary of Sete Brasil Participacoes SA, an entity formed by seven Brazilian finance investors including banks, Brazil’s four biggest pension funds and state-run energy giant Petroleo Brasileiro (PBR, PETR4.BR), or Petrobras.

“This is a very significant milestone as this order not only represents the first drillship that our group is building for Brazil but it is also the first project secured by our new shipyard in Aracruz,” Wong Weng Sun, president and chief executive of Sembcorp Marine, said in a statement to the Singapore Exchange.

“We believe this order will be the first of many orders in Sete Brasil’s ambitious drillship expansion program,” he added.

Sete Brasil was formed to put financing in place for Petrobras’ massive rig building program. Petrobras is seeking at least 21 new deepwater rigs, such as semisubmersible rigs and drillships, in order to develop the vast Brazilian pre-salt oil fields.

“A successful execution of the drillship contract could lead to more such contracts for Sembcorp Marine in the future, said Jason Saw, offshore & marine analyst at DMG & Partners.

He added that the contract price was around 30% higher than drillship prices from shipyards in South Korea, which “provides sufficient buffer to cater for the additional risk of building a drillship in Brazil.”

In December last year, Singapore-listed rival Keppel Corp. Ltd. (BN4.SG) secured a contract worth approximately US$809 million from a subsidiary of Sete Brasil, for the design and construction of a semisubmersible drilling rig.

The drillship in this contract, based on Sembcorp Marine’s proprietary Jurong Espadon drillship design, will feature a 40-meter wide main deck and will be able to operate at 10,000-feet water depth, drilling to depths of 40,000 feet. The vessel is scheduled for delivery in the second quarter of 2015.

Estaleiro Jurong Aracruz, a wholly-owned shipyard of Jurong Shipyard, operates from a 82.5 hectare site. The shipyard is located in the Municipal of Aracruz, in the State of Espirito Santo, Brazil and about 80 km by road north of the capital of Vitoria.
In December 2011 Sembcorp Marine broke ground on its Estaleiro Jurong Aracruz ship yard, in the state of Espirito Santo in Brazil. The yard is scheduled for completion by end-2014, and gives Sembcorp Marine a production foothold in the country. Petrobras requires that locally produced content feature in its massive rig expansion plan.

Engevix Consortium Wins Brasilia Airport in Brazil Auction

A consortium led by construction company Engevix Engenharia SA won the license to operate the airport in Brasilia after bidding 4.5 billion reais in an auction today.
The consortium also includes Corporacion America, owner of Argentina’s largest airport operator.
The minimum bid to manage for 25 years the airport in Brazil’s capital was 582 million reais. The winners will have a 51 percent stake in the license while Brazil’s state-run airport operator Infraero will retain a 49 percent stake in the management of the airport.
Eleven groups participated in today’s auction, which also leased the rights the Viracopos and Guarulhus airports near Sao Paulo.

Technip wins Brazil deepwater presalt gas injection package

PARIS – Petrobras has contracted Technip to supply risers and flowlines for the deepwater Guara and Lula Nordeste presalt field developments in the Santos basin. Water depth is 2,250 m (7,382 ft).
Technip will manufacture 24 km (14.9 mi) of 6-in. gas injection flexible lines rated for a design pressure of 552 bar (8,006 psi). These will comprise 2 x 200 m (656-ft) top risers incorporating the company’s Teta-Clip pressure vault technology, 4 x 1,400 m (4,593 ft) of intermediate and bottom risers, and 18 km (11.2 mi) of flowlines.
Gas injection lines will re-inject produced gas into the reservoir in compliance with Brazil’s new environmental regulation.
Frédéric Delormel, Technip EVP and COO Subsea, said: “This very innovative solution developed by our French and Brazilian R&D teams takes Technip further to meet corrosion and fatigue requirements, which increased with presalt field developments.
“Our success in this first presalt tender for gas injection flexible risers demonstrates the leading edge position of our Teta-Clip pressure vault technology to meet such high internal pressure and high tension requirements, and comfort us in our investment to build our new flexible plant in Açu, Brazil, which will be capable to manufacture this type of high-end products.”

The pipelines will be delivered in two batches during 2012 and early in 2013.