July 8, 2019
Having worked meticulously with Petrobras for years, suppliers in Norway and their hub of sub-suppliers are again gaining large bulk orders from Brazil, as the country’s unexplored reserves compel the national oil company to buy – and borrow – Norwegian.
About 15 years after Norwegian suppliers installed Brazilian deepwater research facilities and Norwegian shipyards and shipbuilders invested in Brazilian manufacturing capacity, Brazil is finally fueling a Norwegian offshore recovery. Export credits offered to Petrobras is feeding orders for “Norwegian” operated vessels, with platforms and other heavy capital offshore equipment also in the mix.
New figures from the Norwegian export credit agency, GIEK, reveal that the resurgence of Brazil abroad is being sustained by $ 1 billion in credit arranged by the Oslo-based agency. Brazilian banks lend money from Norwegian banks to lend to Petrobras, with GIEK ruling out the risk to all those involved in requests for high capital abroad.
GIEK records show that Petrobras – now overseen by a board closer to the oil and gas sector – plunged into Norwegian credit guarantees to borrow about $ 500 million only in June 2019. The credit guarantee of $ 1 billion expires in 2020 and serves to build or secure the rental of Norwegian vessels, although GIEK now also promotes the sales of Norwegian subsea equipment.
“The intention with the credit facility is to provide Petrobras with good incentives to expand its relationship with Norwegian suppliers,” said Wenche Nistad, CEO of GIEK, in a statement. “We are working on similar credit facilities with other oil and gas operators using Norwegian suppliers. In addition to Petrobras, Italy-based Saipem used a GIEK credit facility to finance substantial purchases from Norway. ”
Although Petrobras is the preferred customer of its own banks, the GIEK guarantee for these banks means that Norwegian taxpayers theoretically cover any loss. It is said that Petrobras is paying risk premiums for loan guarantees.
While lending is key to strengthening Brazilian interest in Norwegian offshore products and services, investment in Brazil has also done wonders for a prospect of suppliers. When govt. policy began to shake Petrobras earlier this decade, Norwegian offshore players kept their course and are now prepared to surf an expected offshore recovery from their Brazilian bases.
DOF Group’s local operating model, which includes subsidiaries operating different types of offshore vessels and a joint venture with TechnipFMC. DOF has nine ships and 374 employees in Brazil, or more than in Canada, the North Sea or Australasia (although its Brazilian and North Sea fleets are the same size).
With GIEK as a backdrop, major maritime contracts with Petrobras appear to be competing: there is the eight-year contract of February 2019 for newly hired Skandi Olinda, a vessel owned by TechnipFMC with a vertical pipelining system of 300 t; diving support and remotely operated submarine vehicle contracts (ROVs) guaranteed in 2018 for Skandi Recife; Skandi Salvador and Skandi Achiever. The time spent in Brazil was fundamental to guarantee the work, as well as finding a Brazilian diving company with which to associate.
In May 2019, DOF Subsea secured Brazilian work for Skandi Niteroi and Skandi Seven. The latter will install the riser and umbilical for a floating production, storage and offloading unit (FPSO), while Niteroi commits to the Peregrino’s Phase II Surf Project with TechnipFMC for Equinor.
The JV with TechnipFMC had just received the new Skandi Olinda construction, and the vessel is already under an eight-year contract with Petrobras. Olinda marked “the successful completion” of JV’s newbuild program, according to the DOF.
The DOF administration said it saw signs of recovery in Brazil in 2018. There was “increasing demand for services.”
“The bidding activity increased during the year, and this trend continued in 2019,” the board told shareholders.
Norwegian special tax rules for shipowners also help the Oslo fleets to serve in Brazil. Deferred taxes and duties on tonnage, instead of yields combined with investment years, the presence of Equinor as the “parent ship” and GIEK to eliminate part of the risk of the Brazilian pre-salt.
Judging from the DOF’s progress and a DNV GL poll of January 2019, the new oil and gas boom in Brazil is about to begin, and the Norwegians are well positioned. Of the Norwegian companies operating in Brazil, almost all respondents expect the sector to grow in 2019.
And GIEK has room to grow. DNV GL says that the number of companies claiming that access to capital and finance is a major barrier to growth has increased from 10% to 22%.
Source: O Petroleo