Original article by André Ramalho, Valor Econômico, link: http://www.valor.com.br/brasil/4104352/conteudo-local-exige-ajuste-dizem-analistas-do-setor-de-petroleo. The journalist was invited to Norway by Innovation Norway for the 2015 Technology Press Trip.
In Bergen, the Underwater Technology Conference (UTC) gathered around 500 executives from the oil and gas sector to discuss the future of the submarine goods and services industry. Competitiveness becomes the word of order as the sinking oil price leads the global industry to a scenario of reduced profit margins, investments and job positions.
Specialists consulted by economy newspaper Valor Econômico point that the time is appropriate for Brazil to adjust its local content policies.
“We need more aggressive industrial policies in order to develop the Brazilian supply chain. Firstly, the market cannot be monopsonistic. If a supplier only learns how to sell to one buyer, national, it cannot become competitive in a global industry as oil and gas”, says José Sá, partner at corporative consultancy firm Bain & Company.
Executive director at OneSubsea, Mike Garding highlights that the price of an offshore well raised 250% in the period between 2003 and 2013, and local content requirements around the world have contributed to that inflation.
The local construction work of platforms to be used in the pre-salt has suffered continuous delays. In addition to that, the arrangements amongst suppliers contracted to deliver replicant FPSOs has been dismantled amid ongoing Carwash operation investigations. Those factors contributed majorly to a series of works originally contracted in Brazil to be sent to China, while the local industry faces difficulties to meet Petrobras’ demand and the projects’ timeframe.
GCE Subsea, the Norwegian seasea technology cluster
According to Sá, Brazil needs to create its own nationalization model, and Norway is a good example of implementation of local content policies. One of the practices pointed as good examples is the concept of clusters with focus on the development of a competitive supply chain. Last month, the company Bain launched 12 proposals of industrial policy to increase the competitiveness in the sector in Brazil, including tax exemption for the implementation of technology clusters, competitive financing ways for foreign acquisitions and fiscal liberation for exports within prioritized sectors.
The Scandinavian nation is also affected by the crisis in the oil and gas industry. The economy has slowed, people have lost their jobs and the costs of labor are very high in Norway. Yet, the country is showing its potential to adapt to new the new situation. The last decade saw the subsea goods and services sector survive the drop in local oil production, which halved since 2000, and the sector expanded to international markets.
Whereas, in Brazil, the recent crisis involving Petrobras has created a cascade effect on the suppliers, Norwegian companies raised exports revenue by 11% yearly between 2006 and 2012. According to data from the Norwegian Petroleum Directorate, about 40% of the revenue of the Norwegian goods and services industry comes from exports, and Brazil is the third biggest buyer.
Close to the Norwegian fjords, in the city of Bergen, home to 270,000 people, GCE Subsea illustrates the strength of the local industry. The subsea technology cluster is essentially focused on the development of technology innovation. The centre of expertise, where Aker, FMC and DOF Subsea among others are based, generates more than USD 6 billion in businesses every year and employs 20,000 people.
The Norwegian strategy to develop technology and companies in specific fields was implemented by the fostering cooperation rather than forcing the operators whom to buy from. The government would prefer to give oil blocks to operators that have offered the highest amounts of local content in previous projects.