Opportunities in Latin America for the British oil & gas and marine sectors.
NOF Energy and UKTI organised an inward mission by Petrobras from Brazil and I was delighted to be one of the many delegates attending the session in Newcastle (12.12.12). Personally, I thought the presentations from the Brazilian team were very professional and thorough. Being from South America myself, I have seen Petrobras grow from being one of “those” public sector bodies to being a forward-thinking company that makes Brazilians proud.
What was clear is that opportunities abound for British companies in oil & gas / marine sectors in Brazil. The growth of both sectors has been huge. Let me give you some stats shared with us at the event:
- The shipbuilding industry in Brazil employed 1,900 people in 2000. Now it employs 70,000, with 100,000 forecast for 2016.
- Oil and gas currently represents 10% of Brazil’s GDP. Considering that Brazil is the 6th largest economy in the world, the size of the sector cannot be underestimated. What’s more, the sector’s share of GDP is forecast to grow to 20% in the next 10 years. You can now see why Brazil is investing so heavily in this sector.
- Talking about investment, in 2011 Brazil received USD 66 billion in foreign investment, the 4th largest recipient of FDI in the world that year.
- Petrobras is an international business and it operates across 25 countries. I asked a question at the event about opportunities to reach Venezuela via Petrobras, and from the answer it was clear that Brazil is forging partnerships in that country, the one with the largest oil reserves on the planet.
But breaking into Brazil, and into Petrobras, is not easy. To start with, the subject of local content was heavily profiled. The rules are not that clear to me but the whole strategy is: get Brazil to produce more and import less. Nothing new. I was pleased to get a chance to ask my question about local content from other Mercosur countries. No definite answer was provided. Difficult question, said the Petrobras expert. Other barriers mentioned were taxes and bureaucracy. I spoke to many delegates attending, some with manufacturing plants in Brazil, some with JV partners already established, and they the general consensus was that it takes at least 5-10 years to get established in this particular sector.
It was fascinating to attend a sector-specific event, and to see that the general pointers we give companies in the UK when targeting Latin America apply ever so clearly to this sector:
- Think long-term. There are no quick wins. Investment and strategic vision are key.
- Related to the above: do your research. Why invest so much time and money without having the evidence to guide you?
- Think laterally. Selling direct to Petrobras, for example, from your UK manufacturing plant might be impossible. What can be a better scenario? Is Brazil really your first or your only target in Latin America?
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