The financing of production facilities and projects for the offshore industry, was the topic of the second NBCC seminar during the ROG week.
The seminar, held on September 17, 2014, was sponsored by DNB. Keynote speakers were Priscila Branquinho (in the photo) from BNDES, Dalmo Moreira from Finep and Cathrine Toset from Giek, and the top financial management of several companies were present at the event that took place in the Edificio Argentina in Botafogo, with about 90 participants.
Succeeding in the Brazilian market is also a question of financing, and if a company is able to offer long-term financing to the client, it may strengthen its position in the market.
Priscila Branquinho from BNDES talked about the financing options that the development bank offers for supply vessels to the oil and gas industry as well as for the modernization of shipyards.
“BNDES finances these projects with funding from the Merchant Marine Fund, and we expect a sustainable long-term demand for OSVs”, she said. Mrs. Branquinho also explained how the Brazilian local content requirements are challenging to the bank, and that a higher local content in a project can give better rates and conditions.
For drillships and FPSO´s BNDES is only able to finance the local content of projects.
“We can also finance foreign companies that want to install facilities in Brazil. Aker Solutions´ new plant for subsea equipment and Jotun´s paint plant in Itaborai are some projects BNDES has supported”, she said
From the left; Carlos Sol (BNDES), Arne Christian Haukeland (DNB Brasil) and Marcelo Muller (Tridimensional).Dalmo Moreira presented Finep, the Brazilian innovation agency, which has a current portfolio of projects in the oil and gas sector of 1,7 billion reais
“Innovation is a key to development, and our goal is to act in the whole chain of innovation in Brazil. We offer both refundable and non-refundable financing, and have a broad interpretation of innovation. As opposed to BNDES we can also finance imported projects”, Mr. Moreira said. Finep offers interest rates of 3-7 percent per year, and promise a feedback within 30 days.
Cathrine Toset from GIEK, The Norwegian Export credit agency, explained what GIEK can offer.
“We promote the Norwegian export of goods, and offer guarantees, not loans. We are a major player within the financing of offshore vessels. A guarantee from GIEK will add capacity to the financial market and facilitate attractive financing. We have a close relationship with many large banks, and also cooperate with other agencies. We require participation from commercial banks, the overall risk must be acceptable and we have limits on participation, but sometimes GIEK takes risk where a commercial bank would be reluctant. The Norwegian content in the project is however fundamental.”
GIEK has issued guarantees of the amount of 12,7 billion USD and has 200 vessels in the portfolio. Petrobras is the second largest partner, and there are a total of 60 PSVs, 50 AHTS and 30 rigs and drillships in the GIEK portfolio. In Brazil, GIEK has issued guarantees worth 2,9 billion USD.
Rodrigo Arantes (Vard Promar), Nicholas Burridge (Aker Solutions) and Ferran Bueno (Jotun).Panel discussions
A panel made up of representatives from oil service companies shared their experiences on the financing of production facilities.
Jotun is building a marine coatings factory in Itaborai, with BNDES funding, a 100 million BRA investment.
“Jotun policy is to finance through headquarter loans, but when analyzing the conditions offered in Brazil, it was an easy decision to go for the local market option”, says Ferran Bueno, the CEO of Jotun Brasil.
Aker Solutions is currently constructing new facilities in Curitiba and in Macaé.
“My experience with financing in Brazil, both through BNDES and Finep, is positive. We found it to be competitive and we were supported by our organization globally. Bureaucracy is a barrier, and it is important to understand the process and realize that you need a whole team to manage the process”, says Nicholas Burridge, the Vice President of Finance of the drilling division of Aker Solutions. He stressed the importance of a local base and local people.
Rodrigo Arantes from Vard Promar talked about the yard the company is building in Suapé. It is a 295 million BRA investment approved by FMM with Banco do Brasil as a financial facilitator. Mr. Arantes´ advice is to consider your investment plans carefully.
“If you want to invest in Brazil, make a qualified investment and define what you want. It is also important to assess local content”, he said.
The Vard Promar yard in Pernambuco is 95 percent complete, and will have a production capacity of 15.000 tons/per year.
Brazilian and Norwegian financial institutions discussed financial services available in Brazil in a second panel at the seminar. Conditions, the evaluation and application processes, risk assessment and required guarantees were topics debated in detail. There are no specific lines of credit between Norway and Brazil, but the portfolios of the relevant institutions show close relations and a lot of goodwill.
Mr. Ståle Hellesjø represented Pareto Securities, a Norwegian investment bank specialized in financing for oil and offshore industries. Carolina Mariana represented Finep in this session while Arne Christian Haukeland, the head of DNB Brasil talked about the activities of his bank. DNB has worked with BNDES and Finep on several projects
“It can be challenging to get someone to support you when you are new to the Brazilian market and without a track record. DNB can add value to local players with our knowledge about companies from abroad and help bridge this gap”, he said.
Carlos Sol from BNDES and Jarle Roth, CEO of EksportKreditt Norge, also participated.
“We would like to do more business in Brazil. Our current portfolio is roughly 1 billion USD in Brazil, mainly drill ships”, Mr. Roth said.
By Runa Hestmann, NBCC journalist