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Expansion of Brazil's ports key to oil industry growth

At the mouth of Rio de Janeiro's iconic Guanabara Bay, a queue of ships waiting to berth at the city's main port shows the strain rapid economic growth in recent years has putting on Brazil's infrastructure

The port, one of Brazil's busiest, is vital to keeping this bustling city running. It is also an important staging ground for companies developing offshore oil and gas projects in the nearby Campos and Santos basins.

For the oil and gas industry, clogged ports here and elsewhere threaten to slow development activity, adding another potential bottleneck to operations as companies try to develop billions of barrels oil discovered offshore Brazil. 

The government has promised to support the expansion and modernisation of Brazil's port infrastructure. In December last year, president Dilma Rousseff launched the Logistics Programme for Ports, a major investment and reform plan for the port sector. The programme aims to pump around R$54 billion ($27.5bn) of government funds into new port projects over the next five years. It will also ease regulations on private operators to boost their role in the traditionally-state dominated sector.

Brazil's ports, which the country relies on for nearly all of its international trade, have long had a reputation for inefficiency and some are sceptical the plan will work. For decades, successive governments have pledged to improve port operations, to no real effect. Others caution that, although a step in the right direction, the reforms do not go far enough to open the sector to private investment.

Nevertheless, increased focus on improving Brazil's ports is welcome news for the offshore energy sector, which is increasingly demanding more from the country's already overstretched ports. Operators rely on the ports to ferry everything from food and water for offshore workers to heavy steel pipes, risers and other equipment needed to install and operate offshore platforms.

On a mid-February morning while most Cariocas, as Rio de Janeiro's residents are known, were sleeping off the previous night's Carnival celebrations, workers at Triunfo Logistica's terminal at the Port of Rio were busy loading a Petrobras supply vessel with 125-tonne "torpedoes" - missile shaped steel structures that are dropped about 100 metres into the seabed to anchor semi-submersible platforms.

Demand from Petrobras and others in the energy sector will drive Triunfo's growth, chief executive Rogario Caffaro told Petroleum Economist at its offices at the port. The company has won two contracts with Petrobras and is in talks with rig operators Diamond Offshore, Transocean and Dolphin Drilling, among others, for further contracts.

Servicing the oil industry accounted for about half of Triunfo's R$280m in revenue last year, and that share will grow as the company shifts away from handling container ships. The company plans to invest around R$400m expanding its operations and buying new equipment over the next five years.

Much of that investment will go towards transforming Porto do Forno, a facility located a few hours north of Rio de Janeiro. Petrobras abandoned the port more than a decade ago and it has been little used since. Triunfo hopes to change that. Early in 2012 Triunfo won a concession to operate the port. Then, in December, it won a contract with Petrobras which will see the port become and supply depot for the oil company's offshore operations. Triunfo hopes that there will be more work to come. It is in talks with Halliburton to build a facility to manufacture and store drilling fluids there. It also hopes to equip the port with facilities that would allow platforms to dock at the port for maintenance and repairs. "We imagine it becoming a one-stop shop for the offshore industry," Triunfo's development director Bruno Sá said.

Transformations like this will have to happen at ports all along Brazil's coast for the country to keep up with demand from the oil industry and other sectors in the country. Between 2012 and 2020, Petrobras plans to build and deploy 38 new floating production units, 50 new offshore drilling rigs and 49 new ships, including tankers and platform supply vessels. That effort will put an enormous strain on Brazil's port and shipyards, but is crucial to the oil industry's expansion.

Petrobras' chief executive Maria das Gracas Silva Foster dedicated most of her keynote speech at last year's Rio Oil & Gas conference, the industry's flagship event in Brazil, to lay out her company"s plans to expand its offshore fleet.

The largest port and shipyard project is being led by Brazilian billionaire Eike Batista's OSX Brasil. The company is building the Acu Superport, which will be the largest port in Latin America and the third-largest port in the world, covering an area two-and-a-half times larger than Manhattan island. Petrobras will have two floating, production, storage and offloading (FPSO) vessels worked on at the shipyard and GE and others have agreed to set up manufacturing and supply operations for the energy industry at the port. "This will be the pre-salt industrial park," Batista told the Financial Times in May 2011.

Petrobras plans to work at more than 20 ports and shipyards along Brazil's coast, some of which are still little more than patches of ground. It is a huge opportunity for the country, but as Triunfo's experience has shown, it comes with a host of challenges. "The biggest challenge moving into the oil business has been finding qualified labour," Triunfo's Caffaro said. When the company wanted to expand last year it could not find the crane operators it needed, so it spent around R$1.25 million setting up its own training programme. Of the hundreds of applications it received to take part in the programme, Triunfo has trained 44 people, many of whom had no prior work experience. That is in addition to the 900 workers it has already trained.

And that growth is set to continue. Triunfo will be adding to its staff at the Porto do Forno and hopes to eventually have as many as 120 employees at facility in the coming years. "Last year was a big year for investing in training and 2013 will be even bigger," Caffaro said.

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