In a bold move to revitalise the dormant Brazilian shipping industry, state-owned Transpetro is ordering 42 vessels to be built in Brazil. In an interview with DNV Forum, Transpetro President Sergio Mahado explains the reasons.
Transpetro, the logistics arm of the Brazilian state-owned oil giant Petrobras, has demanded that all the vessels must be built in Brazil, with 60% national content in the newbuilding programme. Today, Brazilian yards are old and their capacity is already stretched, so this means new yards will have to be built and existing yards must be modernised.
Sergio Machado, a former politician, is eager to emphasise the broader context and the far-reaching consequences of the ambitious newbuilding programme.
“On a general note, volatility creates opportunities for newcomers. The world is now facing big challenges and changes and Brazil is in a privileged position. We have democracy, control of our economy and inflation rate, exports are growing, and we have vast natural resources. Brazil also has merits within, for example the aircraft industry, proving that we have the technology and know-how to succeed. In other words, Brazil has an historic chance, and with this, Transpetro should have a way to succeed in the future.”
According to Mr Machado, the trick is to find ways in which Brazil and its industry can support each other. Transpetro has a fleet of 120 tankers, many of them aging. Only 47 are owned by Transpetro. “So now that our fleet needs renewal and we want to own most of our ships, we are naturally also looking at Brazil’s needs. I believe we can spark tremendous initiative with this programme.”
Transpetro’s bold move is backed by Brazilian president Luis Inacio “Lula” da Silva, “With the recovery of the shipbuilding industry we are going to show the world that we are not just good at football and carnival and that the Brazilian worker has the quality to compete in any market in the world,” he said at the event officially launching the start of this newbuilding programme.
Unrelenting on competitiveness.
Sergio Machado is, however, unrelenting on one point: “If you do something like this, it would be irresponsible not to make sure it was on competitive terms. Brazil must not create an industry that is dependent on massive protective measures and favourable treatment. If Brazil is to have a shipbuilding industry, it must be vital enough to compete internationally. We demand state-of-the-art shipbuilding technology. If it does not exist in Brazil today, then all the more reason to introduce it.”
Currently, Brazilian yards are simply not state-of-the-art. They suffer from weak finances, insufficient numbers of qualified personnel, and outdated technology and know-how. These issues are addressed through technical cooperation between major Korean and Japanese yards and the Brazilian yards.
Largest yard in the southern hemisphere.
Out of the seven shipyards pre-qualified for the tender, three need to be built and four need to be thoroughly revamped and modernised. There has been much debate regarding the bidding, and some have criticised Transpetro for prequalifying yards that have yet not been built. Nevertheless, the process is on track and one of the so-called “virtual yards”, would become the largest in the southern hemisphere. It is to be built in Pernambuco by the consortium Camargo Corrêa (Brazil), Andrade Gutierrez (Brazil) and Mitsui (Japan).
Seven consortia are vying for position, with the participation of major international yard groups like HHI, Samsung and STX in Korea, MES and IHI of Japan and CSSC of China, Aker Yards from Europe and Keppel FELS. A final decision on the winners is expected in November.
See also DNV Classification News no. 5 2005 for more about how key players in the Brazilian shipping industry want to move forward and turn the optimism into reality.