What Egypt, Mexico and Brazil have in common - a short reflection about the past, present and future of the Brazilian oil & gas industry

Hello again all my readers here in my blog. Time is running very fast. My sensation is, that since I have started to work at my home office almost 5 months ago, the days and also the weeks have become much shorter than before. The next week day after monday seems to have become friday. Maybe this has to do with the permanent online occupation and the consecutive conferences where I participate almost all day long. But I don´t suffer from this and I do not see it negative at all. In the contrary. My strong feeling is, that my own - but also the ones of many others  - activity and productivity has increased tremendously. I wonder, which type of experiences You have made so far with this. Give us Your respective comments, please.

The subject for my todays post has come into my mind during my participation in yesterdays excellent webinar " business context of Oil & Gas in Rio de Janeiro", which was perfectly organised by Hanno Erwes, Managing Director, and his wonderful team of colaborators of the AHK Rio de Janeiro (https://brasilien.rio.ahk.de/pt/) together with Mrs. Betina Sachsse, Regional Manager Brazil at LAV - Latin American Business Association (https://www.lateinamerikaverein.de/en/) as moderator of the event.

You already know from statements in my former posts, that I am since quite long a great fan and active participant in many German "Mafia" organisations like the AHKs, VDMA, VDI, GTAI, GIZ, LAV, Afrika Verein and several others because of the great networking opportunities and the easy access to valuable information, which these associations offer for their members and also for participants in their public events.

In the case of the AHK Rio de Janeiro there is also another motivation for my quite high personal engagement and active contribution. Besides the fact that my management team colleague Elisangela Santos (elisangela.santos@vulkan.com, +55 11 99619 2808) and her sales & engineering team members operate our Vulkan Couplings (https://www.vulkan.com/en-us/couplings) sales & engineering office in the center of Rio de Janeiro (Rua Visconde de Inhaúma, 83 - 17 andar, +55 21 3799 4017), I have a very special and affectionate relationship to Rio de Janeiro, "the marvellous city", since my first weekend there during 1996. And - never forget this ! - I have become a fierce supporter of the carioca soccer club Flamengo !

With above background mentioned, I am terribly proud and happy, that I have been elected two years ago as one of the Vice Presidents at the AHK Rio de Janeiro and make thus part of this wonderful team.

During yesterdays webinar Milton Costa, Managing Director of Lectas Consultoria Empresarial, gave a very impressive overview about the future and strong growth of the Brazilian oil & gas industry and the lots of upcoming business opportunities for suppliers. As Milton explained, there are some very dynamic developments happening right now. On one hand the cost  of the pre-salt petroleum which Petrobras is producing at the huge Buzios deep sea oilfield is extremely competitive compared on global scale. On the other hand Petrobras is amidst its divestment process for some of its Brazilian refineries and it looks like the sale of the first two of its Brazilian refineries will happen very soon.

And there are also already projects for the construction of several smaller, local new refineries in different Brazilian states by new downstream companies. Petrobras has just announced its investment in several completely new huge FPSO platforms, which turns Brazil into the biggest market for FPSO`s worldwide. And Petrobras is also very strongly investing into the massive introduction of digital technologies for its installations and operations. All this will give the development of this industry and many new technologies here in Brazil a strong boost.

Besides these impressive petroleum related developments, Brazil is also about to become one of the biggest natural gas producers and processors. A whole new industry based on natural gas is about to come into beeing - with the state of Rio de Janeiro as its central point. 

All this is really exciting and very good news - especially for the state and city of Rio de Janeiro, which have - if for nothing else but the terrible corruption there during the last decades - been completely run down into misery. This gives a lot of new hope for everybody there and in the whole country and also for us as oil & gas industry suppliers. 

Having mentioned all these good news first, I will share now some deeply negative experiences and facts with the Brazilian oil & gas business as well, because these still - besides just giving the background - have a big influence on what`s happening today in this industry and country.

During my time as Managing Director of GEA Heat Echangers do Brasil (now Kelvion do Brasil:  https://www.kelvion.com/) in Franco da Rocha, Sao Paulo, during the period 2011-2014, I got deeply introduced to the Brazilian oil & gas industry, technologies and business. We manufactured all types of heat exchangers, but mainly large shell & tube equipments and big aircoolers, of all types of carbon and stainless steel materials for extremely challenging process and ambient temperatures and pressures as well as chemical contact for mainly Petrobras, but within our South America sales expansion project as well for oil & gas, petrochemical and chemical industry customers in Argentina, Chile, Peru, Bolivia, Ecuador  and Colombia.

These were the "hot" years of oil & gas and Petrobras business for us as suppliers of this type of industry. Within totally crazy, megalomanic investment plans, Petrobas - fiercely enlivened by the Brazilian government, namely by president Lula and his successor Dilma - had started since 2005 respectively 2008 to construct the giant new refineries and petrochemical complexes RNEST (Refinery Abreu and Lima) in the Port of Suape area in the north-east of Brazil, about 45 km from Recife, and in Itaborai, Rio de Janeiro state. 

For us suppliers this was fantastic business from the beginning - but not until the end. My own company has delivered an estimated 500 million Reais worth scope of delivery of heat exchangers to alone these two construction sites during the 10 years between 2005 and 2015. We proudly made a hell of a job at our factory in Franco da Rocha and delivered equipments according to the worldwide highest specification requirements and quality demands.

What destroyed completely this beautiful picture was, that from 2014 on very very quickly anti-corruption authorities - led by the judge and recent justice minister Sergio Moro - within the campaign "Lava jato (car wash)" discovered incredibly big corruption scandals and crimes. The involved criminals in politics and industry (Petrobras, but also almost all EPC companies) in industrial scale and with extremely impertinent methods sucked out money of all this business in huge quantities. An estimate of the betrayed money once came to approximately 100 billion USD, which had been channelled to private and fake company bank accounts all over the world. 

For understanding better, how this could work so largely and for so long, You only need to imagine that only for the two above mentioned - and there were lots of other very big similiar cases - new refinery construction projects in total 33 billion US Dollars had been spent until these projects, with only approximately 70% of the completion of the construction achieved, had been completely stopped until now. The original budget for these two projects had been 7 billion US Dollars. Got the point? 

And this is exactly what has happened at the same time to thousands of other - mainly infrastructure - projects in Brazil. Most of these completely interrupted since 2015 without any continuation so far. And many of these totally uncomplete installations and works have degraded since then due to the missing protection against the weather and human interferences. What a desaster and what a shame!

As far as Petrobras has explained, nor the refinery (2 "trains", each 165 thousand barrels petroleum processing/day) and the petrochemical complex at COMPERJ nor the "2nd train" of the refinery RNEST in Suape (2 "trains", each 230 thousand barrels petroleum processing/day, "1st train" since its start-up during 2014 just processing 100 thousand barrels petroleum/day) shall be completed and thus will never become operating. Thus the huge amount of money spent there during the investments so far was for the birds. 

Above mentioned story leads me to the conclusion, that the Brazilians - after the Egyptians (Giza pyramid complex, 2500 years before Christ), the pre-colombian Mexicans (Teotihuacán pyramids, 200 years before Christ) and the Mexican Mayas (Chichen Iza pyramid in Yucatan, 1000 years after Christ) - have become constructors of huge ruins which will become longlasting reminders for the future generations of mankind about the past. 

Hopefully the Brazilian oil & gas industry and Petrobras, together with the lost of international oil & gas companies, which fortunately have decided and started to come back to Brazil and started new investments in this industry again will find more reasonable and successful ways for doing sustainable business in this wonderful country.

To close my todays post, I choose this video of the Brazilian top model Gisele Bündchen`s beautiful participation in the opening ceremony for the Rio 2016 Olympics, which excited (before) and frustrated (afterwards) us so much:

https://www.youtube.com/watch?v=edTVaIXmaqk

I wish You a successful conclusion of all Your todays activities and a great start into the soon beginning new wonderful weekend.

Let`s meet here again in my blog for my tomorrows post.