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Procurement Policy and Critical Equipment Supply - Rio Oil & Gas 2012

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Ronaldo Martins, Relationship Affairs Manager - Petrobras Procurement Department. …

Ronaldo Martins, Relationship Affairs Manager - Petrobras Procurement Department.
Rio Oil & Gas 2012 - September, 2012

Published in: Investor Relations

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  • 1. PROCUREMENTPOLICYAND CRITICALEQUIPMENT SUPPLY
  • 2. DISCLOSURE & IMPORTANT NOTICE The presentation may contain forecasts about future events. Such forecasts merely reflect the expectations of the Companys management. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar or analogous expressions, are used to identify such forecasts. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information presented herein. The Company is not obliged to update the presentation/such forecasts in light of new information or future developments.
  • 3. PRESENTATION SUMMARY 1. Business Plan 2. Pre-salt Overview 3. Local Content 4. Brazilian Companies 5. Relevant equipment demand for the period 2012-2017 6. Suppliers Qualification & Register 7. Conclusion
  • 4. BUSINESS PLAN
  • 5. Investments during the 2012-2016 period Under Implementation Under Evaluation 2012-2016 BP = All E&P projects in Brazil and projects of the remaining segments in phase IV* + Projects for the remaining segments currently in phase I, II and III. US$ 236.5 Billion US$ 208.7 Billion US$ 27.8 Billion 980 projects 833 projects 147 projects 27.7% 24.8% 17% (**) (US$ 65.5 Billion) US$ 51.7 Billion (US$ 4.6 Billion) 28% 7% (US$ 1.9 Billion) 0% 65.8% (US$ 0.1 Billion) 50% 60.0% 3.7% (US$ 141.8 Billion) (US$ 137.2 Billion) (US$ 7.8 Billion) 5% (US$ 13.9 Billion) 5.8% (US$ 1.3 Billion) 1.8% (US$ 13.8 Billion (US$ 3.7 Billion) 2.1% 1.7% (US$ 5.0 Billion) (US$ 3.5 Billion) 21% 1.5% (US$ 3.6 Billion) 0.9% (US$ 6.0 Billion) 1.6% (US$ 1.9 Billion) 1.4% 1.3% (US$ 3.8 Billion) (US$ 3.0 Billion) (US$ 3.0 Billion) ** E&P abroad E&P RTM G&E Petrochemical Distribution Biofuel Corporate * Includes budget already designated for projects under evaluation for RTM, G&E, Petrochemical, Distribution, Biofuels and Corporate
  • 6. Programs supporting the 2012-2016 BP 2012-2016 BP US$ 236.5 Billion Increase of Local Cost Operational Content Optimization Efficiency Management Program Program in Program Campos Basin Integrated Management of the Company’s Portfolio | Safety and Environment
  • 7. Production Curve in Brazil – Post-Salt, Pre-Salt and Transfer of Rights Oil and LNG Production Franco 4 Thousands bpd Lula Ext. Sul Sul de Guará Norte Pq. Espadarte III Baleias (P-58) Lula Alto Iara Horst Júpiter Maromba Florim Roncador IV Lula Central NE Tupi Carcará Bonito Piloto Sapinhoá (P-62) Lula Sul Sul Pq. Baleias Entorno de Iara (Cid. São Paulo) Carimbé Sapinhoá Franco 1 Franco 5 Piloto Lula NE Aruanã Baleia Azul Norte (Cid. (Cid. Paraty) Carioca 1 Iara NW Espadarte I (Cid. Anchieta) Ilhabela) Papa-Terra Lula Norte Franco 3 Iracema Sul Baúna e (P-61 e P-63) Iracema (Cid. Franco 2 Piracaba Roncador III Norte Mangaratiba) (Cid. Itajaí) (P-55) 19 up to 2016 Production Units 38 up to 2020 2011 2016 2020 2,022 kbpd 2,500 kbpd 4,200 kbpdPre-Salt (Concession) Transfer of Rights New Discoveries (*) 5% Pre-Salt (Concession) 1% 12% Post- Salt Transfer of Rights 30% 19% 42% 69% 95% Post-Salt 28% Post-Salt Pre-Salt (Concession) (*) Includes new opportunities in blocks where discoveries have already been found
  • 8. PETROBRAS: Reserve Replacement Ratio > 100% for the 20th consecutive year 34 billion bbl • In the last 5 years, more than 50% of the New Discoveries 2005-2010 new discoveries worldwide were made in 19% deep waters. Brazil accounts for 63% of 49% these discoveries. 32% Brazil • Projections indicate that as Brazil develops Brasil these newly discovered reserves, it will lead non-OPEC supply growth until 2030 Deep Waters (PFC Energy). Other Discoveries Petrobras: Proven Reserves in Brazil (billion boe) +3% 15.28 15.71 • Reserve/Production  19.2 years 13.23 • Reserves Incorporated in 2011+164% 9.65 Total: 1.24 billion boe 7.53 Pre-Salt: 1 billion boe 5.96 1991 1995 2005 2010 2011 2000
  • 9. E&P Investments 2012-2016 Period Exploration Production Development US$ 25.4 Billion US$ 89.9 Billion 24% (6) 34% Pre-Salt (30.2) 49% 8% 69% (43.7) (2) Post-Salt (17.5) 18% Transfer of Rights (16.0) Besides Exploration and Production Development, E&P investments in infrastructure total US$ 16.3 billion
  • 10. BUSINESS PLAN - 2012-2016More information about the Business Plan 2012-2016 at:• http://www.investidorpetrobras.com.br/2012-2016-business- plan.htm
  • 11. PRE-SALT OVERVIEW
  • 12. WHAT IS PRE-SALT? Located in a remote area, up to 300 km offshore Water depths that can Corcovado exceed 2,000 meters Hill Total depth from 5,000 to 7,000 meters Post-Salt Layer Focus up to Salt layer more than 2006 2,000 meters thick. Large Oil Carbonatic Pre-Salt Layer Reservoirs New Exploratory Border
  • 13. WHAT IS PRE-SALT?
  • 14. WHAT IS PRE-SALT? PRE-SALT - SOME TECHNOLOGICAL CHALLENGES Drilling and Completion  Construction of high angle wells, deviated into the salt zone  Well integrity  Penetration rate in the microbial carbonate reservoir  New alloys to reduce costs of well materials
  • 15. WHAT IS PRE-SALT? PRE-SALT - SOME TECHNOLOGICAL CHALLENGES Reservoir  Reservoir characterization  Rock fluid interaction  EOR
  • 16. WHAT IS PRE-SALT? PRE-SALT - SOME TECHNOLOGICAL CHALLENGES Subsea  Flexible risers for water depth of 2,200m (7,218 ft)  Flow assurance  Scaling control
  • 17. WHAT IS PRE-SALT? PRE-SALT - SOME TECHNOLOGICAL CHALLENGESFloating Production Units Mooring in 2,200m water depths Interaction with the riser’s system CO2 processing
  • 18. LOCAL CONTENT
  • 19. LOCAL CONTENTPetrobras Local Content Policy PETROBRAS LOCAL CONTENT POLICY The projects and contracts of Petrobras must withstand the challenges of the Strategic Plan and maximize Local Content in competitive and sustainable basis, contributing to market development where Petrobras operates, guided by ethics and continued innovation.
  • 20. LOCAL CONTENTLegal Requirements E&P E&P RTC Abast G&P G&E Exploration and There is no requirement to There is no requirement to Exploração e Production: Não existe Local Content. Local Content. Não existe Desenvolvimento: exigência de exigência de Evidences to ANP for comprovações para The operatingLocal. Conteúdo company The operatingLocal. Conteúdo company ANP concessions new para novos states its goal and proves Operadora declara states its goal and proves Operadora declara contratos de contracts, production the percentage achieved meta e comprova the percentage achieved meta e comprova concessão, partilha índice realizado índice realizado sharing and onerosaof e cessão transfer rights Operating expenses are not subject to the requirements of the Local Content by ANP
  • 21. Local Content Measurement and Monitoring ProgramMotivation: Higher efficiency in maintenance and post-sales services, access to suppliers,logistics cost optimization, reduction on transportation and delivery time.Objective Maximize the use of the Brazilian equipment and services industry capacity for Bottlenecks 2012-2016 BP procurement demands, with schedules and costs aligned with best identification and market practices industry mobilizationAction Plan Minimum Local Content Local Content Local ContentI Planning of 2012 – 2016 II III Monitoring Measurement BP projects • Information on Industry Capacity • Implementation of Local Content Indicators • Preparation of Execution Reports of Local • Identification of imported goods and • Monitoring of local content in projects Content per project (forecast x executed) services • Actions for recovering occasional deviations in • Updating data base for future projects • Identification of items for nationalization schedule and costs
  • 22. REFINERIES AND G&E DECISION MATRIX Item X National demand is Is it enough to Local Content –Downstream projects – Global Average Source: ONIP possible to justify adding 99% buy in capacity? 100 Brazil? (incremental or 85% YES NO new plant) 80 Item 68% components, 60 individually, 52% YES NO can improve 44% local content? 40 YES NO 20 Develop 0Use local industry Import Global Goods Equipment Materials Services Component (Eq+Mat) Supplier
  • 23. HOW TO MESURE LOCAL CONTENT Local Content Formula% LC = 1- Imported Portion X100 System Total Price without tax
  • 24. PROMINPHISTORY - 2003PROMINP – Mobilization Program for theNational Oil and Natural Gas Industry.Coordinated by the Ministry of Mines andEnergy, was established by the FederalGovernment through the Decree nr. 4925,dated Dec/19th, 2003.Its main goal is to maximize the participationof the national goods and services industry, ona competitive and sustainable basis, in theimplementation of projects in the area ofpetroleum and natural gas in Brazil andabroad.
  • 25. Construction of research centers in Brazil Petrobras partnerships with more than 120 universities and research centers have led Brazil to have a prominent worldwide applied R&D complex At the UFRJ technological complex, 9 P&D 50 Thematic Networks centers of important equipment and services suppliers are already in construction/operation: • Schlumberger • FMC Technologies • Baker Hughes • Usiminas • Halliburton • TenarisConfab • General Electric • Vallourec & Mannesman Other Companies with development plans for technological centers in Brazil: CENPES expansion (Mar/2012) • Cameron • Weatherford • IBM • Wellstream • Technip Source: E&P-CORP, May 25/2012 and CENPES, May 28/2012.
  • 26. BRAZILIANCOMPANIES
  • 27. BRAZILIAN COMPANIESDefinition ‘Brazilian companies’ means companies that have manufacturing processes and after-sales services in Brazil, thus creating jobs and collecting taxes in the country.
  • 28. RELEVANT EQUIPMENT DEMANDFOR THE PERIOD 2012-2017
  • 29. INDUSTRIAL SECTORS PERFORMANCE ANALYSIS Sectors 1. Telecommunication 2. Substation and transformers 3. Generators and MotorsCompetitiveness 4. Electrical Distribution Panels 5. Automation 6. Pipelines 7. Mills Production Demand time Changes in 8. Steam Turbines O&G offer Demand capacity spreading production paths 9. Winches changing fulfillment expansion 10. Valves 11. Flanges and Connections 12. Boilers Works 1 7 2 13. Subsea - Equipment 14. Subsea - Umbilical and 13 8 5 3 Flexible Pipes High 15. Pumps 14 15 6 4 16. Alternative Compressors 17. Engines 18. Cranes (Onshore) 19. Engineering Services 17 20. Construction and Assembly 19 10 21. Instrumentation and 9 Measurement Medium 18 16 22. Gas Turbines 11 20 12 23. Centrifugal Compressors 24. Electrical Motors (large size) Legend 21 Degree of dependence of O&GI Low 22 23 24 Low Medium High Productive Capacity
  • 30. Local ContentCompanies building capacity in Brazil Products Projects in Brazil • NKT Flexibles • New flexible pipe plant in Brazil in 2013. • Technip • Installation of new plant. • WellstreamSubsea Pipelines • Current plant expansion in 2013 (60% capacity increase). • Prysmian • Plant expansion to produce flexible pipes. • Butting • Construction of a new plant for the production of line pipes. • Duco and Nexans • Ongoing discussions to establish new plants in Brazil. • Oceaneering (MSD)Umbilicals • Current manufacturing capacity will double by early 2013. • MFX • 80% expansion in manufacturing capacity by 2013. • Aker • Increase of manufacturing capacity. • FMCSubsea Equipment • Increase of manufacturing capacity and construction of a technology center. • GE • Expansion of the Jandira Plant and the construction of a new unit. • Cameron • Industrial Expansion. 3030
  • 31. Local ContentCompanies building capacity in Brazil Products Projects in Brazil •. Rolls-Royce • Construction of new plant in Santa Cruz (Turbogenerators).Turbomachines • Dresser-Rand • Construction of new unit in Santa Bárbara do Oeste (Turbocompressors). • MEP PellegriniOffshore cranes • Working through partnerships, ongoing discussions to establish new plant in Brazil. • V&M do BrasilDrill pipes • Adapting current units to manufacture pipes. • V&M do BrasilCRA Tubing • Capacity to produce high corrosion-resistant alloys • USIMINASHigh diameter pipes • Current units under qualification.Offshore steel • Metasastructures • Industrial expansion. • EmersonAutomation • Industrial expansion to assemble equipments in Brazil.
  • 32. EQUIPMENT AND MATERIALS REQUIRED FOR 2012-2017 Unit 2012 2013 2014 2015 2016 2017 Total Pumps un 899 1.737 942 381 96 331 4.386 Compressors un 174 54 51 23 40 45 387 Cranes un 23 25 24 8 7 6 93 Structure Steel (Ships Hull) t 205.100 45.600 31.750 29.600 70.900 70.900 453.850 Structure Steel (Plataforms Hull) t 140.000 364.000 224.000 112.000 140.000 112.000 1.092.000 Structure Steel (Rigs Hull) t 0 120.000 120.000 120.000 120.000 80.000 560.000 Flares un 11 12 8 6 4 5 46 Power Generators (13,8 kV) un 32 189 14 20 27 17 299 Power Generators (0,48 kV) un 158 0 0 0 0 0 158 Tanks un 253 180 68 55 39 89 684 Processing Towers un 101 119 53 0 5 17 295 Reactors un 114 71 0 0 4 0 189 Wet Christmas Trees un 136 158 191 217 203 229 1.135 Offshore Wellheads un 215 204 220 225 207 235 1.307 Dry Christmas Trees un 457 522 436 324 189 120 2.047 Onshore Wellheads un 458 522 436 324 189 120 2.049 Manifolds un 10 18 23 15 12 21 99 Umbilicals km 517 714 887 1.295 1.485 1.593 6.492 (**) This list does not exhaust all the equipment and materials required for 2012-2017 period.
  • 33. EQUIPMENT AND MATERIALS REQUIRED FOR 2012-2017 Unit 2012 2013 2014 2015 2016 2017 Total Tubing (Onshore) t 28.681 28.681 28.681 28.681 28.681 28.681 172.084 Tubing (Offshore) t 13.947 13.947 13.947 13.947 13.947 13.947 83.682 Flexible pipes km 743 616 713 957 1.471 1.478 5.977 Risers km 210 173 311 441 544 682 2.361 Turbines (Gas) un 41 38 18 12 16 26 151 Turbines (Steam) un 28 91 67 0 0 17 203 Special alloys for tubing and casings t 2.470 3.293 5.927 6.256 11.525 11.854 41.325 Turbo generators un 32 37 12 8 12 37 138 Polyester mooring cables km 182 249 319 113 170 114 1.147 Fiberglass pipelines km 425 128 353 353 353 353 1.966 Electrical cables for CSP km 9.562 8.487 10.073 10.363 0 0 38.485 Steam generators un 0 0 0 0 0 0 0 HCC reactors un 0 5 0 0 4 0 9 Special alloy boilers, reactors, un 64 79 67 0 4 5 219 towers, and pressure vessels Heat exchangers un 7 61 63 65 0 0 196 Reformer Furnaces un 3 6 0 0 0 0 9 (**) This list does not exhaust all the equipment and materials required for 2012-2017 period.
  • 34. SUPPLIERSQUALIFICATION & REGISTER Petrobras Concepts &Requirements Overview
  • 35. SUPPLIERS QUALIFICATION & REGISTER Corporate Register The Corporate Register is a database of Brazilian and foreign companies interested in participating in bidding for Petrobras. Petrobras Procurement Manual (MPC) These companies, Brazilians or4.1.6 Item foreigners, are eligible to provide to Petrobras high complexity Board of Directors) (Approved by the services or equipment/goods, which are under permanent Petrobras interest. The evaluation approval, as part of the registration process, ensures the incorporation of the company in the Petrobras Corporate Register, obtaining the CRCC – Certificate of Registration and Classification. Then, the company could be invited to participate of new biddings.
  • 36. SUPPLIERS QUALIFICATION & REGISTER Corporate Guidelines Requirements: Legal Economics Technical Approval Complementary Corporate Guidelines Requirements: Health, Safety & Environment - HSE Management & Social Responsibility
  • 37. SUPPLIERS QUALIFICATION & REGISTER Petronect It is an “e-Procurement” portal, which provides tools for acquiring goods and services for Petrobras System companies. In its business platform are carried out several transactions ranging from requests for quotes and sending proposals to management of orders and contracting. http://www.petrobras.com.br/en/supplier-channel/ www.petronect.com.br
  • 38. SUPPLIERS QUALIFICATION & REGISTER Since April 2012 the “Suppliers Registration System” was incorporated to Petronect as a integrated tool and access point for companies registration and bidding
  • 39. SUPPLIERS QUALIFICATION & REGISTER Register Flow Chart Company Access at www.petronect.com.br Identification: Identification - Contact Information; - Scope of Supply; - Local Representative; Registration Criterias: Questionnaire Certificate sent Technical; to Company - Legal; - Economical; - Managerial; - Health, Safety & Environment. Petrobras Company Registration Approval in SAP Petrobras
  • 40. SUPPLIERS QUALIFICATION & REGISTER Legal Requirements Foreign Companies Proof of being duly established and registered in the country of origin; Legal Representative in Brazil – the company must provide its legal representative in Brazil (Power of Attorney); Letter stating that the company is not bankrupt or in debt;
  • 41. SUPPLIERS QUALIFICATION & REGISTER Legal Requirements Foreign Companies Commitment Letter – Through this document the company shall formalize its intention of being included in Petrobras’ Corporate Register; Commercial Representative (indicated by and linked to the supplier):  Not mandatory, but advisable (may be the own company)  May be the same or other than the legal representative
  • 42. SUPPLIERS QUALIFICATION & REGISTER Economic Requirements Brazilian and Foreign companies:  Annual Reports with Audited Financial Statements or  Balance Sheet and Income Statement  Financial statements of foreign companies must be prepared under IFRS or USGAAP  Economic calculation formulas and acceptance criteria are public, available online in the instructions.
  • 43. SUPPLIERS QUALIFICATION & REGISTER Health, Safety and Environment  Service Providers ISO-14001 and OHSAS-18001:  Certification is not mandatory  Petrobras evaluates how the suppliers implement these standards requirements (ranking from 0 to 10 points)  Goods Suppliers Not required
  • 44. SUPPLIERS QUALIFICATION & REGISTER Management  Goods Suppliers  ISO-9001 certification is mandatory  Services Providers  Compliance to the requirements of ISO-9001 is ranked from 0 to 10 points - certification is valued
  • 45. SUPPLIERS QUALIFICATION & REGISTER RQT Category of products - definition (RQT - requires specific technical qualification) Those equipments or materials which performance in the industrial process of Petrobras can threaten continuity, compromise the safety of personnel, facilities and environment, and those products that, included in the industrial process as raw material, can jeopardize the quality of the final product of the Company.
  • 46. SUPPLIERS QUALIFICATION & REGISTER Technical Requirements for Materials & Equipment Depending on the material or equipment, the supplier must comply with the following requirements:  Tradition (Main Sales, Reference Letters)  Facilities for Technical Assistance (in the case of Automation Systems, Rotating Machinery, etc)  Mandatory Product Certification (API, ASME, ...)  Other Specific Requirements
  • 47. SUPPLIERS QUALIFICATION & REGISTER Technical Requirements for Services Depending on services criticality, the supplier must comply with the following requirements:  Tradition (List of Services Provided – continuity and Reference Letters)  List of equipment relating to services provided;  Main personnel curricula vitae  Other specific requirements NOTE: in accordance to the Law, to render services in Brazilian territory the company must have a subsidiary or partner company in Brazil.
  • 48. CONCLUSIONS
  • 49. CONCLUSIONS Petrobras has a robust projects portfolio, which is atypical of the current economic situation. There are huge opportunities for already installed and newcomers in the Brazilian market of suppliers, service and engineering companies due to the scale provided by the project portfolio. In order to carry out such a portfolio, Petrobras is looking forward to establish long term business with companies willing to invest in Brazil.
  • 50. Thank you ! ronaldomartins@petrobras.com.br materiais.rel@petrobras.com.br eliel.costa@petrobras.com.brsuppliers.registry@petrobras.com.br