Brazil’s Petrobras to Build 26 Oil Tankers and Create 32,000 Jobs

The arm of Brazilian oil giant Petrobras in the transportation sector, Transpetro, will sign tomorrow (January 31) an agreement with the Atlântico Sul consortium for building 10 new oil ships of the Suezmax type.

The contract will be signed at the Port of Suape, in the northeastern Brazilian state of Pernambuco. This is the first order in the company's fleet modernization and expansion program, which forecasts the manufacturing of a total 42 large vessels.

According to Petrobras, its Atlântico Sul (South Atlantic) shipyard should give rise to a naval industry hub in Pernambuco. Last year, the National Service of Industrial Education (Senai) trained professionals linked to the ship-building sector, including solderers, mechanics, machinery operators, electricians, electro-mechanics technicians among others. The order is estimated to generate 10,000 jobs in the state.

The total contract value is US$ 1.21 billion. The consortium is comprised of building companies Camargo Corrêa, Andrade Gutierrez and Queiroz Galvão, the Aker Promar shipyard, and Korean group Samsung.

The contract signing ceremony will be attended by president Luiz Inácio Lula da Silva, by the governor of the state of Pernambuco, Eduardo Campos, the president of Petrobras, José Sérgio Gabrielli, and the president of Transpetro, Sergio Machado.

In addition to the 10 ships to be built in Pernambuco, the first phase of the fleet modernization plan includes the manufacturing of 16 other oil ships. According to Transpetro, this phase should generate 22,000 jobs.

The additional vessels will be built at shipyards in the southeastern state of Rio de Janeiro (Rio Naval Consortium and Mauá Jurong Shipyard) and in the southern state of Santa Catarina (Itajaí­ Shipyard). All of the companies involved won a tender last year. The 26 ships to be built during the first phase will cost approximately US$ 2.5 billion.

Transpetro guarantees that the amount is only 1% higher than what would be spent if the orders were placed in the foreign market, thus proving that Brazil is capable of competing in the global market again.

The Petrobras program is part of a strategy of the Brazilian government for revitalizing the country's naval industry. According to Transpetro, Brazil was the world's second largest ship builder in the 1970s, but the sector decayed from the 1980s onwards.

The vessels to be built in the Transpetro project must have at least 65% of domestic inputs. The company forecasts that the first 26 ships will require 300,000 tons of steel plates and profiles, 150,000 tons of pipes, more than 6 million liters of paint, and 2,500 kilometers of electric cables, among other materials.

In addition to revitalizing the industry, the company also plans on increasing its fleet and capacity for catering to its own demand.

State-controlled Petrobras is Brazil's largest company. With its new ships, the company intends to cater to 100% of its coastwise shipping needs, and 50% of its long distance transportation needs.

Presently, the company operates with 130 vessels, of which it owns only 52, therefore it spends approximately US$ 1.2 billion per year on chartering, of a total US$ 10 billion spent by Brazil as a whole, every year, on maritime transportation.

Currently, the world's largest ship builders are Korea, Japan and China, which answer to 88% of global production. In 2006, the sector had a global revenue of US$ 100 billion.

In 2005, according to Transpetro, 1,480 ships were manufactured worldwide, and there are 6,214 ongoing orders placed internationally, with deliveries due in the next four years. From now on, Brazil is going for a share of this market.

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