Petrobras’s US$ 2 Bi Investment in the South of Brazil to Create 60,000 Jobs

Brazilian state-controlled Petrobras Petrobras is investing US$ 2.1 billion in the Presidente Getúlio Vargas refinery (Repar), located in the city of Araucária, in the Metropolitan Area of Curitiba, capital of the southern Brazilian state of Paraná. This is the largest investment ever made by the state-controlled company in a single industrial unit in the country.

The investment plan, which will last until 2011, contemplates 19 projects, which should create approximately 60,000 new direct and indirect jobs. The plan should set in motion various sectors of economy in Paraná and throughout the country.

The funds will be invested in the installation and expansion of coke, gasoline and diesel, liquefied petroleum gas, propylene and hexane production units. Estimates point to a 10% increase in refining capacity, which would rise to 220,000 barrels per day. "Until now, we were focusing on basic projects," explains João Adolfo Oderich, general manager at the unit.

Late last year, the tender process for ground leveling and civil construction works began, during which more workforce is required. The purchase of some equipment is either undergoing tender processes, or has already been tendered.

This is the case with the new boiler, which is under construction by the SES Montcalm consortium – comprised of a Brazilian and a Slovenian company. The boiler will generate 180 tons per hour of steam, used in the refining of petroleum.

Over the next four years, these US$ 2.1 billion will not just produce more petroleum derivatives and employment. They will be a significant aid to the State government's tax collection efforts. The Petrobras investment in Araucária will produce an estimated amount of US$ 200 million in value added state tax (ICMS).

In addition to strengthening the state's finances, construction works at Repar are giving rise to a chain effect that will reach various sectors of the economy in the state of Paraná. Business opportunities will be created in the agricultural, services, and industry segments in the capital, the Metropolitan Area, and the interior.

"The effects on employment and income levels should be relevant during the construction of industrial complexes, and especially after the factory units are implemented" according to economist Gilmar Mendes Lourenço, of the Paraná Institute of Economic and Social Development  (IPARDES).

This is the case with the propylene production unit. Propylene is a basic input for intermediary petrochemical industries, such as polypropylene, used in the production of automobile accessories, packaging and household utensils.

Propylene is also used in the manufacturing of acrylic acid, super absorbent polymers, butyl acrylates – a raw material for the paints and coatings industry – and acrylates – used in water treatment.

The unit to be installed at Repar will require US$ 76 million, with a production capacity of 180,000 tons per annum of the product. It will also be the center of a future petrochemical hub in the Metropolitan Region of Curitiba.

The civil construction industry is one of those directly interested in the Petrobras investment plan. In early 2006, technicians from the company met the board of directors at the Union of the Civil Construction Industry of Paraná (Sinduscon-PR), in Curitiba.

The goal was to present the projects to the businessmen, and explain to them the business opportunities that will open up with the investments in Araucária. "There are expectations for great activity in the industry," says Júlio Araújo Filho, president of the organization.

One conclusion that can be drawn from the data presented by Petrobras is that, eventually, there will be demands that, due to their dimensions or technological specifications, will not be capable of being met by construction companies in the state of Paraná. In these cases, the Union suggested the possibility of creating consortiums among companies.

Another measure adopted to increase the industry's competitiveness, given the size of the projects for Repar, was the establishment a partnership with the Brazilian Micro and Small Business Support Service (Sebrae) and with the National Service of Industrial Education (Senai).

Construction companies are also seeking to comply with the standards required by the Brazilian Program of Habitat Productivity and Quality (PBPQ-H). According to Araújo Filho, the advantages of complying with these regulations are more than just meeting the requirements of Petrobras. They will generate an important market for civil construction companies in Paraná in other sectors, which are also zealous about the quality of their suppliers.

The fact is, there already are companies in the state of Paraná that are either in the chain of suppliers to Petrobras, or working to comply with the requirements, and grab a share of the investments forecasted for Repar.

Carlos Roberto Nunes Lobato, a partner at the Goetze Lobato Engenharia engineering company, explains that his company adapted to the conditions imposed by Petrobras.

Lobato, who has worked in the civil construction sector for fifteen years, has been working for Petrobras for four years now, including works at the Alberto Pasqualini Refinery, in the southernmost Brazilian state of Rio Grande do Sul, in the state of Santa Catarina and in the city of Paranaguá, in the state of Paraná.

Omar Nasser works for the Federation of Industries of the State of Paraná.

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