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(Last updated: 31 Jul 2008)
Trends and opportunities
The market
The National Petroleum Agency (ANP) was recently created to regulate the privatisation of the oil and gas sector. It has selected 73 fields previously controlled by Petrobras (the oil and gas state company monopoly) to be offered in 11 separate groups of between four and 11 fields each.
Major projects include:
- Brazil's Rio Grande do Norte State-controlled gas distributor Potigas is planning investments and projects worth around US$1.07 million to increase its customer base and create new markets for its natural gas distribution services.
- Forty-nine projects for the construction of thermo-electric power generation plants in the country are about to begin.
- Brazil's petrochemical sector received funding to cope with the country's 10 per cent annual increase in plastic and resin demand.
- Brazilian state-owned power distributor CEB is working on terms and bidding rules to invite private companies to form a joint piped-gas distribution company to be called Companhia Brasiliense de Gas (CBGas).
- Brazilian petrochemical company OPP is considering a joint venture expansion with Petrobras to construct a US$200 million, 250,000 tonnes per year polypropylene plant in Paullinia.
Opportunities
It is estimated that investments in equipment for the oil sector will represent US$8-$10 billion per year in the next five years.
Opportunity areas include:
- Drilling equipment, components and tools.
- Components for seismic vessels, production platforms, refineries, corrosion control and refrigeration.
- Pumps and pipeline products.
- Drilling, exploration, airborne seismic surveys, catering, engineering and environmental services.
- Software for drilling, exploration, oil platform management and geophysics.
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Tariffs, regulations and customs
The practice of protecting domestic manufacturing through high tariff rates was reversed in the early 1990s with current rates now in line within acceptable General Agreement on Tariffs and Trade (GATT) levels.
For oil and gas related products a special tax regime may exempt all import taxes and some state taxes. There is also the temporary import regime for this kind of equipment and products, subjected to specific authorisation.
Industry standards
To participate in the auctions that the National Petroleum Agency (ANP) is promoting, a company needs to address the specifics of the bidding rules. There are no other requirements than normal market rules. Many new-to-market companies have chosen to partner up with Petrobras, the former oil and gas monopoly, to kick-start their operations in Brazil.
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Marketing your products and services
Market entry
Local companies follow a procurement policy involving ‘registration and filing’ of all potential suppliers. In order to be considered as a supplier, a foreign company must have a local partner or subsidiary to ‘register’ under local requirements.
To show long-term commitment and to be able to understand the nuances of doing business in Brazil, the best market entry strategy is to open a local office. The second best approach is to appoint a representative, local agent, distributor, or systems integrator.
Local companies stress the importance of establishing a local presence, especially for software. The perceived major weaknesses of overseas suppliers are the lack of post-sales technical support and maintenance offered in country.
Main opportunities are upstream in the oil sector and in transportation and reticulation of gas. The best entry strategy is to set up presence in the country to profit from the deregulation process that is taking place. Main exploring areas are being auctioned to international exploration. A usual formula is to partner up with an established player to act as a strategic supplier, or a capital investor, or both.
The best way to effectively explore the market and to reach a self-sustainable operation is to form a joint venture with a company to explore its inner-market knowledge and its clientele.
For project related services and products, a formal bidding process is very common. E-communities are springing up in the B2B sector, mainly to handle daily needs of large corporations. Brazil takes the major stake of 55 per cent of e-business market with more than 530,000 buyers on the Internet.
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Contact details
The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.
Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.
Austrade:
- Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
- Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
- Administers the Export Market Development Grants scheme.
- Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
- Provides advice to the Australian Government on its trade and investment development activities.
- Delivers consular, passport and other government services in designated overseas locations.
A list of Austrade offices (in alphabetical order of country) is available.
More information
For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au |
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