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Beyond the sea: Brazilian logistics giant Transpetro renews its fleet, renovating a stagnated shipping industry.

The beginning of the second half of this year marks a new era for Transpetro, the logistics and transportation arm of Brazilian state oil company Petrobras--and for the Brazilian shipping industry. When it signs its first contract for the construction of 42 oil tankers, the result of a public auction a few months ago, Transpetro will be making the largest single order ever made by one company in Brazilian shipping industry history.

Investments of US$2 billion will be made during the program to renovate Petrobras' fleet. The state-run company expects to revive the country's stagnant shipyards, which haven't made ships of such sizes in 16 years. "The program is a priority for Transpetro, for the Petrobras system and for the country. which depends on maritime transport for more than 95% of our international trade," says Sergio Machado, president of Transpetro. The Petrobras unit reported revenues of $940 million in 2004 and profits of $105 million.

Latin America's largest shipbuilder and shipper and warehouser of petroleum and its derivatives, among them natural gas, bulk oil products and ethanol, Transpetro has seen its fleet over the past decade shrink to 51 ships from 74. Its capacity available to service Petrobras, its main client, has shrunk to 17% from 40%. Little by little, the company's fleet has lost its market share to larger shippers and more modern, foreign shipbuilders. "Because of a lack of ships, the wealth being generated by this business was leaving the country, given that shipping represents 10% of the cost of these products," says Machado.

The new ships (big, double-hulled boats in the Suezmax, Aframax, Panamax, Products and GLP classes) will add 3 million deadweight tons to Transpetro's cargo transport capacity. The first of these new petroleum transports will raise anchor in 2006. Although European and Asian groups are among the 11 consortiums pre-qualified to build Transpetro's new fleet, all of the ships will be built in Brazil and they will be 65% built with domestically made parts. Brazil's development bank, the Banco Nacional de Desenvolvimento Economico e Social (BNDES) will finance 90% of the ships' value.

Created in 1998 during the restructuring of the Brazilian oil sector, Transpetro ended up a monopoly in the oil-tanker business for the simple fact that no other company challenged it. In the past few months, Lagoa Azul Transportes Navais, owned by businessman Daniel Birmann, owner of Banco Arbi, has sought financing of $184 million to build three tankers. Boberto Dieckmann, manager of the shipyard Estaleiro Rio Grande, another business owned by Birmann, recently told the Brazilian press that the current cost of shipping justifies the construction of tankers.

It's not just in its fleet that Transpetro is looking for greater efficiency and capacity. The company is also investing in modernizing and increasing its network of pipelines and terminals. The company operates 10,000 kilometers of pipelines for products like oil and gas and 43 maritime and land terminals, which move all of the petroleum and petroleum derivatives produced and consumed in Brazil, including all imports and exports. The Terminal Maritimo Almirante Barroso (Tebar), on the Silo Paulo state coast, is the largest run by Petrobras and is responsible for handling half of Brazil's oil consumption. It will receive investments of $115 million in the coming three years.

"Half of the resources will be used to build four new pipelines in order to make it easier to move petroleum and petroleum derivatives," says Geraldo Marfurte, manager of Tebar. The remainder will be used to substitute two older lines and build 19 connectors used to link the pipelines to the ships, as well as safety projects.

Protocols. In the last five years, Transpetro invested $500 million in improving the quality of its pipelines, 70% of which are operated electronically by satellite from a control center in the city of Rio de Janeiro. "Our safety protocols are first world," says Marcelino Guedes Gomes, Transpetro's director of pipelines and terminals.

Another big investment is linked to the recent decision by Petrobras to participate in the logistics of exporting ethanol made in Brazil. If the optimistic projections on the production and export of ethanol are realized, Transpetro will invest $320 million by 2010 in the construction of an "export corridor" that will link the agricultural areas with refineries and maritime terminals via pipelines and tanks.


Transpetro wants to rebuild Brazil's fleet with these five types of ships.

Suezmax: a petroleum tanker narrow enough to pass through the Suez Canal. Holds between 150,000 and 200,000 deadweight tonnage

Aframax: a petroleum tanker with capacity of between 75,000 and 120,000 deadweight tonnage

Panamax: a petroleum tanker narrow enough to pass through the Panama Canal. Holds between 70,000 and 80,000 deadweight tonnage

Products: a ship that transports clear petroleum derivatives, such as diesel, gasoline, aviation kerosene, naphtha and lubricants. Holds up to 45,000 deadweight tonnage

GLPs: gas-transporting ships

SOURCE: Company reports, LATIN TRADE

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Title Annotation:SHIPPING
Author:Pfeifer, Margarida O.
Publication:Latin Trade
Date:Jul 1, 2005
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