Brazil
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'The Brazilian market demands very diverse and high-tech products'

Bnamericas Published: Friday, August 12, 2022
'The Brazilian market demands very diverse and high-tech products'

With large contracts in Brazil, Italian-Argentine steel tube and equipment manufacturer Tenaris is investing some US$14mn in its local production capacity. 

In addition to big Petrobras offshore oil and gas projects, such as the Búzios field, the company sees good prospects for new business with private sector players, including in the onshore segment. 

"There are a number of private companies working on revitalizing the fields, generating demand for tubing and pumping rods, among other goods, to increase production from these assets," the president of Tenaris in Brazil, Renato Catallini, tells BNamericas. 

In this interview, Catallini comments on the projects under development, market demands, technological challenges and initiatives related to the energy transition.

 

BNamericas: Tenaris closed, in July, a major contract with Petrobras to supply equipment for the Búzios field, in the pre-salt of the Santos basin. What’s the importance and the status of this project?

Catallini: The contract is for the supply of seamless and welded pipe casing. We manufacture the welded pipes in Brazil. The seamless ones will come from factories in Mexico and Italy. Our plants work in a network. The Brazilian unit specializes in connectors, which are large diameter, high thickness casings, and high specification pipelines. 

The Brazilian market demands a combination of very diverse and high-tech products, and some are imported. 

About Búzios, this is the third contract we signed with Petrobras for the pre-salt fields. We started with Mero 3, then we closed a deal for production sharing fields. Then we won packages for Mero 4 and a global contract. 

Búzios is the most relevant in terms of volume, more than 100,000t of pipes. The other contracts total approximately 30,000t. Búzios is one of Petrobras' most important fields, with very high well productivity. It’s a pre-salt star. So, for us, to have been trusted by Petrobras to supply it is a very important success. 

In addition, we supply ExxonMobil in Guyana via Brazil and other plants in the world, with larger diameter connectors. Today, the plant in Brazil exports approximately 65% of its production. 

BNamericas: The pre-salt fields have high CO2 content. How is Tenaris working to meet this challenge?

Catallini: The products we supply to Petrobras are corrosion resistant. It’s the most sophisticated portfolio we have. They are pipes that must resist very rigorous corrosion conditions, in addition to high collapsing pressures, as the projects are located in water depths of over 2,000m. They are premium connections to withstand very challenging conditions. 

BNamericas: What contracts and projects are underway with private oil companies?

Catallini: We supply casing tubes to Equinor in the Bacalhau [field], as well as lines for risers and flowlines with thermal coating produced at our plant in Pindamonhangaba [in São Paulo state]. We have also supplied ExxonMobil, TotalEnergies, Shell, PetroRio, Petronas. Practically all the operators in the country, including onshore. 

BNamericas: Have Petrobras' onshore divestments been heating up the market?

Catallini: This is really generating demand, with the reactivation of the onshore fields. Apart from the case of Eneva, which is producing 'gas to power', there are a number of private companies working on revitalizing the fields, generating demand for tubing and pumping rods, among other goods, to increase production from these assets. There is already planning underway for new well construction, generating orders for well casing, for example.  

The prospects are very positive for both onshore and offshore. 

BNamericas: What are the most anticipated bids and tenders?

Catallini: The bids are happening practically continuously. For example, there are many processes for the development of the Búzios field, with risers and flowlines, for Gato do Mato, Bacalhau, etc. And this is the strongest sign of the increase in activity. Years ago, there was a big process, and then we would go for a long time without any bidding. We recently won a contract with Petronas for exploration in Brazil. And there are already other processes coming from private companies. 

BNamericas: What’s the trend in terms of subsea configurations, considering the flexible riser incidents that have occurred in Petrobras projects?

Catallini: For many years, Petrobras opted for a development based fundamentally on flexible pipes, mainly for the collection and flow system. This was not a common strategy in the rest of the world. Other oil companies used hybrid systems [combining flexible and rigid pipelines]. After the incidents in the pre-salt, Petrobras changed to a more traditional strategy, which was applied for Mero, Sépia and Búzios, combining rigid with flexible, which is the most efficient combination for field development. The technology keeps evolving. We supply rigid, carbon steel pipes, which are later coated internally with a corrosion-resistant alloy liner, the MLP [mechanically lined pipe]. These pipes arrived from Germany, and we’re doing the thermal coating to deliver them to the Búzios and Bacalhau fields. Each EPC company then defines the best solution in each case.

BNamericas: Is Tenaris investing in production capacity and human resources in Brazil? 

Catallini: We’re investing 70mn reais [US$13.6mn] to increase capacity or to produce different products, such as the ‘Dopeless’, which is Tenaris' technology for threads without grease, with two important benefits: environmental, because it reduces water contamination, and safety, because not having grease allows a reduction in the number of people on the platform. 

And we have two other technologies that we’re supplying to Petrobras: connectors with automatic keyways, and the ‘Pipe Tracer’, providing information about the pipes electronically.  

We’re investing in these technologies and expanding the production capacity of welded connectors in the country. And we’ve just completed an investment of 23mn reais in automatic ultrasound equipment, necessary to produce export lines according to a new DNV standard. We’re starting a project for Qatar Gas with 200,000t of pipes produced in Brazil. Without this equipment we wouldn’t be able to comply with the required standards. And it will be important for future contracts in Brazil. 

The last major investment we completed is the thermal coating that is used mainly in riser lines and flowlines for the flow of pre-salt oil. 

Meanwhile, we expect to increase our local staff by 15% in the next six months. 

BNamericas: How is the company positioning itself in the energy transition?

Catallini: We have a very ambitious plan to reduce emissions. Tenaris today produces 1.2t of CO2 per ton of steel produced, compared to the industry average of 1.89t of CO2 per ton of steel. We use electric furnaces, which generate less CO2 than blast furnaces, and thanks to the extensive use of recycled scrap. 

We plan to reduce CO2 generation by 30% more by 2030 compared to 2018. And we’re implementing hydrogen in our processes. 

In Italy, we want to reach zero emissions with green hydrogen in our production system. We’re evaluating and planning investments to capture CO2 and investing US$190mn to build a wind farm in Argentina to clean up our electricity matrix. 

BNamericas: Is the plant in Pindamonhangaba in the free [non-regulated] electric power market? Is self-production of energy a possibility for it?

Catallini: The CO2 generation of our plant is very low, because we don’t produce steel here. Even so we’re working to be able to purchase more renewable energy. In the case of gas, we don't consume enough to be a free consumer, but in the case of electricity, yes. Our steel in Brazil comes from Usiminas and Gerdau, and that’s where we’re working. The big companies are all looking at the energy transition because it’s an obligation, practically. Our main shareholder is also a shareholder of Ternium, in Santa Cruz [in Rio de Janeiro]. And they are drawing up alternative plans for reducing CO2 emissions and increasing the consumption of alternative energies, such as biogas, among other sources.

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