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Brazil’s Energy Sectors Seek U.S. Exporters

July 30, 2015

Commercial Officer Tom Hanson just completed his three-year tour at the U.S. Commercial Service in São Paulo.

Brazil’s enormous offshore oil and gas finds, called the pre-salt fields, are located 200 miles off its southern coast and lie approximately 7,000 feet below the ocean’s surface. As these logistically and technologically challenging discoveries are explored, substantial business opportunities arise for U.S. suppliers of oil and gas equipment and services.

Although Brazil’s largest oil player, Petrobras, has yet to publish its revised five-year investment plan for the 2015-2019 period, industry sources estimate that it may range between US$130 billion to US$ 140 billion.  The exploration and production subsector should take 80% of the total planned investment. However, due to financial constraints brought about by investigations surrounding budget improprieties, Petrobras is likely to reduce its investment plan substantially, and may sell off some of its assets to offset its cash flow issues.

As Petrobras has not yet issued its 2015-2019 equipment and services demand forecast, based on its previous Business Plan as of February 2014, U.S. providers of supplies and operating systems for platforms and tankers and manufacturers of workboats and transport vessels would stand a great chance of winning new business. Despite the current crisis involving Petrobras and its main turnkey contractors, Petrobras’ expansion plans may represent one of the world’s largest business opportunities in the oil and gas sector until at least 2020. Commercial Service (CS) Brazil counsels U.S. exporters who are not already established in Brazil to partner with a local firm that is registered as a supplier to Petrobras – a prerequisite – rather than attempting to register directly.

Meanwhile, CS Brazil is engaged in the dynamic Renewable Energy sector. Brazil generates nearly 80 percent of its electricity from renewable sources – hydro, wind, solar, bio-mass, waste-to-energy – driven by both its immense renewable energy resource potential and rising energy demand. In fact, renewable energy capacity in Brazil is registering an average annual expansion of 12 percent, with special emphasis on wind energy, biomass from sugarcane, and small hydropower plants.

To date, most U.S. exports have been in the form of services and high value-added products that are not available domestically. However, exports to Brazil are hindered by significant import tariff barriers. Brazil imposes a 14 percent tariff on wind turbines, component parts for the wind industry, and hydropower turbines; and a 12 percent tariff on imported solar equipment, both PV and thermal.

CS Brazil can assist U.S. exporters navigate the complex path of market entry to find their niche markets and identify partners in these and other industry segments. Other, indirect costs of doing business in Brazil (referred to as “Custo Brasil) are often related to distribution, government procedures, employee benefits, environmental laws, and a complex tax structure.

Brazil has a large and diversified economy that offers U.S. companies many opportunities to partner and to export their goods and services, and U.S. exports are increasing rapidly. For more information about export opportunities in these energy sectors, please review the Country Commercial Guide and Top Market reports.

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