Challenges of transparency

As some people will know President Dilma Rousseff has, since she took over from President Lula in November 2010, suffered the resignation of three ministers over the past seven months - Antonio Palocci (Home Affairs), Alfredo Nascimento (Transport) and Wagner Rossi (Agriculture) - due to alleged corruption. There have also been a number of other high officials who have also resigned.

At the this week’s swearing in of the new Minister for Agriculture Mendes Ribeiro, Presidente Rousseff said “that it was her duty to see an end to the impunity which shelters many of those accused of involvement in corruption practices and we will punish all abuses and excesses.” It appears that the President is taking a much harder line on corruption than her predecessors, but runs the political risk of alienating some of her political support in Congress.

The challenge though with this sort of social change is the relationship between corruption, transparency, the handling of political power and the distribution of wealth. These items have been the bogey men through history for all countries and as you might imagine some countries are worse than others. What some people may not know is that all signatories to the OCED have since 2002 been party to the International Transparency ratings list and if you go on http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results you will see some interesting statistics, which will surprise and shock you, well it did me. I thought that the UK would be at the top but we aren’t .. we are in 20^th place with a relatively lowly 7.6 points and Brazil is in 69^th place with a score of 3.7. The idea has been to make countries clean up their act and certainly the behaviour of our MP’s and bankers demonstrates that the UK is probably in the right place. The table below shows some of the other countries:

Position	Country	Score
1	Denmark, New Zealand, Singapore	9.3
8	Australia, Switzerland	8.7
15	Germany and Austria	7.9
17	Japan	7.8
20	United Kingdom	7.6
22	United States	7.1
25	France	6.8
30	Israel	6.1
67	Italy	3.9
69	Brazil	3.7
76	China	3.5
78	Greece	3.5
87	India	3.3
154	Russia	2.1

The interesting thing is that the Scandinavian countries are way out ahead, the Antipodes are at the top with some of Europe, the UK is above the US and France but the BRICS are quite a way down and President Roussseff wants to improve their position as the Brazil begins to take a more important place on the world stage. Certainly for the UK this is a bit of a wake-up call and certainly it is great that Brazil is doing something about it.

Brazil FPSO’s in the Gulf of Mexico

Floating and Production, Storing and Offloading ships have been developed over a 30 year period by Petrobras and are now common on the Pre SALT and Campos basin oil fields. Two of the main advantage of these very large ships is that they can store oil, which is very useful where there is no pipeline and they can get out of the way of inclement weather. Certainly they have a limit in terms of capacity, as one will eventually fill anything up but for the Gulf of Mexico, which has very deep areas where there are no pipelines and some pretty horrible hurricanes. Most hurricane seasons see the suspension of oil production and the destruction of many platforms, which when you have thousands in operation is a risky and expensive business.

One of the latest ships being operated by Petrobras is the BW Pioneer, which can drill to a depth of 2,500 m, a record for this type of drilling platform and can process up to 80,000 barrels per day. This system of oil production requires two sets of flexible connecting pipework, one that connects the rigid vertical pipes to the FPSO and then another set that connects the FBSO to the shuttle tankers that take the oil to the land based refinery. Two of the many challenges involved with flexible oil lines are how the pipes are connected/disconnected, whilst at the same time dealing the high pressure and the other is mooring the top of the vertical risers when not connected to the FPSO.

A whole set of critical developments, which are some of the reasons why oil &gas technology developed in the Brazilian oilfields are being exported around the world and we will be seeing more and more exported around the world.

Brazil’s Maracana in a spot of bother?

Rio de Janiero’s world famous football stadium Maracana, which used to hold just under 200,000 standing spectators, when it was first built for the 1950 World Cup, is in the process of being re-built to house 85,000 seated spectators and fulfil all FIFA’s security specifications .

It is scheduled to be ready in 2013 well in time for the World Cup final in July 13^th 2014 but there is a report out that the stadium has suffered a n explosion with one worker reported dead and other workers striking complaining about working conditions.

Maracana is one of twelve stadiums being upgraded or built from scratch around Brazil in readiness for the World Cup – Manaus, Fortaleza, Natal, Recife, Salvador, Cuiaba, Brasilia, Belo Horizonte, Porto Alegre, Rio de Janeiro, Sao Paulo, Curitiba – and a total of approximately £660 million has been put aside for the repair, upgrading and construction of the stadiums of which three are privately owned.

Certainly there are huge opportunities for UK companies to be part of the huge World Cup and Olympics in 2016 but it will be part of the lower supply chain for the massive infrastructure upgrading which needs to take place. The window of opportunity is amazingly beginning to close as so many companies from around the world are already moving in on Brazil as they scent profits now and in the future.

If you’ve not read it, you’re missing out...

Latin America Business Monitor

September issue

The Latin America Business Monitor or BMI for short is one of those added value items that organisations offer and when the Brazilian Chamber started to send it out, I was not sure how much time I should spend looking at it. The challenge for us all is that we get so much information and other 10 pages could be another 10 pages to skip.

I have now learnt that to keep on top of what is going on in Brazil I need to read everything on the BMI as it means that I don’t have to go through O Globo, the Folha and Veja for general news and I also get some economic information as well. Well presented, supported by facts and figures with the odd graph, this is 15 minutes of time very well invested.

The first thing this month, which took me by surprise, is their downgrading of Brazil’s economic growth projections and why, when everybody that I talk to in London is talking them up. There were also some additional comments about the close scrutiny of the banking sector, which makes for some very interesting reading, considering some of the latest challenges that the global financial sectors are facing.

One of the areas, which I have noticed is the growth in travel to and from Brazil with TAM’s doubling of their flights, their fleet increase of 34 planes and their £1.4 billion investment in Rolls Royce engines. Sure enough BMI had this covered, plus some additional interesting tourism statistics 

Another subject is the relationship of UK companies wanting to trade with Brazil, the effect of the recent Bribery Act and levels of corruption in Brazil. Sure enough there on page 2 was a lot about the pressing problems that President Dilma is facing with the resignation of the Transport Minister Alfredo Nascimento and the recent challenges with the Ministry of Tourism. All of this is especially relevant to the infrastructure investment by the government for the World Cup and the Olympics.

Finally there were some very useful comments on export figures, investment in hotels, Petrobras’s recent budget changes and Brazil’s global security rating, all of which are crucial to the increasing interest by UK companies in Brazil. Very definitely a very well spent 15 minutes and many thanks once again to the Brazilian Chamber for organising it and free of charge.

Brazil, UK and Argentina

Challenges for supplies to the Falklands

Almost unnoticed in the press was the fact that in January of this year Brazil refused entry for the docking of HMS Clyde, the Falklands Islands protection vessel,  in Rio de Janeiro. This was the first time for a long time that such a thing had happened as Brazil and Britain regularly exchange boat visits and in fact the Navio Escola 'Brasil'  is making one of its regular visits to London  on August 31^st.

At the time many people thought so what that Brazil is beginning to side with Argentina over the Falklands but with the increased interest in the Falklands helped when the British Geological Survey said there could be 60 billion barrels' worth of oil there, this takes on a slightly slant. Since that statement was made, Rockhopper has carried out a lot of exploratory work there and in April and May 2010, which resulted in the first oil coming to the surface from the North Falkland basin.

So what you might think but the thing is that if Rockhopper finds more oil and this is developed by them or one of the huge petrol companies like BP or Shell, where on earth will all the supplies come from. Of course if Rockhopper sells to Petrobras then that will also be an interesting twist but if it is developed by a British company and if there is an accident where will the aid come from. The UK is 8,000 miles away and with no open ports to British boats bound for the Falklands on the Atlantic side of South America, there will certainly be a lot of head scratching.

With Brazil rapidly becoming the epicentre of deep oil drilling expertise, as a result of the Pre-SALT oil discoveries, logic states that support would come from there. Maybe it is a good thing that even if oil is discovered in great quantities, it will not be commercially available for some years. This will give time for the diplomats and politicians to work out a solution, which of course could be that the Falklanders decide to go for independence.

Anglo Brazilian Society Garden Party September 10th 2011

The Anglo Brazilian Society summer Garden Party was held on Saturday September 10^th 2011 in Mr and Mrs Roger Whittely-Smith’s delightful gardens in Wimbledon. My wife and I had never been to one of these events before and so we were a little unsure what to expect, but we discovered that we need not have worried, as it was an extremely friendly group of interesting and interested people.

The first thing of course on entering the house was, as you might expect at anything which involves Brazil, is to be given a Caipirinha, chock block full of crushed ice, sugar, sliced lime and a really good dollop of Cachaça. This one had a really good dose of Cachaça, tasted delicious and set the scene for the eveing. The first person I chatted to was Michael Gabriel, the Chairman and helped by us meeting previously at a Brazilian Chamber event, the conversation flowed and I must admit that I am unable to remember much of what was said except that it was all very interesting and amusing.

We found ourselves chatting to a whole host of people, as we flowed out into the garden and then when it began to rain, flowed back into the house and then back into the garden again. During all this time we were all being followed by the kind gentleman with the huge jug of Caipirinha, who seemed to sense exactly the right moment to top up one’s glass, and the very friendly waitresses, who had a seemingly inexhaustible supply of delicious empadas, cochinas and pao de quiejo, amongst others.  They seemed to be everywhere all the time with full plates of the tasty food and like the Caipirinhas, we and everybody else was very served all night long.

All too soon the sun set and it became darker and darker, but just before total darkness, Michael called for some hush and said a few words of well-deserved thanks to Christine and Roger for hosting the Society and for Ellie and the team at the Brazilian Consulate for organising it all. It was now nearly 9 o’clock and everyone was leaving after a delightful relaxing evening, safe in the knowledge that the Anglo Brazilian Society was in strong and safe hands.

If you weren’t there, then make sure you go to the next party.. they really are excellent and well worth attending. Please also remember all the other cultural events that the Society puts on – musicals, Theatre trips and talks http://www.anglobraziliansociety.org/events.html   – it really is a very active group. Finally many thanks to everybody at the ABS for a great evening.