brazilian outlook 2010
TRANSCRIPT
AUGUST 2010
About Us
Headquartered in Rio de Janeiro, Mello Martins is a multidisciplinary team formed by
attorneys coming from across Brazil s largest companies and best law firms.
Its expressive experience was acquired during decades of good services rendered to both
legal and business arena
Mello Martins assists a full range of different companies from all over the world in
structuring and executing large-projects for oil & gas, biofuel, mining, infrastructure,
environmental, equipment and services trade commerce, M&A operations, assets
commercialization, international and domestic project financing and capital markets.
Solutions provided by Mello Martins attorneys are custom tailored to fit the Client s
specific and unique needs based on a variety of practices such as litigation, taxation,
administrative and regulatory compliance, corporate governance and policies,
environment and sustainability, labor, arbitration and dispute resolution
Why Brazil?
TERRITORY:
8.5 MKm2
5th largest territory
4.600 Km from North to South
4.400 Km from East to West
The GDP Growth Is Jumping From 0.21%
in 2009 TO 5% to 6% in 2010 according to
local authorities;
The investment grade rating awarded by
moody’s in 2009 just after the 2008 global
financial crisis…
…confirmed the same rating released by
S&P and Fitch in 2008.
Brazil as the host of the FIFA World Cup in
2014, has already opened a bunch of new
opportunities…
…as well specifically Rio de Janeiro, due
to the election as the 2016 Olympic
Games host.
Where are the Opportunities?
ProductRank
(Producer)Rank
(Exporter)
Ethanol 1st 1st
Sugar 1st 1st
Coffee 1st 1st
Orange Juice 1st 1st
Soybean Products 2nd 1st
Beef 2nd 1st
Tobacco 2nd 1st
Chicken Products 3rd 1st
Pork Products 4th 4th
Infrastructure Overview
Toll Roads:
Investments: $18.5 billion through 2010 (PAC)
Main Projects: - SP Ring Road South Section;
-3rd phase of Federal Toll Road
Concessions Program;
-2nd phase of SP Concession Program.
Railroads:Investments:
US$ 4.4 billion through 2010 (PAC).
US$65.5 Billion for expansion and maintenance, according to
National Logistics Plan estimation up until 2023
Main Projects:
-North-South Railroad (Transnordestina);
-São Paulo – Rio de Janeiro high speed train;
-Rio De Janeiro Local subway project for 2014 soccer World Cup
Infrastructure Overview
Airports:
Investments: $1.7 billion through 2010 (PAC)
Main Projects:
-BID for International Airports Concessions (e.g., Rio de
Janeiro & Campinas);
-Expansion of Guarulhos airport
-Construction of a 3rd international airport in SP;
- BID FOR SP state OWNED airports
Airport is a critical issue for 2014 world cup and 2016 olympics. São Gonçalo Airport, in natal, now under construction, will be the largest one in Latin America when completed.
US $ 2.5 billion will be invested in different world cup host cities such as Brasilia, Rio de Janeiro and Sao Paulo for modernization ot their airports starting this year..
Energy - Generation
Since last year, private companies have started the construction and
commissioning of 14 new energy plants, being 12 Hydroelectric, 01 coal fired and
01 Nuclear powered.
With all those investments Brazil will reach a significant number around 10.602,28
MW of power delivered, being 7.000 MW by the end of 2010.
The deployment of more than 2.700 KM of power lines will increase the
integration of all Brazilian regions.
Energy - Renewable
The Brazilian government shall put 399 wind farm projects and 79 other
renewable energy projects up for bidding this year of 2010.
The projects, if approved and completed, would add 14,529 MW to the country's
electric grid, an amount just slightly greater than the generating capacity of Itaipu,
the world's largest hydroelectric power plant, which Brazil operates jointly with
Paraguay
The Brazilian Oil & Gas Sector
Over 60 oil companies with oil
exploration and appraisal areas in Brazil
Petrobras 2010-2014 investment: US$
224 Billion
819 oil blocks auctioned; Petrobras
plans to contract about 300 new vessels
(e.g. oil drilling and production platforms,
ships, platform support boats, and very
large crude oil carriers)
Challenge: Heavy emphasis on local
equipment content. Complex suppliers’
registration process with Petrobras
Pre-salt oil fields: Petrobras
plans to invest USD$ 111.4
billion from 2009 to 2020 to
produce 5.7 million bpd plus
1,815 million bpd from pre-salt
fields. This figure includes
Petrobras and its partners’ pre-
salt production.
PETROBRAS bounces
back as #1PETROBRAS is the first company regarding market value at Brazil andentire Latin America (R$ 252,828 Billion).
With the recent governmental decision regarding the capitalization ofpre-salt at US$ 8,51, PETROBRAS stocks are expected to rise. After thestatement concerning the amount of the barrel, the stocks raised 1.12%.
The actual potential recoverable amount of Oil equals to all the PETROBRAS production for 57 years and the total of its proven reserves (10 – 16 Million BoE).
Pre Salt Phases
Data Acquisition
(2016)
1st PhaseDefinitive
Development(2013-2016)
2nd PhaseDefinitive
Development(2017-2030)
Small Scale
Production of long
term tests and
Tupi – exploratory
wells.
Large scale
production (>1
Million barrels/day
at 2017)
2 pilot wells
(Guará & Tupi), 8
FPSPs
Growth of
production
New Production
Unis
Primary Demand for Energy
PETROBRAS business plan 2010-14: US$ 224 billion
Targets 2010-2020
Production, Refining and Demand
Production, Refining and Demand
The exploratory activity in
the Solimoes Basin
With the new auctions for the
concessions of exploratory blocks in
Brazil still undefined and the
prospect of new discoveries focused
more and more on the pre-salt area,
this part of the frontier located in the
North Region, in the heart of the
Amazon jungle, is emerging as one
of the strongest bets in Brazil —
especially after the entry of the
newcomer HRT Oil & Gas, a
Brazilian oil company that will take
over the operation of 21 blocks in the
region. It intends to invest the
significant sum of US$ 140 million.
One of the largest onshore sedimentary
areas in Brazil, deep in the heart of
Amazonas, will take on a new pace
beginning at the end of the year.
With a proven potential
for high quality gas and
light oil, the production of
the Solimoes Basin
already totals an
accumulated 200
million barrels BOE
World Cup
With a budget estimated at one hundred (R$ 100) billion Reais, the 2014
World Cup ("Cup"), shall be the largest sports event ever held in the history of
the country, comparable only to the 2016 Olympic Games, an event which will
be hosted in the City of Rio de Janeiro and will have a budget of approximately
thirty-four billion Reais (R$ 34 billion).
Investments needed in all of the 12
selected cities (Rio de Janeiro, São Paulo,
Belo Horizonte, Porto Alegre, Curitiba,
Brasília, Fortaleza, Salvador, Recife, Natal,
Cuiabá and Manaus)
Conscious that Brazil needs to address
the current deficient infrastructure in some
parts of this huge country, the Brazilian
government has announced several
ambitious investment plans for the near
future
Urban Development
The seaport region, including the areas of
Saúde, Gamboa and Santo Cristo will be
further developed and in need of
investment for residential properties,
commercial buildings, restaurants,
theaters, museums, shopping centers and
more.
The Urban Development is linked to the
expected growth in tourism, which has a
deficit on hotel numbers. The projected
target is 11.000 new rooms, which
amounts to 20 to 25 new hotels across the
12 cities which will host the games.
Transportation
Airports
On 31 August 2009 the state airport management agency
Infraero unveiled a R$5.3 billion (approx. US$3 billion, £2
billion) investment plan to upgrade airports of ten of the
venue cities, increasing their capacity and comfort for the
hundreds of thousands of tourists expected for the Cup. A
significant amount (55.3%) of the money will be spent
overhauling the airports of São Paulo and Rio de Janeiro.
The investment figure covers works to be carried out up to
2014.
Railways/Subways
A new subway line is planned and the massive
upgrade of the stations and systems is planned.
Construction of a VLT (Light Rail Transit
vehicle)
Transportation
Seaports
The special secretary of ports announced that R$700
Million will be invested at the expansion of the
seaports at 7 cities. Rio de Janeiro seaport will be
one of the key expansions
This sector is expected to attract more than US$20
billion in investments for the next 5 years.
TAV
In September 2008, Brazil's Transport Ministry
announced the High-speed rail in Brazil, a project
for the World Cup connecting Campinas, São
Paulo and Rio de Janeiro. This would cost R$11
billion (approx. US$6.25 billion, £4.1 billion)
High Speed Train
Construction, operation and
maintenance of a High-Speed Train
system between Campinas/ São Paulo
and Rio de Janeiro, with stations in
Viracopos Airport, Guarulhos Airport,
Jundiaí, São José dos Campos, Volta
Redonda, and Galeão Airport;
Integration between the two largest
urban areas in Brazil and the
improvement of their competitiveness,
due to the reduction in the travelling
time and in transportation costs
Possible path of the project
Concession Period: 40 years
Construction Period: 5 years
Start of Construction: 2010
Opportunities
Construction - Planning and execution of all
stages of building works on infrastructure,
transportation and leisure, further to refurbishment
and construction of sports stadiums and arenas.
Cement & Steel Industry - As a result of diversified
investments in civil construction, the cement industry
foresees a significant increase in the next years, as well
as the steel industry, concerning steel production and
treatment.
Sanitation - Development of several measures at
the host cities aiming at improving the sanitary
conditions of a certain region through the appropriate
sewage, water distribution and garbage administration
treatment. 12 million houses have yet to be serviced –
Just in Rio de Janeiro, 50.8% of the houses have no
sewage treatment, as an example.
Opportunities
Power - Development of undertakings related to the
production and distribution of different forms of power to
meet the demand that the infrastructure works will
generate, always seeking the implementation of
alternative power in such undertakings, to cause less
impact to the environment.
Real Estate - Construction and sale of
infrastructure undertakings in the host cities,
such as hotels, apartments, flats or any other
means of accommodations for the tourists
expected to visit all host cities.
Tourism - Development of activities related to
the construction and/or management of tourism and
leisure undertakings in the host cities.
Opportunities
Airports and Ports - The great increase in demand
caused by those sports events will require considerable
refurbishment works of the airports in cities hosting the World
Cup and Olympic Games.
Ground Transport - Performance of the road
infrastructure works required to improve the ground
transportation structure at the cities involved in the
events.
Publicity - Development of projects intended to
advertise ideas associated with the competitions as well as
negotiations of sponsorship quotas for the events, in
different media.
Opportunities
Technology - The global aspect of both competitions
will demand the development of products and services of
information dissemination, communications, Internet and
broadcasting of the competitions to the entire world.
Likewise, the indirect demand for technology applicable to
infrastructure works will be considerable.
Language Courses - Development of language
courses, especially English and Spanish, in the host cities,
to qualify the local population to receive the great number
of tourists that the country will attract by hosting the two
competitions.
Rio - Olympic City
Areas to be developed:
• Construction/improvement of the arenas that shall
hold the Games;
• Rental and disposal of equipment (vehicles, medical
devices, identification and security equipments);
• Accommodation and leisure activities for athletes
and attendees from all over the world , including
modern press facilities;
• Improvement of public transportation used in the
2014 Soccer World Cup;
• And also Airports, Toll Roads, Energy, Urban
Development, Ports, Sanitation and more!
Organization Structure
Opportunities
An aquatic sports stadium with 18,000 seats with an estimated construction cost of US$40
million;
An Olympic Park to host gymnastics, cycling, handball, and other sports competitions with
an estimated building cost of US$200 million.
An Olympic village of 32 buildings with 12 floors each and a capacity of over 17,000 beds,
estimated at US$450 million.
An Olympic Tennis Center with 16 courts (US$45 million).
A renovated rowing stadium at Rodrigo de Freitas Lagoon, which will cost approximately
S$2 million.
An arena in Copacabana for beach volley (US$7 million).
The renovation of Maracanã Stadium (where the opening and closing Olympic ceremonies
will be held as well as soccer games) will cost approximately US$400 million, and must be
completed before 2014 to use in the 2014 Soccer World Cup.
Tourism Opportunities
2010: The number of visitors to the city is expected to increase 10% in
comparison to 2008, when 1.68 million tourists visited Rio.
After 2014 Soccer World Cup and 2016 Olympic Games, this number will
increase even more.
Several hotels are being refurbished.
Authorities from Rio may reduce taxes to attract new investments in hotels;
thereby creating opportunities for International hotel chains in refurbishment,
architectural projects and building or acquiring existing facilities..
THE INVESTMENT IN TOURISM INFRASTRUCTURE FOR 2016
SUMMER OLYMPIC GAMES IN RIO DE JANEIRO are expected to be
worth approximately USD 6 Billion.
The estimated investment in infrastructure is about US$15 billion, including
US$5 billion in logistics upgrades at seaports and airports.
The main projects include:
• The modernization and enlargement of the two International Airport terminals
(increasing the airport’s capacity from 15 million passengers per year to 25
million);
• Highway widening, Construction of ―Olympic lanes‖;
• The Port of Rio area revitalization to include a new 30,000 square meter
leisure area featuring bars, restaurants, an amphitheater, a multiuse space
and parking, Port dredging, Construction of two new subway lines;
• The creation of a Bus Rapid Transit (BRT) system, Housing projects
(including low income housing) and water sanitation.
Infrastructure Investments
Contact Us
MELLO MARTINS ADVOGADOS
Bruno Gonçalves - Partner
Brazil - Rio de Janeiro
Rua México, 90 – 8º andar
Centro - CEP 20.031-141
Telefone: 55 21 2196-6000
Fax: 55 21 2196-6001
www.mellomartins.com