Rolls Royce Increasing Investments in Brazil

Relying on the expected growth of the O&G industry in Brazil and the influx of new rigs and FPSOs in the Brazilian offshore market, British manufacturer, Rolls Royse is set to make a $60 million investment in a new plant to build energy modules for offshore rigs. The plant will be located in Santa Cruz, in the outskirts of Rio de Janeiro. The manufacturing plant is slated to begin operations by the third quarter of 2012. Rolls Royse is also seriously considering another $60 million investment in Brazil in the next 2 or 3 years, in the O&G sector and in other sectors such as airplane turbines.

The location in Santa Cruz was chosen because of its proximity to the company´s client base in Rio de Janeiro and also to its proximity to the Campos Basin, where over 80% of the Brazilian O&G is produced, it is also near the Santos Basin, where most of the major pre-salt finds are located and where the new Brazilian oil boom is actually taking place. The fact that the Itaguai Port is very close is also a definite bonus as it will be used to import most of the equipment that makes up the energy modules. These equipments are all built in the United States. The port will also be used to transport the finished modules to the offshore rigs, when necessary.

In 2010, Rolls Royce South America earned in excess of $700 million and these earnings are forecast to double in the next 10 years with the increase in shipbuilding along with new rigs and FPSOs already in construction or already ordered. Brazil is responsible for around 80% of Rolls Royce´s business in South America and it would be safe to speculate that this percentage is bound to rise even further in the next 5 to 10 years.

Claudio Paschoa