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Thinking local to drive growth

19th February 2014

An important market for Forum is Brazil and the company has opened two facilities in Brazil, a recently completed 7,000-squarefoot workshop in Rio das Ostras

Forum Energy Technologies is a global oilfields product company serving the subsea, drilling, completion, production and infrastructure sectors of the oil and natural gas industry

Forum Energy Technologies is a global oilfields product company serving the subsea, drilling, completion, production and infrastructure sectors of the oil and natural gas industry.

The company’s products include highly engineered capital equipment as well as products that are consumed in the drilling, well construction, production and transportation of oil and gas.

An important market for Forum is Brazil and the company has opened two facilities in Brazil, a recently completed 7,000-squarefoot workshop in Rio das Ostras adjacent to Macaé, which has emerged as the country’s main offshore supply centre, accounting for about 85 per cent of all Brazilian oil and gas production.

Forum’s other facility in Brazil is a small corporate office in Rio City Centre, situated near Petrobras headquarters and other major oil and gas business development offices. Based here is regional director, Paul Yaghmourian.

“There are huge potential opportunities for Forum products in Brazil, and we expect to be a major player within a few years,” Yaghmourian says. “Brazil is not, however, an easy market. We’re taking a step-by step approach to growing our presence, seeking to support existing customers and taking advantage of new opportunities as we learn more about the market and its challenges.

“The decision to open offices here was driven by the need to have a local presence in order to compete for new contracts in the rapidly expanding oil & gas sector, and also to support existing customers who have brought a lot of Forum equipment, purchased outside the country, into Brazil.”

The country’s oil and gas industry is characterised by demanding local content rules, which are usually set at 65 per cent, but can go as high as 73 per cent in some cases, which can be a challenge to some operators. “We have assembled subsea tools in Brazil, with high levels of local content, and our intention is to develop this further so that we have a range of locally-made tools on offer,” Yaghmourian continues. “In other areas, we shall continue to monitor developments and assess the needs of our customers before deciding whether to introduce local content.”

“In the case of Brazil, one key consideration is the Repetro scheme, which enables operators and contractors to import some types of equipment temporarily with substantial tax relief (making it difficult for local producers to compete on price). Changes to Repetro were introduced in December, which may increase the viability of local production in some cases.”

That said, several companies often point to what they describe as strict local content rules as one of the reasons why they are prevented from doing business in Brazil. “Doing business in Brazil does involve challenges; this is the case in any overseas market, but there are particular factors here that any company needs to be aware of to avoid potentially costly errors,” Yaghmourian concludes.

“The local content rules are just one example. It is essential to have a local presence in order to do business successfully in Brazil, and this can be achieved either by having a reliable local partner or agent, or by establishing an in-country operation as Forum has chosen to do. What is right for each company will depend on their own circumstances and ambitions for the market.”

 

 

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