Luiz Braga, Vice President & Geomarket Director, Latin America, CGG, Brazil
Luiz Braga, Vice President and Regional Director Geomarket Latin America, describes the activities of CGG in Brazil, which are spearheaded by its BroadSeis technology. With a long history in the country, having been present since 1961, Luiz Braga illustrates his vision of how CGG will move forward in an exciting period of expansion for the Brazilian oil and gas industry.
CGG acquired Fugro’s Geoscience division in January 2013 just before you joined the company. How has CGG integrated these business activities and what have been the highlights for you professionally since you arrived, a little less than a year ago?
I have experienced about two or three acquisitions over my career and they have not always been so easy. What struck me about the way Fugro Geoscience joined the wider CGG family was the warmth of the welcome and the smoothness of the process. The integration process had been well prepared, which facilitated the transition moving forwards. Also the new capabilities of the new CGG complement each other very well.
One year on, we are all working together harmoniously which is an outstanding achievement.
My mission when I arrived was to refocus our Latin American businesses, including developing a particularly engaged business here in Brazil. This was the principal objective of my new role. I think that the maturity and professionalism of our staff have helped contribute to this new emphasis on Brazil, and also allowed me to move the company forward utilizing my own management style. The market has also responded very well to the increased and wider services our new company now offers, with CGG being a market leader in seismic services and the businesses of the ex-Fugro’s Geoscience division excelling in non-seismic and geoscience services.
In that respect, how does the full geoscience portfolio of CGG’s services reduce operators’ risk, and how do your services make exploration more certain and production more efficient?
By now, being a fully integrated geoscience group we have a strong portfolio of products and services that can add value at every stage in the Exploration & Production workflow. In particular, we have a new geological and geophysical consulting services organization, GeoConsulting, which brings together all of our geological and seismic reservoir expertise and includes our unique line of Robertson geoscience consulting services and multi-client products. Robertson represents 250+ geologists who have unique knowledge of basins around the world and market a rich and comprehensive library of complementary datasets ranging from geological reports, geochemistry and hydrocarbon seep databases to well data grav-mag and seismic surveys. As well as giving our clients a competitive edge, this powerful planning tool also helps CGG select the most prospective new areas and best survey program and parameters for its multi-client business.
The integration of seismic and non-seismic services is therefore a unique differentiator for us within the market that allows us to better understand and serve our customers. This is because when we look at the remote observations we make of the reservoir with geophysics, the interpretation of these results has to be correlated with the geology, the reservoir rock itself, which is the ground truth. The more we understand of the geology the more we can constrain our geophysical predictions to get as close to the reality as we can. This is powerful knowledge, which will help us design better geophysical surveys and provide more accurate results for reservoir modeling. It allows us to extend the value chain of geophysics and seismic further in the E&P cycle.
One stop-shop operations are a key tool for making sure our customers receive services they are fully happy with. Being able to offer multiple technologies and solutions tailored to customer needs is highly important. Managing to deliver sophisticated solutions that work in a complementary fashion is a challenging undertaking; it is a process that must be continually developed as technologies progress, yet one which is essential to delivering value-adding customer services.
This broad technology portfolio allows customers to acquire data that suits their needs, both for finding oil and for making sure they extract the maximum yield from a well. On the non-seismic side, particularly with regard to airborne geophysics, CGG has a leading range of integrated services. The ability to tailor our services to customers’ needs, delivering precisely the solution required for the challenge faced means that our customers receive accurate data in the format they require. The more information they have, the less risk they face.
How does CGG’s international presence help to create loyalty to your brand within Brazil, and how are you ensuring your surveys are considered to be the most accurate that geoscience can offer in Brazil?
CGG has been operating in Brazil since 1961 and therefore has significant insight and experience of the country’s E&P challenges. During over five decades of continuous business here, CGG has always been committed to bringing the best of its technologies to Brazil to ensure we offer the latest innovations and capabilities. A recent example is our BroadSeis broadband technology that has brought high-quality imaging around the world, and which we have been deploying for our multi-client surveys offshore Brazil since 2012 in order to provide a better understanding of the region’s geological potential. We also develop customized solutions to meet the specific local challenges faced. In both cases, we draw on the experience we have gained from our international operations around the world, where we face all kinds of technical or operational challenges, and then link this in with the geological resources we have, which I have already described, to design the best, fit-for-purpose solutions to meet our customers’ needs in Brazil. The best proof of this approach is the fact that major discoveries, such as Tupi, were discovered on the basis of our data, or bid rounds, such as Libra was actually based on our data.
The real validation comes from the use our clients make of our services. For example, CGG’s BroadSeis technology has received a great deal of attention, and has been significantly refined by our company. The company is convinced that CGG’s broadband offering, including BroadSeis technology, is a key differentiating factor between CGG and other geophysical survey companies in the market.
What future do you envisage with regard to geophysical and seismic survey work and the IOCs?
Initially, we expect a lot of activity in the coming years on all the blocks recently awarded. We see the IOCs having a greater role to play in financing survey work. This expectation is very encouraging because this would offer the prospect of a more diversified mix of clients.
The Espirito Santo Basin has a mix of licensed areas and open acreage. How does CGG make sure it competes in these areas?
Multi-client surveys in Brazil have become the preferred business model, as the operator transfers risk to the surveying party. CGG seeks to promote the multi-client model using the best technology. This strategy is also eagerly pursued by the operators.
In an area with strong potential for future concessions, CGG is confident that the quality of its data is such that we are a preferred provider of these services. The one factor that concerns CGG in operating ahead of a bid round for concession areas is the amount of pre-funding that is available. This obviously affects the amount of risk that CGG faces when preceding with a survey.
In terms of acquiring data, CGG recently announced it was reducing the scale of its fleet. What is the motivation for this change?
The roadmap for our Marine Acquisition business is to continue the repositioning and reformatting of our fleet on our core high-end vessels, which include the four modern C-class vessels recently acquired from Fugro Geoscience, and on high-technology market segments. This reduction in the size of our operated fleet will lead to a significant reduction in fixed costs, in investments and hence reduce the volatility of Marine earnings and improve cash generation throughout the cycle. We will maintain the critical size to retain a world-leading position, address the global regional markets and consolidate CGG’s leadership in the high-end broadband and global solution marine market.
Last year, 2013 saw the first bid rounds in five years take place. It looks unlikely that 2014 will see any bid rounds however. How does CGG deal with this variance in new opportunities coming forward?
It is very important to have a broad range of technologies in this context. The 2013 onshore bid rounds opened up a number of opportunities for the company’s non-seismic technologies. CGG is, however, not so keen to restart pursuing land-based seismic prospects without a clear indication that the market would make this a secure investment.
At the same time, CGG secured a backlog in 2014, and new bid rounds are expected in 2015. In this manner, CGG has covered its risk.
What new technologies is CGG developing currently, in particular with regard to the Brazilian context, and what technological imperatives are pushing your company forward at the moment?
CGG’s Broadseis and broadband technologies are still so new that I do not consider that clients have as yet extracted the full value from these tools. This is a current focus for our clients.
As to the future, clients will seek further illumination, clarity and detail in the data. Currently CGG is in a partnership with Petrobras, and imaging and data production is a clear emphasis for research. Very importantly, we have our Technology Center in Rio, which is largely dedicated to Petrobras yet also open to other clients. Here, our local experts who are experienced in processing Brazilian data and benefit from the backup of CGG’s world-leading global R&D network, are working to solve technological questions in a way that is completely dedicated to the local challenges, conditions and local clients.
Offshore, CGG is pioneering new technologies as well. Clearly, with Brazil’s significant focus on this area for new development, companies such as CGG must pay attention to this sector as well. Ensuring operators are able to fully understand their wells as production is ongoing will need a degree of emphasis, and CGG will seek to address this requirement.