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Interview

with Donizeti Carneiro , Managing Director, C&C Technologies

14.06.2010 / Energyboardroom

C & C entered Brazil with its AUV offerings nearly a decade ago. Can you describe the scope of your operations in the market today?

Our operations use vessels as platforms to launch equipments, covering the depth range from ultra shallow till our current technological capability of 4500 meters, allowing even to find debris of planes or vessels from accidents in such deep water.

Due to the structure of the Brazilian market, the majority of our resources are absorbed by the main oil & gas operator in Brazil. Bringing vessels to Brazil involves comprehensive and complex operation, including several permits from the Brazilian authorities.

C & C Technologies provides services that involve measurement of water properties to seabed topography, to seabed soil characterization. Our clients use these parameters to assist their underwater infrastructure construction. This is slightly broader from what C & C offers in the US, where the focus is seafloor mapping, surface and acoustic positioning. In Brazil the company has enlarged its scope of services on demand by clients after the success of our seafloor mapping. They have asked for our help in oceanography and environmental monitoring, which today makes up a good part of our revenues in the local market. Headquarters has seen the positive response to these operations and are now considering implementation of similar services in the US.

When our colleagues met your colleague – José Aguilar – in Mexico in 2007 he noted how the operations had grown 35% in one year. What has your growth story been like here?

C & C was awarded its first job in Brazil in 2002 for site survey and pipeline inspection, where was employed our Autonomous Underwater Vehicle (AUV) C-Surveyor I, a new technology at the time. The big advantage of the AUV is data quality, enhanced by the improved underwater positioning. Prior to using AUVs, companies used towed vehicles, which at a depth of 2000 meters meant dragging the device acquiring information up to 6 kilometers behind. For deep water projects, compensation of the difference in distance leads to wide margins of error in the data. Where’s the value in this? If you think a certain aspect of the seabed is in one location but it’s actually far away and you proceed to lay down a structure, you’re bound for difficulties.

The engineers saw the better quality data the AUV is capable of delivering, and the resulted improvements in their modeling programs, which enabled them to choose the best routes. At the time our strategy was to enter the Brazilian market on the deep water projects with our AUV technology. Once the engineers realized this was our angle, they have asked us to attend the shallow water projects as well.

Early 2004, we established a local office downtown Rio de Janeiro with half a dozen people and we began to work on bids eventually obtaining the right to bring down one of our vessels for the shallow water projects. Since then we have been doubling the number of employees and revenue year after year only slowing down the pace in 2009.

Today, what do the Brazilian operations represent for C & C Technologies globally?

Presently, the local operations represent a significant part of the group’s revenues. This is explained by two simultaneous factors: the fast growth of the local operation, concurrently with the slowdown in the Gulf of Mexico. Due to the multi-year contract obtainable in the Brazilian market, forecasting our work is easier than for our counterparts, elsewhere in our organization.

The challenge is to maintain these businesses and keep the vessels running. Having managed this division from the beginning, the hardest issue I face today is to lead a management team to maintain the momentum created here. Nowadays, I handle more of the overall strategy but I’m still involved in sales and sometimes gravitate into the operations side as well.

To what extent do you think Brazil can be a proving ground for what C & C can do?

Our technology chiefly comes from our US headquarters but we frequently examine possibilities elsewhere. Brazil is the present new frontier for oil & gas, especially located on unchartered territories and as such represents a tremendous potential for the kind of technologies we offer.

When we spoke with BW Offshore, Jan Kilde noted that fulfilling local content demands for human resources has been one of the biggest challenges. Being a foreign company how do you manage this?

C&C Technologies do Brasil Ltda is a Brazilian company and employs about 250 local people and nearly a hundred expatriates on our vessels. With offshore positions you need to multiply your crew needs by four times due to both 24-hour operations and crew rotation.

That being said we have to comply with the regulations. After the first two years, a vessel must operate in Brazil with 66% local content.

One of the issues we have to tackle is that the knowhow to operate our AUV technology rests in the hands of a few members. We have to disseminate this knowledge to the local workforce and incorporate more local talent.

What’s stopping you from partnering with a Brazilian shipbuilding group and creating a vessel under a Brazilian flag?

We’ve been exploring this angle for our future operations.

You currently have a good amount of work with the main oil & gas operator in Brazil but there are a lot of other IOCs entering Brazil. How do you see these relationships evolving, is there potential here?

With the present exploration model, the IOC presence is still comparably weak after more than a decade since the end of oil monopoly.

If you look back to 2002 when the first ANP blocks were being developed, the volume of IOC field development is not quite representative once compared with the national operator activities in the area. The sub-salt plays afford a bigger chance of finding oil, and its exploration model (once defined) will direct the IOCs investment in Brazil.

Despite the uncertainties and the high expense of extracting oil from deepwater, the IOCs still seem interested in coming, which probably has much to do with Brazil geopolitical position. These companies need to incorporate more local knowledge.

We need to continue working up to our standards and meeting the needs of our clients as this has been ultimately responsible for bringing C & C Technologies new projects in the market. Our clients have our guarantee that the work will be done correctly which is important because our line of services is in the critical path leading to production: if you mess up the survey it’s felt all the way downstream.

Today, we’re kind of entrenched in the Brazilian market, which is a turnaround from the situation five years ago. We have the preferred solution for the engineers, but we still have to bid in the market like anybody else so price is still a factor we have to consider strongly.

Do you see a lot of competition in the market or are you clearly in the lead?

There is a lot of competition in the market but we have the advantage of strong local presence, so when companies decide they need services we offer it promptly, then we are one step ahead of our competitors.

Compared with your larger competitors looking to enter the market would you consider yourself more of a Brazilian company despite your international origins?

We’re certainly a Brazilian company and our survey engineers know the client base. We have the right combination: a local company with access to foreign resources.

These operations have been yours since the very beginning, looking forward, what can we expect from C & C Technologies in Brazil over the next five years?

The outlook for the oil & gas market in Brazil looks very promising; we are preparing the company to match the demand. The main Brazilian operator plans to ramp up production by a scale of nearly three times in the next decade. To do this they need strong partnerships with service companies like us. All indications point to 2011 as being the year for this development to takeoff. We need to meet this demand with more resources in order to be ready and one step ahead of the competition.

Do you have a final message you would like to send on behalf of C & C Technologies Brazil?

We need to keep believing in the dynamics of the Brazilian market which has been moving forward despite seemingly backwards movements elsewhere. C & C is here to stay and we will continue to keep our clients trust through solid business. I personally invite everyone to check on our stand on the Rio Oil & Gas Expo 2010, in September from 13th to 16th. We are located at Annex 4, stands 13, 14, 15 and 16. Please come by and look for us.

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