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Interview

with Nestor Perini, Lupatech

29.07.2010 / Energyboardroom

You came into your current role at the helm of Lupatech a year ago; at the time what was the mission you were charged with?
To talk about Lupatech is to talk about my life because I have grown with the company over the past 30 years.
Initially, in 1980 we were dedicated to industrial applications, with a micro casting foundry that supplied the automotive industry. Four years later, we entered into the valve business and over a decade long period we expanded our portfolio for oil and gas applications. When we reached a strong position in the Brazilian market for this field we went out and bought companies elsewhere in Latin America to complete our offerings and expand our geographic reach. Simultaneously, we began to look into other products and services for the oil and gas industry.
In 2006 we made the decision to become a public company and concurrent with our IPO we began to acquire companies pertaining to the oil and gas business. In three years we bought 15 companies and invested a lot to increase the infrastructure of these organizations to improve their equipment. Overall, during this period we spent R$ 1 billion in CAPEX to create an improved portfolio for the market.

What has this period of expansion and acquisition been like for you as a manager?
There’s no secret to doing this; you have to concentrate your energy and people together and go!
Lupatech has been in the industrial business for a long time so we are used to creating. I dedicate my time to establishing links between companies and the businessmen that run them because more than money you need the sympathy of both sides. These acquisitions were not typical ones either; they were very strategic areas to complement a whole so we needed to create a friendly bond with every potential target. Money is only a part of the game because you need to convince others that the alternative you propose is the best option for all parties.

Of course, internally, you have to create a relationship between parties in order for acquisitions to work. How do you convince your clients like Petrobras, that during this period of transition and growth you’re still Lupatech at the core? How do you maintain your customer relationships?
In the past Petrobras knew our company as a valve company. Through these acquisitions we have bought technology and relationships so it’s a natural progression to conglomerate these aspects. Petrobras understands this and has agreed with our movements. I think it’s important for them as a national oil company to have support from domestic suppliers and know that they can reach out to local companies not just international ones.
Lupatech is a small to medium player but step by step we can transform into a larger player and provide to Petrobras some necessities and solutions to their challenges. This is moving in the right direction and we are following not only what Petrobras wants but what Brazil needs.

Does Lupatech’s benefit to the client come more in the upstream or downstream?
Up until now, the downstream has been our niche but we’re dedicating more of our energy and investment into opportunities upstream. This means more product development for upstream applications and preparing experienced people to tackle the market.
As a result of our efforts we’ve recently been able to capture a five year, $779 million contract with Petrobras to provide offshore services. We’re offering a technical solution at or above the level of others in the market and we’re doing it at the best price so this was not a decision of national or international but rather a technical one.
That being said, we’re a young player in the oil and gas arena and at the beginning of our history as an upstream services provider. Looking at the market today, the conditions to grow are there.

There is a lot of international competition looking to grab as much of the Brazilian market as they can. Do you see these entrants as an opportunity or challenge to Lupatech?
As a young player, we see many more opportunities than competitors in this business. The fact that Brazil is one of the most important markets at the moment with one of the world’s largest players – Petrobras – means everyone’s eyes are here so there are many possibilities for technical agreements to grow. When international companies look to enter Brazil they need a local company to partner in order to have production capacity locally.

Lupatech also signed and agreement in March with FINEP (Financier of Studies and Projects) which is art of the Ministry of Science & Technology in Brazil for the development of solutions in the pre-salt oil fields. What does this say about how you would like Lupatech to be seen in the market?
We are conscious of our current technological capabilities and how far we may be in comparison to big players such as Schlumberger, Halliburton and Cameron among others. However, if we look at the market, even in the pre-salt region it’s apparent that we can be present in 70% of the opportunities because they don’t require high-technology but rather conditions that everybody knows already.
Therefore, we know our limitations and the niches where we can focus our development in order to not compete with the big names as that would be a bad bet for us. As long as we know our competencies and the abilities of our people, we can establish our position steadily in the market.
That being said, we do have some technical solutions that are unique, for example, ropes and coatings.

Lupatech recently decided to create a new company called Lupatech Oilfield Services that will be tapping into the experience of industry leaders such as Joo Carlos de Luca. What does this mean for the group?
This is a new business for us. The genetics of Lupatech is in manufacturing but more and more we are putting energy into the services sector. We don’t have the experience to enter into the areas big players are participating in so we need an added edge which is why we have brought in experienced people to start something new.
Once we have established our partners, we need the patience to see things through and in the future we will be a true player in the industry.

One of the ambitions of the Oilfield Services group is to go outside to the rest of Latin America; will this venture pull Lupatech further into the international arena?
Lupatech defines the three main areas of opportunities as Brazil, Columbia and the Mercosur which is where we are concentrating our resources and energy. Of course, this is our first initiative and in the following steps we can open up to options further afield.

Lupatech has expanded aggressively in a short amount of time; how do you cope with the human resources?
When we buy a company, we keep the people. Today, we have a human resources Director in order to professionalize this process and orient our policies. We’re focusing on developing our talent internally so an obvious objective for us is retaining these people in a competitive environment. Keeping people means motivating them with both finances and challenges so that they want to stay within the company.
Lupatech is also beginning a program to attract new talent and somewhere that people want to expand their careers.

How would you describe Lupatech’s current perception in the market and the position that you want to take?
We’re at the beginning of the process. Lupatech is a local company with an aggressive strategy that gives investors an opportunity to put money into a driven company with lots of potential. We’re at a time where we can change the position of the company very quickly and we have to grow faster than the other companies in the market.

Many of the international players speak to the local content barrier in Brazil, how much of your success would you attribute to being a national player?
Local content is important but the main competitors are here and producing with their own footprints in Brazil so I don’t think this is the deciding factor. You need to offer world-class products and services at competitive prices so local content is only one condition. Petrobras needs good suppliers capable of delivering to their specifications, and if they happen to be local then even better.

Over the last three decades you’ve seen Lupatech evolve and radical shifts since 2006. Sitting at the helm today, where do you want to see the company in five years?
The company needs to be in a very different position than we are today. We have a strategic plan so we’re aware of what needs to be done. Our main goal is to grow quickly which will naturally put us at a different level in terms of size, sales and positioning. Speed to capitalize on the opportunities that are in the market today and in the near future is the most critical component.
Today, we’re in the right country and the right moment and while we need to create a position in other markets to export our offerings but the main story is here in Brazil – that’s why everyone else is coming here.

Do you have a final message to the readers of Oil & Gas Financial Journal readers?
Lupatech could be a very important national oil and gas process and services company based on our established strengths. We offer a good product with top-of-the line facilities run by experienced personnel with the technological, domestic and financial support to back up our operations while also having the potential for partnerships. Together, these factors mean we can transform Lupatech into a leader.

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