Latin America Reports

Jotun Builds First Brazilian Factory

By Charles Thurston, Latin America Correspondent | September 17, 2012

Norwegian paint major focuses on marine and protective coatings growth.

The Jotun Group, of Sandefjord, Norway, is constructing its first Brazilian factory at Itaipuaçu, in Rio De Janeiro state—also its first in Latin America—to better serve the growing maritime coatings market there. The Brazilian maritime coatings market as a whole is estimated at about $45 million, according to Ferran Bueno, the managing director of Jotun, in São Gonçalo, across the bay from Rio de Janeiro. “The aim is to have strong growth in marine and protective coatings business in the country,” he said.

The new factory will produce 10 million liters per year of marine coatings and protective products once completed in late 2013, but plans exist to increase production five-fold if market demand presents itself, a Jotun executive told the Brazilian press in early August. For now, production at the new facility is expected to be consumed entirely in Brazil, Bueno said. The company maintains offices and a warehouse nearby in São Gonçalo.

Brazil has been expanding its maritime fleet as well as its oil and gas rig fleet, inspired by recent discoveries of pre-salt oil reserves off the shore of Santos state, adjacent to Rio de Janeiro. Onshore and offshore equipment involved in sub-salt oil production require special corrosion protection coatings.  The Associação Brasileira de Corrosão, the national corrosion association, recently published findings that the application of appropriate corrosion protection in Brazilian industry saves 75 percent of the cost of replacement due to corrosion.

Jotun in 2008 signed a contract with state oil company Petrobras’ Transpetro unit to supply about 250,000 liters of dry dock coatings per year for fleet maintenance. Transpetro has a fleet of 52 vessels, and 26 more have been ordered. Brazilian law requires Petrobras to maintain a 70 percent local content percentage within supply chain requirements.

In June of last year, Petrobras awarded GE Oil & Gas a $120 million, four-year service contract for repair, maintenance and retrofitting Petrobras’ fleet of subsea equipment in the Campos Basin. This year, GE plans to open a $100 million investment Global Research Center in Rio de Janeiro.

A recent study by Universal Consensus indicated that Petrobras plans to spend $224.7 billion in their supply chain during the 2011 to 2015 time period, as the company aims to triple its oil production by 2020 from its current 2.1 million barrels per day. Petrobras’ latest new business plan, in July 2011, called for “16 floating production and offloading platforms and/or modules and 28 offshore drilling rigs, which are currently being re-tendered,” the consultant reports. By 2017, the company expects to have at least 63 drilling rigs, and will continue to operate the world’s largest offshore rig fleet.

Apart from oil and gas-related vessels, Brazil is expanding its navy. In January, BAE Systems, based in Arlington, Va., won a £133 million contract to supply three ocean patrol vessels to Brazil, along with ancillary support services. The contract includes a manufacturing license that will permit additional vessels of the same class to be built in Brazil, BAE indicates.

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