Overview of Financing Requirements for Brazil s Offshore Sector - Opportunities & Challenges -

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1 Overview of Financing Requirements for Brazil s Offshore Sector - Opportunities & Challenges - Marine Money Offshore Forum, Rio de Janeiro, October 9th 2013 Dr. Carsten Wiebers (Global Head Maritime Industries) Bank aus Verantwortung

2 Active Lender in Maritime Industries Among the Top 10 in Maritime Finance 2012 Shipping Portfolio League Table Mandated Lead Arrangers Mandated Lead Arranger 3.000,00 Deal Value (EUR) (m) 2.500, , , ,00 500,00 0,00 Nordea Markets DNB Bank ASA Citi SEB ING KfW ABN AMRO Bank Sumitomo Mitsui Financial... DZ Bank M Source: Marine Money International, May 2013 Source: Dealogic, September

3 Maritime Industries Oil & gas offshore portfolio as of June 30, 2013 Pipelaying Vessel 7% Jack-up Rig 1% Seismic Vessel 3% Wind Farm Installation Vessel 13% Shuttle Tanker 5% Semi-Submersible Rig 17% Platform Supply Vessel 5% TOTAL USD 1.6 bn USD 1.7 bn FPSO 4% Anchor Handling Tug 20% Drillship 15% Construction Vessel 7% 3

4 KfW IPEX-Bank Selected Customers 4

5 Massive UDW Offshore Investments Offshore Spendings in 2012 by Country (USDbn) Source: Rystad Energy Frankfurt Mexico City New York Athens Norway Brazil US UK Angola Mexico Saudi Arabia Nigeria Australia Malaysia Mumbai Singapore KfW IPEX-Bank Desk Maritime Industries São Paulo SELECTED INVESTMENT PLANS Brazil India Mexico Malaysia Petrobras ~ USD 237bn ONGC ~ USD 200bn PEMEX ~ USD 115bn Petronas ~ USD 100bn

6 Investment Program in Brazil Offshore Support Vessels: Fleet by 2013: ~420 Required fleet by 2020: ~570 Additional: ~150 Drilling Rigs Water Depth above 2000 m: Fleet 2013: ~35 Required fleet by 2020: ~70 Additional: ~35 Production Facilities (FPSO): Fleet 2013: ~55 Required fleet by 2020: ~95 Additional: ~40 Total number newbuildings for the Brazilan oil & gas industry by 2020: ~225 Source: Petrobras, May

7 Local Content in Brazil Local content average ( LC ) up to 86% (exploration stage)/89% (development stage) in bidding round 6 (2005) Proof of LC LC Concession Owners Buyers/Contractors Shipyards/Suppliers Proof of LC Proof of LC LC LC 7

8 Financing Approaches Oil & Gas Offshore Assets for Brazil Limits of international and domestic banks Borrower/ Contractor Balance Sheet / Cash Flow Lending Increasing Local Content Requirements Ship Building Nation Vessel Financing Dig deeper Equipment Exporting Nation Equipment Based Vessel Financing 8

9 Asian (International) Built Vessels versus Brazilian Built Vessels Pre-Delivery Financing Post-Delivery Financing International Built Vessels Local Banks based on Yard Balance Sheet International Banks based on strong RG International Banks ECAs of Ship Building Nations Brazilian Built Vessels Local Content International Content FMM (Fundo Marinha Mercante) Local Banks International Banks FGNC (Fundo de Garantia para a Construção Naval) International Banks ECAs of Equipment Exporting Nations 9

10 Most prominent example: 29 new drilling rigs for Sete Brasil World s future largest drilling company with capex of ~USD 25 billion Average local content: 62% Rigs to be built at six Brazilian yards (EAS, Rio Grande, Paraguaçu, Brasfels and Jurong) Strategic alliances with local and international partners Local Content Financing BNDES FMM Bridge Loans Bonds (Project and Corporate) Commercial Financing Large potential to source ECA covered financing in supply countries Bridge Loans Foreign Content Financing Bonds (Project and Corporate) Commercial Financing 10

11 Financing Risks Specific to Local Building Program Pre-Delivery Learning Curve for local Brazilian yards; FGNC cover is limited in amount and tenor; Cost & Time overrun; Post-Delivery Coordination between BNDES, international Banks, ECA etc.; Verification of local content? Opex risk: (workforce demand of 200k until 2015*); Regulatory Risk (e.g. Chevron case); *Source: Priminp

12 Opportunities and challenges at the same time 12 Size of Investment Program Complexity of Technology/Innovation Regulation and Implementation Transparency of Process/Structure

13 Get in touch with us we will be glad to advise you KfW IPEX-Bank GmbH Palmengartenstrasse Frankfurt am Main Germany Dr. Carsten Wiebers Global Head Maritime Industries Tel: carsten.wiebers@kfw.de Sebastian Blum Director South America Tel: +55 (11) sebastian.schober@kfw.de Peter Haas Director Tel: peter.haas@kfw.de Thomas Ankele Project Manager Tel: thomas.ankele@kfw.de Luciana Queiroz Project Manager Tel: +55 (11) luciana.queiroz@kfw.de 13