Brazilian OSX, an EBX Group company, is to start building South America’s biggest shipyard in 2011.
Over the next decade OSX will deliver 48 offshore platforms worth USD 30 billion to its sister company, OGX. Both companies belong to the EBX Group, which is known as the most rapidly growing business empire in Brazil. OSX was founded in 2009 to meet OGX’s enormous need for production units following major oil finds.
Eduardo Musa, OSX’s Director for Engineering and Chartering, found the offer of a job with the private oil company impossible to refuse last year.
“This is the first time that Brazil has had a company that can compete with Petrobras, and this was an opportunity to participate in building something new,” Mr Musa says. He is a trained naval architect specialising in the offshore sector and had worked for Petrobras for 31 years when he joined OGX – and then a few months later went on to OSX.
Following major finds over the past few years, OGX has potential resources of 6.7 billion barrels, according to DeGolyer. In comparison Petrobras has confirmed oil reserves of around 15 billion barrels.
“Due to the scope, the president of the EBX Group, Eike Batista, saw that it would be difficult to meet the national content requirement stipulated by the Brazilian Petroleum Directorate (ANP) – that 70% is to be produced in Brazil. The country did not have the infrastructure to build all the platforms that OGX needs and the idea was originally to build our own shipyard. Since then, the idea has developed and OSX currently offers the oil industry integrated solutions related to production. We develop projects, build the platforms, lease them to OGX and also operate the units,” says Mr Musa.
In total, OGX stipulates that it will need 48 new production units from OSX over the next decade, with a peak in 2016.
South America’s biggest
In April, therefore, OSX will start to build what will be South America’s biggest ship-yard. It will be located at Açu in São João da Barra, 340 kilometres north of Rio de Janeiro, and will cost OSX the sum of USD 1.7 billion. Steel fabrication will start in September 2012 and the first platform, OSX-3 – an FPSO, will be delivered in 2013. South Korea’s Hyundai Heavy Industries owns 10% of the shipbuilding division, OSX Shipbuilding, and the two companies have entered into an agreement to transfer technology and the know-how which is to give OSX ‘Asian efficiency in two years’.
“The shipyard covers an area of 3.2 million square metres and we will have a dry-dock of 130 x 480 metres, a 2,400-metre-long quay and a crane that can lift 1,600 tonnes. In addition, we will have a large area for building wellhead platforms which OGX also needs since the biggest finds have been made in shallow waters,” says Mr Musa.
A head start
At the beginning of 2010, OSX bought its first FPSO from ailing company Nexus, and OSX-1 has been chartered to OGX for 20 years. After being modified in Singapore, it will be used to produce oil on the Waimea field off Rio starting in May 2011. OSX-2 will also not be built in the company’s own shipyard and invitations to tender for this contract have been issued. OSX-3 will be the first that the company builds itself. OSX-1 is classed by DNV.
“We inherited the DNV classification, it was not something we chose, but we don’t regret it. DNV is a very respected classification society. We could have changed classification society but felt that DNV knew a lot about the unit and met our requirements,” says Mr Musa.
“OGX has ordered us to only cooperate with three classification societies: DNV, BV and ABS. We naturally intend to continue our collaboration with DNV but will also ask the other two players for prices. However, I think that DNV already has an advantage because they know our first unit and the way in which we work,” he continues.
Rapid growth anticipated
Both OSX and OGX form part of the EBX Group, which is owned by Brazil’s richest man, Eike Batista, and the rapid expansion is characteristic of his business operations.
“That’s a feature of the whole group. Most of his companies are new and they all have projects which are often described as aggressive and bold. OGX will start to produce oil in 2011 – when it will produce 20,000 barrels. In 2015, the production volume will according to the business plan be 730,000 barrels, while it will be 1.38 million barrels a year in 2019. In order to reach these production goals, we must deliver OSX-3 and three wellhead platforms (WHP) to OGX in 2013, five WHPs and two FPSOs in 2014 and six WHPs and four FPSOs in 2015. In 2016, we are to deliver 11 production units – and that’s something that would be considered quite incredible by any company in the world,” says Mr Musa.
This ambitious plan is necessary to satisfy the needs of OGX.
“You can say we have an umbilical link to them. OGX has experienced enormous growth and as a consequence OSX has also grown rapidly in a short space of time,” says Mr Musa.
A new North Sea
Statoil is among those that call the Brazilian continental shelf the new North Sea, and that is an opinion shared by Mr Musa.
“Yes, this is where it’s all happening, and the boundaries we have crossed, especially with the discovery of the pre-salt oil, mean that the oil industry’s focus will be on Brazil during the next few years. We are talking about a huge amount of high quality oil. Due to the Brazilian requirements concerning national content, those who want to be involved have to come to Brazil. The level of activity will be high in the coming years,” says Mr Musa.
Text: Runa H. Tierno
Date: 08 March 2011