Brazil, long the home of a Norwegian princess, is now becoming the new favoured destination for Norwegian companies keen on expanding abroad. Major investments are being made in oil, shipbuilding, aluminium and furniture production, prompting a government minister to fly on down to Rio for a visit this week.
Brazil’s economy has grown quickly in recent years and Norwegian investors want a piece of the action, reports newspaper Aftenposten. Many have already succeeded. Newspaper Dagens Næringsliv reports that around 120 Norwegian are now established in Brazil, compared to 55 just five years ago.
Norwegian oil and energy minister Terje Riis-Johansen could thus leave some of his troubles at home and travel to Rio de Janeiro earlier this week on a mission, to attend South America’s largest oil exhibition and help more Norwegian companies gain access to the lucrative market.
Norwegian exports to Brazil more than doubled during the first six months of 2010 compared with the same period last year. Up by 143 per cent, the value of exports totals NOK 3.3 billion (USD 550 billion) so far this year, compared to NOK 2.8 billion for the whole of last year.
Investments have also risen significantly, growing almost five-fold from 1998 to 2008 from NOK 1.1 billion to NOK 4.9 billion. Major Norwegian companies such as Statoil, Aker Solutions, Norsk Hydro and Telenor have acquired footholds in Brazil.
Norway has traditionally exported large amounts of dried fish to Brazil. This is still a major part of what Norway sells to the South American giant with its 200 million inhabitants. Machinery and equipment to the growing offshore oil industry make up another significant part. The Brazilian economy is expected to grow by 5 per cent in 2010. The average per capita annual income based on GNP figures exceeds NOK 60000 (USD 10000).
Statoil sees Brazil as a core area for its future investments, despite the dominant role of Brazilian state-owned oil company Petrobras and stricter regulation by the Brazilian government. Possible changes in taxation may also make operations in Brazil less lucrative. President Lula da Silva has said that licenses already granted, however, will not be affected by tax changes.
Investment goes both ways
Norwegian authorities also welcome Brazilian investment in Norway. Riis-Johansen is courting foreign oil companies, asking them to take part in carbon capture research critical for the venture being carried out at Mongstad north of Bergen. The aim of the project is to investigate how to remove carbon dioxide from the emissions of a full-scale gas-driven power plant. Oil company Shell and energy firm Sasol are already taking part and in May this year Riis-Johansen asked Chinese authorities and oil companies to join in. According to Aftenposten this is what he also will now propose to the Brazilians.
Brazil conducts its own carbon capture research and Riis-Johansen says that Brazillians share his view that it is important for oil companies themselves to see the importance of taking part in the process.
The technology center at Mongstad (TCM) will cost around NOK 6 billion (USD 1 billion). Start-up is planned for the first quarter of 2012. Initially 100000 tons of CO2 will be captured but not stored as the aim of the project is to develop and test new technology. Norwegian authorities would like Mongstad to become an international research hub in the carbon capture field.
“We’ve spent a lot of money making Mongstad a global center and it’s important to gather information from various places and communities,” Riis-Johansen told Aftenposten. “At the same time it’s important to spread the knowledge we gather. This is not a local problem. Challenges to the environment are global.”
During a meeting with Petrobras, Riis-Johansen spoke warmly on behalf of the Norwegian oil service industry, parts of which are already active in Brazil. He also underlined the “great” opportunities available to foreign oil operators in Norwegian waters.
Petrobras has previously been active in Norway, but pulled out. Riis-Johansen pointed particularly to new possibilities in the Barents Sea, where the marine border dispute between Russia and Norway has now been settled.