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Financing the Brazilian Maritime Sector

Luís André Sá d’OliveiraHead of O&G DepartmentOctober / 2017

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Estabilished in 1952.

100% state-owned company under private law.

Key instrument for implementation of Federal Government’s industrial and infrastructure policies.

Main provider of long-term financing in Brazil.

Emphasis on financing investment projects.

Team of 2,800 employees

Robust processes and structure regarding compliance and risk management

New operational policy since January, 2017: priorities focusing on projects qualifiers (innovation, sustainability, health, education, infrastructure, exports, SMEs).

General Information// Highlights

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Companies: agro-business, industry, trade and services etc.

Cooperatives or associations

NGOs, OSCIPs or Foundations

Rural producer

Truck drivers

Micro-entrepeneur

LEGAL ENTITIES ESTABLISHEDIN BRAZIL

BRAZILIAN PRIVATE INDIVIDUALS

BRAZILIAN PUBLIC MANAGEMENT

Municipalities

States

Federal

Operations and Policies // Who can apply

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DIRECT TRANSACTIONS

Companies financed directly by BNDES

Power Plants SanitationIndustriesOil and GasExamples

ENTERPRISE

How we Work // Direct Operations

Maritime

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FMM (Merchant Marine Fund)

Companies financed directly by BNDES with FMM Funding

PLSV AHTSOSRVPSVExamples

ENTERPRISE

How we Work // FMM Funding

Shipyards

FMM

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FMM Main Terms and Conditions

Term: up to 4 years of grace period and up to 20 years of amortization.

Sector NationalContent

ParticipationUp to Financial

cost

Spread (%)

NationalItems

ImportedItems

NationalItems

ImportedItems

Cabotage≥ 65%

90%

90%

TLP orUS$

2 - 3,75 3 - 4,75

< 65% 70% 2 - 3,75 4 - 5,8

Tug≥50% 75% 2 - 3,75 3 - 4,75

< 50% 60% 2 - 3,75 4 - 5,8

OSV≥ 60% 70% 2 - 3,75 3 - 4,75

< 60% 60% 2 - 3,75 4 - 5,8

Dry Docking - 90% 3 - 4,75

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How we Work // Financial Instruments

• BNDES Financial Instruments:

• Financing Fixed Assets: Machinery and Equipment; Implement investment production capacity; Increase of goods and services supply capacity;

• Project Finance;

• Export Financing;

• Equity;

• Innovation.

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Performance and Financial Data // Annual Disbursements

9BNDES O&G & Maritime Sector Potfolio

10BNDES Maritime Sector Support

11BNDES Shipyard/Tankers Support

20 Tanker Ships

2 Large Shipyards

5 Integrated Shipyards

12BNDES Offshore Vessels Support

79 PSV - Platform Supply Vessels

14 AHTS – Anchor, Handling, Tug and Supply

5 OSRV – Oil Spill Recovery Vessels (OSRV)

15 FSV – Fast Supply Vessels

4 PLSV – Pipe LayingSupport Vessels

3 LH – Line HandlingVessels

13BNDES Offshore Clients Portfolio

14BNDES Support to the Maritime Sector

• OSV Daily Rates have fallen almost 50% in Brazil since

peak oil prices in 2014.

• Brazilian Offshore Fleet : up to 20% idleness.

• BNDES helping to find solutions (debt restructuring for

companies with relevant liquidity issues) :

• Joint and proportional efforts from all stakeholders.

• Repricing and reinforcement of guarantees.

• Temporary relief only on repayment, interests

preserved.

• Cash sweep mechanism.

• Covenants.

15Sector challenges – Cumulative Global Deepwater Resources Discovered

Presalt oilThe world's largest oil discoveries

in recent years are in Brazil's offshore, presalt basins.

(US EIA, DOE)

50%+ of the world's discoveries from 2005 to 2010 were in deep waters.

Brazil accounted for 63% of the findings in the period.

16Sector challenges – The Oil and Gas Sector currently

• Brazil is the 12th largest oil producer in the world and93.4% of the national production is offshore.

• 15th largest world reserve - possibly 7th with the presalt.

• GFCF O&G weight in jumped from 3.5% in 2000 to morethan 10% in recent years.

• Despite Petrobras' investments, reduction the Brazilian market for offshore goods and services willremain very important in the world.

• Until 2020, more than US$ 83 billion are expected to be invested in the Brazilian O&G sector.

17Sector challenges – Presalt

• The presalt is the main ultra deep waters reserve in the world.

• The presalt wells have high productivity and high quality oil (currently 36

thousand bbl/day and with an expected up to 45 thousand bbl/day).

• The cost of presalt extraction is decreasing - increasing its attractiveness.

• Libra Field Breakeven target – US$ 35/bbl.

18Investment Perspective (2020)

US$ billion

Brazilian Bidding Round in O&G sector.

Privatization of gas distributors.

Investment in Infrastructure.

19Sector challenges – Final Words

• Flexibilty to adjust to low price scenarios.

• Main Goals:• Reduce investment costs/OPEX;• Increase productivity and flexibility;• Develop new technologies (subsea factory).

• BNDES is prepared to support the oil and gas industry and foster the supply chain.• BR Presalt is robust and sustainable.

Thank You!

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