Caterpillar's Petrobras sales boosted by build-in-Brazil policy

Peoria-based Caterpillar Inc., the largest maker of diesel and natural gas engines, is increasing sales to state-run Petroleo Brasileiro SA and its suppliers after expanding a Brazilian manufacturing plant.

The company has been able to boost sales of its power generators for offshore vessels used by Petrobras, as the Rio de Janeiro-based producer is known, because of requirements that companies use locally built equipment at oil and gas projects, Reese Jones, the commercial manager for Caterpillar Oil & Gas Brazil, said in an interview.

Caterpillar has delivered 100 offshore generators since it expanded its Piracicaba industrial complex in Sao Paulo state three years ago, and has enough orders to deliver another 100 units by the middle of next year, Jones said. It takes nine months to build each generator and they cost $500,000 to $2 million to make, depending on size, he said.

"The expansion we did was to answer the call from Brazil for local content," Jones said yesterday by telephone from Rio. "Even if we were the only supplier, we'd have enough capacity to supply the needs of Petrobras and the Brazilian offshore market. It enables us to compete very strongly."

Output Goal

Caterpillar's success contrasts with difficulties other suppliers and oil producers are having with national content regulations. Builders of drill ships and production vessels have been requesting waivers on the rules to meet project time lines. The country's oil regulator, known as ANP, has fined producers including Petrobras and Royal Dutch Shell Plc. for failing to meet local content requirements.

Petrobras, the biggest oil producer in waters deeper than 1,000 feet (305 meters), is counting on the delivery of floating platforms and drill ships to develop the biggest oil finds in the Americas this century and double output by 2020.