Schulz Prepares to Expand in South America

German steel tube manufacturer Schulz is preparing to seek new business opportunities in Latin America's oil and gas sector after announcing plans to invest 180mn reais (US$92mn) in building its biggest production complex in Brazil.

"We believe there is an interesting market in South America," Schulz Latin America CEO Marcelo Bueno told BNamericas.

"Argentina needs to invest in energy to expand its production. Bolivia has gas reserves. Venezuela has one of world's largest oil reserves but seems to be facing problems," he said.

The focus, however, is on Brazilian market, which accounts for much of the investment in the region.

Brazil's federal energy company Petrobras (NYSE: PBR) aims to invest US$112bn in 2008-12, of which US$65bn will go to E&P, where Schulz is a major supplier.

"We believe almost all Petrobras' investment plan will be delivered, although not within the schedule it announced," he said. "We're working now with firm demand for our products through 2012 and demand is currently well above our production capacity," Bueno said.


Schulz's three factories in Rio de Janeiro state will help meet growing demand, he said. The project also includes a distribution center.

The first tubes and connection factory will start production at the end of 2007 with investment of 60mn reais.

"Our initial forecast was for investment of 44.5mn reais, but we had to increase our budget to account for appreciation in the local currency," he said.

The company is investing another 35mn reais in a welded tubes unit that will start production in January 2008. The third factory will develop seamless tubes and start operations by end-2008.

"Our production capacity in Brazil will be bigger than at our HQ in Germany," Bueno said.

Schulz plans to export to US, European and Middle Eastern markets from its Brazilian units.

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