The quiet revolution taking place at Brazilian oil company Petrobras has occurred without bloodletting among the group of directors inherited by chief executive Pedro Parente, so the one notable addition to the board, corporate affairs director Eberaldo de Almeida Neto, catches the eye.

Eberaldo, as he is known in Brazil’s oil sector, earned his spurs in offshore operations and project management but made his mark in the field of procurement, overseeing the growth of a subsea supply chain and re-organising relations between the oil company and its suppliers.

He is now tasked with carrying a strategic vision to the heart of the company, including areas as diverse as health and safety, social responsibility, shared services, information technology and, of course, procurement.

“The company is going through a cultural transformation, aimed at bringing out our best values. This means traditional strengths, such as our capacity to rise to technical challenges, while also applying the lessons that have been learned in facing the problems that have hurt the company,” says Eberaldo.

Operational experience

The transformation extends to the equally strategic process of digitalisation and automisation.

“Making areas such as procurement and auditing fully electronic means they can become more transparent and easier to monitor. We have completely eliminated paper from our contracting processes, for example,” Eberaldo says.

The transformation also draws on operational experience, such as Eberaldo’s four years managing the key UORio unit, where keeping abreast of change can unearth new concepts.

“With automation, things like shift-working in remote control rooms can bring closer involvement between different aspects of the operations, even if it is just a chat during coffee break. This can bring unexpected new upsides,” he says.

While all these activities are important, it is debt de-leveraging that best defines the current Petrobras administration, and it was probably Eberaldo’s contribution to past efficiency gains that earned him a place on the board.

Whilst in charge of the supply of offshore services, for example, he spearheaded a major renegotiation of rig contracts.

When a debt-burdened Petrobras began cutting investments at a time that global demand for rigs was collapsing, Eberaldo seized the initiative by offering to extend chosen rig contracts on reduced rates, rolling others off contracts early.

Petrobras halved its fleet of deep-water rigs, with a significant cut in rates on many of the units that remained.

The adjustment was negotiated, rather than imposed, and the few arbitration claims filed against the company were restricted to cases where generic anti-corruption clauses were evoked to justify contractual recision.

“The process of re-negotiating was important, with solutions intended to make sense to both sides, but we also found lots of scope for improvement in our internal processes and in reducing operating expenditure costs,” Eberaldo notes.

Logistics

This included activities such as logistics planning for offshore vessels and more efficient use of office space. These efforts are continuing, as seen by the 10% reduction in operating expenditure costs recorded in the company’s 2017 results.

Efforts are steered by an efficiency initiative, currently boasting 76 different projects. One of these, covering subsea sector topics such as as the simplification of unit costs and pipe-laying productivity, has targeted more than $4 billion worth of savings through 2021.

“The board gives a very broad perspective of the question of efficiency, and there is space to continue improving,” Eberaldo notes.

As corporate director, Eberaldo remains focused on consolidating these gains, but his past experience also taught him that real efficency extends beyond cost-cutting, and includes the concept of partnership.

Outcomes

“I always tried to emphasise to our contracting team that we need to look for the best outcome for both sides. If only one side is the winner, the business is not sustainable and you end up losing a supplier,” he says.

This vision stems from a formative experience, in the client role, overseeing procurement work in an expanding subsea sector.

“Back then, I felt the absence of a longer-term vision of the contracting process and I had a chance to address this when I was invited to lead a structuring initiative to help attract suppliers to set up in Brazil or to increase their capacity here,” Eberaldo says.

An important aspect of this was giving suppliers a longer-term view of what was coming, providing demand that would be coming to fruition in two or three years' time.

“With a contract like this in hand, and the prospect of firm demand over a 10-year timeline, companies felt able to invest in more capacity,” he recalls.

The demand-led development of a world-class subsea industry is seen as one of the leading success stories in the Brazilian offshore industry.

Intense dialogue

“Big global players were attracted to a sector offering attractive challenges for a capital intensive and technologically advanced industry, with value-added products,” Eberaldo adds, recalling a time of intense dialogue with the sector. Unlike other segments of the offshore industry, where later local content policies provided highly prescriptive incentives, the expansion in the subsea sector was demand-led and did not suffer the failures in anti-corruption compliance seen elsewhere.

When the downturn came, this segment was found to be in much better shape to survive by improving processes and efficiency.

This view is being vindicated today by the fact that Brazil’s subsea industry is competitive enough to be moving into export markets, led by companies such as TechnipFMC and Aker Solutions. “We managed to put the right elements together, where demand and technical challenges stimulated the development of high quality, high value products supplied by companies with a responsible long-term view of their own future success,” Eberaldo says.

Inclusiveness

His vision of partnership extends to promoting awareness of what makes a project financeable, hence inclusion of financial entities in the growing use of requests for information procedures, designed to facilitate contracting processes.

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