1. Financial Support for Offshore Projects in Brazil BNDES: Current Status and Future Plans November/2014

2. BNDES Brazilian Development Bank

3. BNDES Highlights Fully state-owned company under private law. Key instrument for implementation of Federal Government’s industrial and infrastructure policies - broad presence on brazilian economy. Provides long-term financing (the main provider) directly or by accredited financial agents. Provides equity investment directly or by funds. Emphasis on financing investment projects, but also supports exports, environmental and social projects.

4. Annual Disbursements Converted to US dollar on the disbursement dates Average growth of 18,4% in disbursements (in R$) during the 2003-2013 period.

5. Disbursements by Business Sector Distribution in %

6. BNDES vs. Multilateral Banks IADB = Inter-American Development Bank World Bank China DB = China Development Bank

7. BNDES and the Shipbuilding Sector

8. Brazilian shipbuilding sector growth mainly driven by O&G industry... Long-term demand for drillships, platforms, offshore support vessels and tankers Investments in the Brazilian marine supply chain Investments in shipyards – increase of productive capacity and modernization Shipbuilding Sector in Brazil

9. The 2000s: ressurge of shipbuilding sector based on offshore support vessels and tankers. Outlook: Sustainable demand of OSVs in the long term. BNDES acts with FMM funding. Shipbuilding Sector in Brazil

10. PROREFAM I 22 Vessels PROREFAM I 22 Vessels PROREFAM II 21 Vessels PROREFAM II 21 Vessels PROREFAM III 146 Vessels PROREFAM III 146 Vessels PROMEF I 23 Vessels PROMEF I 23 Vessels PROMEF II 26 Vessels PROMEF II 26 Vessels EBN I e II 39 Vessels EBN I e II 39 Vessels Drillships 28 Drillships 28 Production Plataforms Existing Shipyards Renovation New Shipyards Shipbuilding Sector in Brazil

11. Newnsal New Shipyard Investments International Partnerships Shipbuilding Sector in Brazil

12. MAUÁ (4 tankers) BRASFELS (6 DS, 2 PU) INHAÚMA (4 PU) MAUÁ (4 tankers) BRASFELS (6 DS, 2 PU) INHAÚMA (4 PU) ESTALEIRO ATLÂNTICO SUL (7 DS, 19 tankers) VARD PROMAR (8 tankers) ESTALEIRO ATLÂNTICO SUL (7 DS, 19 tankers) VARD PROMAR (8 tankers) ENSEADA PARAGUAÇU (6 DS) JURONG ARACRUZ (7 DS) ESTALEIRO RIO GRANDE (3 DS, 8 PU) HONÓRIO BICALHO (QUIP) (2 PU) ESTALEIRO DO BRASIL (EBR) (1 PU) ESTALEIRO RIO GRANDE (3 DS, 8 PU) HONÓRIO BICALHO (QUIP) (2 PU) ESTALEIRO DO BRASIL (EBR) (1 PU) Up to: 32 PUs 28 DSs Up to: 32 PUs 28 DSs 2003-2013: 16 PUs 06 Vessels 2003-2013: 16 PUs 06 Vessels Shipbuilding Sector in Brazil

13. Up to 2013: 120+ OSVs 2013 to 2020: 198 OSVs DETROIT/Starnav KEPPEL SINGMARINE NAVSHIP/Bram DETROIT/Starnav KEPPEL SINGMARINE NAVSHIP/Bram ALIANÇA/CBO VARD NITEROI SÃO MIGUEL ALIANÇA/CBO VARD NITEROI SÃO MIGUEL WILSON SONS GUARUJÁ

14. Shipbuilding Sector in Brazil CAGR 33% a.a. 2013 up to setember

15. Fonte: IPEA. Valores reais de 2010, corrigidos pelo IGPM. Shipbuilding Sector in Brazil

16. Merchant Marine Fund – FMM Treasury fund, managed by the Ministry of Transportation, and operated by Federal State-owned banks. Projects must be eligible by the FMM Committee (CDFMM) before being analyzed by the accredited bank. Supports vessels construction, jumborization and modernization, made in Brazilian shipyards (Buyer’s and Supplier’s Credit). Supports Brazilian shipyards construction, expansion and modernization. Holds for all eligible items, with better conditions for local content.

17. Sector National Content Maximum Participation Financial Cost Total Spread (%) National Items Imported Items National Items Imported Items Construction of Offshore Vessels ≥ 60% 90% 70% TJLP or US$2 – 4,5 3 - 6 < 60%60%4 - 7 Construction of Cargo Vessels ≥ 65%90%3 - 6 < 65%70%4 - 7 Construction, Expansion and Modernization of Shipyards ≥ 60%75%4 - 6 < 60%60%4 - 7 Merchant Marine Fund – FMM Period: up to 4 years of grace and 20 years of amortization

18. BNDES Annual Disbursements – Shipbuilding Sector

19. Transpetro - Promef I (2007) 23 Ships - 10 Suezmax; 5 Aframax; 4 Panamax and 4 Product Ships. Transpetro - Promef II (2010) 7 Ships - 4 Suezmax and 3 Aframax. Atlântico Sul (PE)Wilson, Sons (SP)And Others... Financed Projects – Tankers and Shipyards

20. 82 PSV – Platform Supply Vessel 21 AHTS – Anchor, Handling, Tug and Supply 3 OSRV – Oil Spill Response Vessel (OSRV)2 PLSV – Pipe Laying Support Vessel 2 RSV-ROV – Remotely Operated Vehicle Support Vessel Clients: CBO, Bram, WSOffshore, Starnav, DOF… Financed Projects – OSVs

21. The 2010s: O&G demand creates new challenges to the shipbuilding sector. –Petrobras Business Plan – production target requires numerous critical resources. –E&P local content rules induce the construction in Brazil. BNDES acts with special funding, supporting the local content of projects. Drillships FPSOs Complex OSVs Shipbuilding Sector: New Challenges

22. 8 FPSOs (“Replicants”): –Santos Basin –Operation starts in 2015 P-58 and P-62: –Campos Basin –Operation starts in 2013 4 FPSOs (Transfer of Rights): –Santos Basin (pre-salt) –Operation starts in 2015 Perspectives: FPSOs Petrobras contracted 14 FPSOs to be built in Brazilian shipyards. Global local content: from 65% up to 75.5%.

23. Petrobras hired 28 new drilling ships to be built in Brazilian shipyards. Deliveries must occur between 2015-2020. LOCAL CONTENT INDEX 7 Drillships Package System1ª e 2ª3ª e 4ª5ª a 7ª Generation, Propulsion and Dynamic Positioning System 40%50%60% Drilling Package20%30%50% Local Content Index55%60%65% Perspectives: Drillships

24. BNDES P&G Program

25. 25 Texto Local content policy Unique opportunity for an industrial upgrade Long-term and sustainable demand Pre-salt: a new paradigm, specially for technology Requirements: Innovation as a key strategy; Search for new technologies; Cooperation and Management skills; Economies of scale on goods and services Competitiviness Human Resources Training A new high-potential O&G Industry O&G as a driver for other Brazilian economic sectors development.

26.  To facilitate credit access;  To less risk averse (increase exposition), using contracts as collaterals;  Lower financing cost. SME’s (Revenues up to R$ 90 MM – US$ 52 MM) Win-win relationship  Better relationship between Umbrella Company and its suppliers;  Cooperative environment;  Promotion of clusters. Umbrella Company BNDES O&G Supply Chain Program Highlights  To increase RD&I activities;  To increase local content;  To increase installed capacity and to gain economy of scale;  To reduce production bottlenecks. Goals  Deadline: December 2015  Budget: R$ 4 Billion Duration

27.  Installation, expansion, modernization of production capacity;  Increase of goods and services supply capacity;  Including training, technology transfer, certification, etc. Capex  Financing cash flow of goods and services suppliers;  Goods and services contracts are taken as collaterals from the company. Working Capital  Supporting innovation on O&G supply chain;  Financing condition according BNDES rules. Innovation e Technological Development A Program for local industries needs (Direct and Indirect Operation Mode) (Direct operation mode only) (Direct and Indirect Operation Mode)

28. 28 Lower Interest Rate Lower production costs for the whole supply chain Higher Maximum BNDES Participation Economy of scale for the Umbrella Co. Higher loan limit Umbrella Company Production increase considering supply chain synergies Credit for MSME suppliers Advantages for the Umbrella Company Benefits

29.  Financial Cost: TJLP (now is 5% p.a.).  Basic Spread: i) MSME or Umbrella: 0,5% p.a.; ii) Capital Goods: 0,9% p.a.; iii) Services and other industries: 1,3% p.a.  Credit Risk Rate: 0,4% to 2,87% p.a.  Total: 5,9% to 9,17% p.a.  Term: up to 10 years.  Participation: up to 80%; up to 90% for MSME and Umbrella. CAPEX - Conditions

30.  Financial Cost: TJLP (now is 5% p.a.).  Basic Spread: i) MSME or Umbrella: 2,0% p.a.; ii) Medium Large and Large Company: 2,5% p.a.  Credit Risk Rate: 0,4% to 2,87% p.a. Total: 7,4% to 10,37% p.a.  Term: up to 5 years (if based on contracts), or up to 10 years (if based on productive capacity). Limit:  Working Capital based on contracts: up to 50% of contract value (receivables) and according to company´s contract needs.  Projects of Productive Structure (CAPEX) might have financial support to Working Capital related to CAPEX also. Working Capital - Conditions

31.  Financial Cost: 4,0% p.a. (PSI)  Term: up to 10 years.  Participation: up to 80%.  Only Direct Mode from R$ 1MM. Innovation - Conditions

32. Guarantees and Collaterals

33. THANK YOU Luiz Marcelo Martins Almeida www.bndes.gov.br/english