SIEMENS

To what extent will technology help your company to open the recently discovered oil fields off the coast of Rio de Janeiro?

Fraga: Without technical innovations we wouldn’t be able to extract a large proportion of the oil deposits there at all. We have to drill through rock layers that are kilometers deep and then through kilometers of salt layers before we can get to the oil reservoir. That’s why we call it “pre-salt” — formed before salt deposition. In order to extract the oil, we will have to install production equipment thousands of meters under sea level. We therefore have a considerable incentive to invest in innovation. However, we already had a strong innovation culture even before the recent discovery of new oilfields. Additionally, by law, we are required to invest one percent of the gross revenue from large oilfields into research and development. In retrospect, I have to say that this requirement has benefited our company.

However, small Brazilian companies have fewer opportunities and less incentive to invest in research and development…

Fraga: I disagree, at least as far as our suppliers are concerned. They have always had to fulfill stringent technical requirements, and these requirements became even more stringent with regard to the extraction of pre-salt oil. Companies that wish to help Petrobras extract this oil are being forced to develop new solutions. In addition, the Brazilian government is demanding that a large proportion of the products and services we use at Petrobras come from Brazil. Smaller Brazilian firms will thus also benefit from the future oil boom.

Does Brazil intend to open these oil fields entirely without foreign partners?

Fraga: That would not be possible. We need the support of international suppliers. Petrobras is the world’s fifth-largest energy company, and the pre-salt oilfields are gigantic. We expect to be producing six million barrels of oil per day by 2020. We need suppliers that will not be overwhelmed by such huge volumes. However, our long-term goal is to keep a growing proportion of the value chain in Brazil itself — from research and development to manufacturing the drilling equipment for the oil and gas fields.

Are you already working with other companies along these lines?

Fraga: We can already point to a positive experience in Rio de Janeiro, where our R&D center is located. On the campus of Brazil’s largest university, some of our major global partners, including Siemens, are building world class R&D facilities. As a result, we are working closely with other companies, but also with Brazilian students and university researchers.

How does the innovation process work with so many different partners?

Fraga: Well, it’s quite a challenge. Our suppliers are not the only partners with whom we work on development projects. We also finance joint projects with universities. We even provide financial support for relevant research initiatives in which Petrobras is not directly involved. Ultimately, this means we are becoming managers of open innovation processes. “Open innovation” really is the key. We welcome every good idea from outside. Often, we get our best ideas from people who are not even working in the oil and gas industry.

Isn’t Rio de Janeiro developing an innovation monoculture — cutting-edge research devoted to exploiting an energy source that many believe is becoming obsolete?

Fraga: On the contrary, the oil boom is a unique opportunity to develop capabilities that are valuable in other industries as well. We are currently thinking about cost-saving laser drills for use in deep-see drilling. We also want to improve conventional drilling equipment by using innovative materials. Nanoparticles will play a role, too — for example in coatings for metal tubes. The largely automated drilling equipment on the sea floor requires sensors and data management systems for improved control and monitoring. It’s a bit like the race to the moon: The technologies we are developing now for oil extraction will contribute to progress in other fields as well, for example in materials research, laser technology, sensor technology, and nanotechnology. In this way, the research devoted to developing more efficient oil and gas technologies will also help us to prepare for the challenges of the post-oil era.