RIO DE JANEIRO, Sept. 20 (UPI) -- Brazil's energy boom is generating contracts worth hundreds of millions of dollars, the latest of those worth more than $1 billion going to multinational giants GE and Teledyne, and industry analysts predict more business for U.S. companies.
GE also has announced plans to invest $500 million to expand operations in the country and help establish a multidisciplinary research and development center in Rio de Janeiro.
Brazil's underwater offshore discoveries of oil have set it on a course to become one of the largest oil producers in the region, possibly eclipsing OPEC members Venezuela and Ecuador in a foreseeable market shift.
Before large-scale production can begin, Brazil plans to spend more than $200 billion on developing its production and export capacity, including complex and expensive installations offshore that have triggered a simultaneous investment in defense to protect them.
Brazil's commodities-fueled economy has generated enough cash surplus to enable Brazil to fulfill both ambitions. Foreign investors anxious to cash in on Brazil's oil bonanza have to go through rigorous tests and foreign suppliers have to pledge technology transfers on a scale not expected elsewhere.
Brazil explains its terms for overseas investors are part of a program of achieving self-sufficiency in as many areas of industrial development as possible.
GE has secured more than $800 million in commitments to supply wind and gas turbines for projects that will produce 1.4 gigawatts of electricity -- 40 percent of the total amount awarded in energy auctions conducted recently by Brazil's National Electric Power Agency.
The auctions will supply 51 energy projects in Brazil with a total gross capacity of 3.9 gigawatts. GE won all of the natural gas power generation commitments and will be supplying 7FA Gas Turbine combined-cycle technology for more than 1 gigawatt of projects, the company said.
In addition, commitments for at least 378 megawatts of GE's 1.6-megawatt wind turbine technology have been made, with many projects still in process.
"These awards reinforce our position as a leading provider of reliable and well-proven energy technologies for Brazil and Latin America," GE Power and Water Chief Executive Officer Steve Bolze said.
He said the 7FA gas turbines and advanced 1.6 wind turbines represent "very cost-effective electricity solutions in the transparent and competitive Brazil energy auctions," in which all of the major global original equipment manufacturers took part.
Brazil's Energy Ministry says the country needs to increase its electricity generation capacity by 50 percent over the next 10 years. So far Brazil has relied heavily on hydropower for its electricity.
The auctions extend the country's commitment to diversify its energy supply by adding more natural gas and renewable energy to the mix. Since 2004, Brazil has been holding energy auctions as the main procurement mechanism for distribution companies to acquire energy to meet these demands. Under the system, auctions of capacity from new generation projects are conducted three to five years in advance of delivery dates.
The wind turbines will go into service in the first half of 2014, while the gas turbines will be used in projects that are expected to enter commercial operation later that year.
Meanwhile, GE Oil and Gas has won a contract from OGX Petroleo e Gas Ltda. of Brazil to supply drilling and production equipment for three offshore fixed production platforms to be deployed in the Waimea and Waikiki oil and gas fields of the Campos Basin, offshore Brazil. OGX plans to drill several production wells in the area over the next four years.
With a total potential estimated value of $230 million over the next four years, of which $32 million has been already signed, this is the largest contract signed between GE Oil and Gas and OGX.
The Waimea and Waikiki underwater fields are about 35 miles off the coast of Rio de Janeiro.
Teledyne Technologies Inc., which has headquarters in Thousand Oaks, Calif., says it received a development contract from Cameron do Brasil Ltda, a subsidiary of Cameron International Corp., to design and deliver a subsea high-power electrical interconnect system for a deep-water oil field in Brazil.
The contract's value and the oil field wasn't immediately known.