NARRATIVE | PORT OF AÇU 2 OCTOBER/ 2020 Narrative

Port of Açu October/2020 NARRATIVE | PORT OF AÇU 3 OCTOBER/ 2020

Port of açu, a state-of-the-art, sustainable, world-class enterprise

With nearly 90 km and une 24, 2020 was a milestone impeccable work in late 2019, when an for the Port of Açu, the port- oil spill which origin is still unknown hit a total of BRL 13 billion industrial-energy enterprise northeastern . In October 2019, formed by 13 companies — 7 Brazil and the world were exposed to in investments, Açu independentJ firms and 6 subsidiaries — images showing people in Pernambuco, located in northern state. Maranhão, Ceará and Bahia trying to help has already attracted On this date, the International Association the civil guard and environmental agencies of Ports and Harbors (IAPH) recognized to remove tar from the beaches. On the various global giants Açu with the World Ports Sustainability 22nd of that month, the Port of Açu’s like bp, Shell and Award, a highly prestigious category in management received a letter from the Rio which the Brazilian enterprise competed de Janeiro Secretariat for the Environment Equinor to northern with traditional world class ports such (SEA) asking for help in monitoring the as Amsterdam and Los Angeles. coast and setting up prevention policies, Rio de Janeiro state The award was a recognition of Açu’s considering the possibility that the oil NARRATIVE | PORT OF AÇU 4 OCTOBER/ 2020

would reach the area. Although Açu the sea dissipated the oil and it did not in the country in terms of cargo volumes had no involvement in the oil incident, reach the Southeast coast of the country. handled. Global leaders such as BP, the authorities regarded the port For the Port of Açu, the spill was a Equinor, Shell, Siemens, and Chevron are as an important ally in surveillance major test which they skillfully passed. among its clients and partners. All of this eff orts, given its geographical In a way, the episode sums up the was realized in a period just seven years. location and strict safety policies. essence of the Port of Açu: privileged The project began to take shape The intricate operation encompassed geographical position, international in 2013, when U.S.-based investment action such as monitoring vessel routes, performance standards, commitment fund EIG, specialized in the energy monitoring the coast (supported by local to ESG practices, highly qualifi ed and infrastructure industry, became fi shermen, drones and employees of professionals, quick decision-making, a controlling shareholder of the Port the Port of Açu’s Sea Turtle Monitoring and obsessive zeal with safe operations. of Açu (EIG became a partner of Abu Program), contact with other ports in the “It is the synthesis of a state-of-the-art Dhabi’s sovereign wealth fund Mubadala, Northeast, dialogue with the Brazilian and effi cient port”, says Carlos Tadeu, which was already a shareholder). Açu Navy, design of various training and CEO of Prumo Logística, the holding had been conceived six years earlier response scenarios, and creation of risk company that controls the Port of Açu. but had not been put into operation and emergency committees. Taking With a total of BRL 13 billion in until then. It would be necessary to advantage of the partnership with the investments so far, the Port of Açu transform those 130 square kilometers — ports of Antwerp and Houston, the now represents one of the largest an area equivalent to the city of Vitória Açu team was able to be inspired in infrastructure enterprises in the country: — into an operational and vigorous its initiatives by the best practices of it has the third largest iron ore terminal in business. Investors were encouraged international reference. The oil reached Brazil, is responsible for 25% of Brazilian to take on the challenge thanks to Espírito Santo state in November and, oil exports, includes the largest thermal signifi cant advantages compared to by the end of that month, stained the power complex in , is home other Brazilian ports. Two advantages, waters of São João da Barra, the city to the world’s largest off shore support in particular: a unique location, and where the port is located. Fortunately, base, and is already the third largest port the fact that it is the only port in the NARRATIVA | PORTO DO AÇU 5 OCTOBER/ 2020

country that is a 100% privately owned. To prepare for this demand, Açu has The port’s development can be Located 30 km away from downtown invested in infrastructure to receive, divided into three major waves. The São João da Barra, a municipality in the process and distribute output from the fi rst, from 2013 to 2019, focused on northern coast of Rio de Janeiro state, wells, becoming a major hub for the oil completing construction and making the Port of Açu does not face the usual and gas industry and for the production the port operational. With this task limitations of a port located in the middle chain that could be built upon that. accomplished, the second wave of a city, such as road congestion— an The second key advantage is being the started last year, with the expansion of issue that impacts not only companies only port in the country that is a 100% operations (especially oil and gas), set- that need to ship their products but privately owned, ensuring much more up of strategic connections (gas and also residents who have to put up with fl exibility and agility. A private port is a oil pipelines, cabotage navigation, and many trucks and trailers in local traffi c. port open for business, able to off er on- an aerodrome) and preparations for an Built in a region of lower population demand solutions to customers without industrialization process. To that end, density, the Port of Açu has gigantic the restrictions that are inherent to partnerships were signed with two of expansion capacity and privileged competitors. Açu’s private management, the most important ports in the world — infrastructure to access the sea. Vessels quick decision-making process and Antwerp (the second largest in Europe, that require great drafts can easily enter liberty to act are of strategic value dating back 400 years) and Houston the port. For the oil and gas industry, for the business. “The mindset here is (a benchmark of excellence in the oil Açu is the closest logistics support diff erent. We are fl exible enough to industry) — to incorporate the best base to the largest active fi elds in the propose the best infrastructure, logistics practices in terms of safety, management country, especially those located in and technology solutions. This fl exibility and governance. Therefore, Açu is able the pre-salt region. It is estimated that is a strategic part of our development, to combine all the advantages of a Brazil will triple its oil production and and turns Açu into fertile ground for modern port (technology, cutting-edge double its gas production in the next business,” says José Firmo, CEO of Porto socio-environmental practices etc.) with ten years, therefore Açu´s proximity will do Açu Operações (PdA), the company the expertise of world class ports. become an even more valuable asset. in charge of the port´s administration. The start of operations by industries NARRATIVE | PORT OF AÇU 6 OCTOBER/ 2020

that set up facilities in Açu, scheduled world-class companies specialized in key The same happened with the oil and for 2023, will mark the beginning of activities for the the energy, oil and gas, gas hub. In Brazil, Petrobras held the the third wave. “I worked in oil and gas iron ore, logistics and industrial hubs. monopoly for such terminals. As oil my whole life and I know that Açu has Prumo off ered joint ventures to attract production grew, export prospects the potential to be the largest port in the best companies in these sectors. improved, and other companies tried this segment in the whole country. No That is how companies like BP, Oiltanking to get a piece of the action, it became wonder that today it accounts for 25% and Siemens set foot in Açu. There vital to set up another “anchor store”: of Brazil´s oil exports and this share could be no greater seal of approval for an export terminal to explore this will keep on increasing,” says Tadeu. companies willing to join Açu. “It is a market. Hence the creation of Açu “But the venture goes beyond that: clear sign of our controlling shareholder’s Petróleo, a partnership between Prumo we have the vocation to become the full commitment,” says Tadeu. and Germany’s Oiltanking. Nowadays, best port-industry complex in Brazil.” In practice, it is as if the Port of Açu all major foreign companies use Açu were a shopping center, where Prumo Petróleo’s transhipment, services as does JOINT VENTURES WITH THE — the shopping center’s owner — is Petrobras, which accounts for a large BEST IN THE WORLD also an investor in anchor stores. This share of volumes handled at the terminal. To better understand each development is how Ferroport, a subsidiary created The same rationale was used with wave, one must go back in time, when to develop an iron ore export terminal, GNA (Gás Natural do Açu), one of EIG defi ned the business model and the was set up. The company has two the enterprise’s biggest investments. role of the Prumo holding company in the shareholders with equal shares, Prumo Designed to be the largest thermal development of Açu. It would be up to and Anglo American, one of the world’s power complex in Latin America (the Prumo to align strategic objectives and to largest mining companies. Thanks to fi rst phase will start its operations in actively participate in an operation that this combination, the entire process was 2021), GNA has 3GW capacity, enough could turn the port-industry platform into already integrated when the hub was for 14 million households, and licenses reality. The fi rst move was to carefully formed — from the slurry pipeline to to double that capacity. Prumo’s choose the levers of the Açu engine: fuel for ships that export the product. partners in this endeavor are BP, the NARRATIVA | PORTO DO AÇU 7 OCTOBER/ 2020

Chinese company SPIC and Siemens, their segments, such as TechnipFMC, the original Atlantic Forest remains. one of the world’s leading suppliers NOV (two major subsea equipment Still, it is one of the world’s richest in of power generation equipment. producers), Intermoor (off shore services, endemic species. Caruara covers 40 Vessel traffi c required fuel. Looking rig moves, underwater installation, square kilometers, or 2.5 times the at the world map of major suppliers, mooring), and Edison Chouest (the area occupied by port operations. Prumo’s attention fell on the U.S., largest off shore support base in the Açu also took on the role of creating where oil and gas giant BP produces world). Today thirteen companies income and jobs in the region. “We are marine fuels. Another project arrised already set up facilities in the port. The just getting started and have as many from that: BP Prumo, which serves as a fourteenth is on its way: an aerodrome, as 7,000 people working on the project. type of gas station in the Port of Açu. soon ready for inauguration, managed by There is huge capacity for job creation, To further meet the needs of ships the Aeropart group, also administrator which will materialize as businesses using the port, Dome was set up by a of the International Airport of Cabo evolve and companies are attracted,” partnership between Prumo and GranIHC Frio. It is an important achievement that says José Firmo, Head of PdA. “It is in (formerly GranEnergia), a Dutch- will allow air transportation of personel our essence to take on the responsibility Brazilian capital enterprise specialized from the port to the oil platforms. of establishing close and long-lasting in vessel inspection, maintenance and relations with the community”. repair, even on the high seas. Porto do ESG STRATEGY The enterprise’s impact on the area has Açu Operações (PdA), a partnership From its concept phase, the Port of Açu an emotional aspect too. Born in Rio de between Prumo and the Port of Antwerp, has been committed to ESG practices. Janeiro city, Carlos Tadeu, CEO of Prumo, is responsible for port administration. One of the highlights of this strategy is recalls family vacations on the beaches Açu came even more to life by Caruara, the largest private conservation near Campos. “Reaching for the memory attracting additional independent reserve dedicated to the restinga of when I was 10 or 15 years-old and companies without any shareholding ecosystem in the country. The restinga comparing it to today’s picture, little has relationship with the holding company. is part of the highly endangered Atlantic changed here. The region’s development Many of them are global leaders in Forest biome. Nowadays, only 7.3% of is not visible over time,” he says. “I NARRATIVE | PORT OF AÇU 8 OCTOBER/ 2020

remember some places had no electricity of 75% employee engagement. For the companies and this is perhaps one of and now do have it, but the landscapes sake of comparison, a worldwide survey the most important assets of the Port are virtually the same, and the social by consulting fi rm Aon with about one of Açu,” she says. “It was not by chance development that should have come thousand companies found an average that it managed to attract partners with 40 years of oil royalty payments of 65% employee engagement, the such as BP, Anglo and Siemens.” did not happen.” In his view, the Port highest level since the study began. of Açu is the enterprise that can make The survey also came up with INDUSTRIAL CONNECTIONS the social and economic transformation more reasons for celebration: 93% The second development wave, from happen for the region. “This was an of respondents were in favor of the 2019 to 2024, is all about connectivity. aspect that attracted me when I was statement “I am proud and passionate It will be kicked off by a major Açu invited to join the Port of Açu team.” about being part of the company”; 92% Petróleo project: the port’s connection The chance to transform the region said that “Business is being run ethically with onshore pipelines — the veins and is one of the biggest motivators of and law-abidingly”, and 87% agreed arteries that distribute oil within the thousands of employees. Another that “Employees here are treated with country. Nowadays the oil that arrives aspect that caught Firmo’s eye when he respect, no matter their diff erences”. in Açu has only one outlet: the foreign fi rst arrived was the enthusiasm of the When it comes to governance, the market. Once the connection with the port’s workers. “There is an emotional third pillar of the ESG strategy, Açu domestic pipeline network is established, relationship with the project; I feel pride has also been following best practices, the oil’s owners will have the option in being part of something that can something that attracted independent of selling to the domestic market. This change the region and the business board members such as Ieda Yell, expansion project, which is in full swing, environment in the country,” he says. a former director of BP and former includes the construction of storage The numbers reaffi rm this perception president of Comgás who serves on the tanks at Açu Petróleo’s facilities. With among the entire team. A recent boards of several companies in the U.S. pipelines and storage structure, it is climate survey by the Port of Açu’s HR and France. “I found a company with a possible, for example, to attract refi neries department showed a very high rate governance very similar to that of listed and set up export terminals for oil NARRATIVA | PORTO DO AÇU 9 OCTOBER/ 2020

byproducts. Thus, the Port of Açu creates international market. What matters is export gas from Açu. It is very diffi cult conditions for upstream (transportation), that it will arrive in Açu,” says Tadeu. to imagine a situation where we cannot midstream (refi ning) and downstream Some of the gas will supply the quickly adapt our strategy to absorb (distribution) activities. “Açu will always onshore network and some will feed any changes in the global scenario.” have the mark of an energy port, much GNA’s turbines. As the oil and gas cycle Eyeing this immense industrialization like Houston”, says PdA’s Firmo. is completed, Açu is transformed into an potential, Açu has been investing Gas pipelines are another focus of energy generating port, paving the way in all the branches that could make the connectivity phase. Historically, for the next wave: industrialization. With transportation and operation fl ows Brazilian gas has been associated with gas, it is possible to expand existing iron even more dynamic. It off ers cabotage oil extraction, almost as a byproduct. ore operations and attract operations in activities, initially between Açu and The country consumes fi ve times less other sectors, such as fertilizers. On July the Port of Rio de Janeiro, starting in gas than Argentina, whose population 16, Açu announced an agreement with 2020. This modal has clear safety and is just a quarter of Brazil’s. Nowadays Grupo Fertipar, marking its debut in this environmental advantages over road Brazil has 1 meter of gas pipeline per market. Effi cient, clean, and competitively transportation. Plans include the EF- square kilometer, compared to 60 priced energy could attract automotive, 118 railway and the prospect of the new meters in the U.S. and 16 meters in plastics and petrochemical industries. RJ-244 highway being built to enable a neighboring Argentina. With the pre- “Gas is seen as the biggest opportunity connection with BR-101 (which runs from salt fi elds, gas fi nally should play a role for Brazilian reindustrialization in 50 Rio Grande do Norte to Rio Grande do in the energy matrix that is as relevant years. And this opportunity fi ts perfectly Sul states). Another important strategy, as in other countries. The New Gas within Açu,” says Firmo. “And what currently in the bidding phase, involves Law, which facilitates the operation of is brilliant: we have the fl exibility to Export Processing Zone (ZPE), which private companies in the gas sector, change the strategy at any time, to work similarly to free trade zones, can unlock many investments. “It does adapt to any economic condition. If LNG with tax exemption, exchange rate not matter how the gas will arrive, becomes a major global commodity, leeway and simplifi ed procedures for whether from pre-salt wells or from the one can turn everything around and industries that export minimally 80% NARRATIVE | PORT OF AÇU 10 OCTOBER/ 2020

of their output. For example, for a signed a contract amendment with With all these features, the Port of Açu steel company that produces for the Petrobras that could double the current is becoming a major hub that attracts export market, it makes perfect sense volume to about 100 million barrels. national and foreign companies. “Anyone to set up facilities in a place that has On June 12, Açu celebrated one who wants to make a large industrial an industrial district along these lines. of its most visible achievements in investment in Brazil — a fertilizer factory, 2020: it welcomed a gigantic vessel, steel mill or refi nery, for example — fi nds NOT EVEN COVID-19 LNG regasifi cation unit BW Magna — all the necessary structure in Açu,” says STOPPED WORK AT AÇU almost 300 meters long and 50 meters Firmo. “Pre-licensing is ready, there The Covid-19 pandemic, which high, meant for receiving natural gas are 90kilometers of area that can be emerged in Brazil in March, imposed and transforming it from liquid to the occupied, the location is privileged. colossal challenges on all companies. To gaseous state to supply GNA’s thermal Açu is a unique asset in Brazil, totally deal with the crisis, the Port of Açu took power plants. The vessel will remain in prepared for the installation of even its fi rst measures quickly, guided by a the port for 25 years — the same term more companies and is being run few premises: taking care of people, as contracts for the sale of energy under world-class standards.” helping the community, protecting from the thermal power complex. the enterprise, controlling access Magna’s arrival was epic. Built in South by land and sea, and establishing Korea, the vessel passed by Singapore for healthcare and prevention protocols fi nal adjustments before docking at Açu for operations that could not be that Friday morning. The maneuver at the stopped. In addition to being able to LNG terminal was scheduled for 8:30 am. maintain activities (the work was not It was a historic day for the port. Once interrupted for a single day during the Magna starts its operations, the thermal pandemic), the port even broke records power complex will be able to produce for ore production and oil exports in the equivalent of 17% of natural gas- the period. Moreover, Açu Petróleo based thermal power generation in Brazil.