Huge Port Envisioned by Billionaire Tycoon Opens in Brazil – Without Him

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June 8, 2016

Prumo Logistica’s $3.7 billion Port of Açu pictured in January 2016. Credit: Prumo Logistica

ReutersBy Jeb Blount

SAO JOAO DA BARRA, Brazil, June 8 (Reuters) – The launch this week of Prumo Logistica’s $3.7 billion Port of Açu, the largest in Latin America, marked the revival of a Brazilian logistics hub many thought doomed when the empire of its former billionaire owner collapsed.

Açu’s more than 25 km (15.5 miles) of docks, piers and breakwaters is a much-needed step towards narrowing a crippling infrastructure gap in Latin America’s largest economy.

The Manhattan-sized industrial complex northeast of Rio de Janeiro, which officially opened on Tuesday, however, remains a far cry from the plans drafted by Eike Batista before his $60 billion EBX industrial empire disappeared almost overnight in 2013.

While Batista envisioned a thriving hub of shipyards, steel mills and electric-car factories, much of the giant complex remains a quiet expanse of bird-flocked dunes and swamp.

Batista ceded control of Açu three years ago to Washington, D.C.-based EIG Energy Partners in exchange for a promise to invest $562 million in the unfinished port.

“Açu is doing well because the port was based on solid ideas,” said Jose Magela, CEO of Prumo, which is 74 percent owned by EIG.

So far, Açu has been most attractive for oil-related ventures. About 240 km (150 miles) northeast of Rio, it sits aside waters responsible for 80 percent of Brazil’s oil output. The petroleum industry accounts for more than a tenth of the nation’s gross domestic product.

On Tuesday, Prumo opened Brazil’s first independent crude-oil terminal in partnership with Germany’s Oiltanking GmbH.

It can transfer up to 1.2 million barrels a day from shuttle tankers loaded at offshore fields to long-haul vessels. Royal Dutch Shell Plc has a contract to transfer as much as 300,000 barrels a day of its growing Brazilian output at the terminal, Prumo said.

A new maritime diesel terminal run by Britain’s BP Plc just sold its first fuel for ships working in adjacent deepwater fields. Prumo’s general cargo docks exports bauxite for Brazilian industrial conglomerate Votorantim Participações SA.

Louisiana-based ship and oil service company Edison Chouest expects to complete its largest offshore oil supply base outside the United States at Açu in 2017.

For Brazil’s government, struggling with its biggest recession in decades, the port is a lifeline. More than a decade of government-led infrastructure spending has failed to make exports competitive.

It is counting on private investment to revive an oil industry, struggling with low prices. State-controlled oil giant Petrobras is crippled by debt and corruption.

“The government has signaled a new phase of private sector interaction,” Transportation Minister Mauricio Quintella said. “Everyone knows the budget restrictions that Brazil faces.”

Among the nearly 200 government officials, investors, politicians and executives flown in for the ceremony, one person was notably absent: Batista.

Asked if an invitation was extended to Batista, who lost Brazil’s largest personal fortune when project delays and overreach saddled his sprawling empire with debt, Prumo executives shrugged. “I don’t know,” CEO Magela said.

Batista was banned from running public companies for five years by the CVM markets regulator last year for conflicts of interest at his oil company OGX.

Eucherio Rodrigues, who was briefly chief financial officer of Batista’s shipbuilding unit OSX after its bankruptcy filing, said the tycoon’s absence was unfair.

“Açu was a great idea and will be a great port, but Eike’s timing was poor and he made many mistakes,” Rodrigues said. ($1 = 3.387 Brazilian reais) (Reporting by Jeb Blount Editing by W Simon)

(c) Copyright Thomson Reuters 2016.

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