Kawasaki Heavy Industries Ltd. will acquire a 30% interest in a Brazilian shipbuilder for an estimated 2 - 3 billion yen, with plans to produce vessels for exploratory offshore drilling.

The Japanese firm has reached a basic agreement to take the equity stake in Estaleiro Enseada do Paraguacu SA in stages. The shipbuilder was established by Odebrecht SA and two other major general contractors in Brazil. The joint venture plans to build a roughly 90 billion yen shipyard in the northeastern Brazilian state of Bahia.

Kawasaki Heavy will participate in the construction of the shipyard, in addition to providing production technologies and development expertise. The joint venture is said to have already received an order from state-owned oil company Petroleo Brasileiro SA (Petrobras).

Japanese shipbuilders have been struggling to compete for orders with South Korean and Chinese rivals, partly as a result of the strong yen. Japan ranked No. 3 in the world last year, with ship orders down 35% from 2010, at 7.71 million gross metric tons. South Korean shipbuilders won 25.2 million tons worth of orders, while Chinese firms handled 15.44 million gross tons - with their leads widening by the year.

Kawasaki Heavy, which makes conventional vessels in China's Jiangsu Province and elsewhere, is the only Japanese company with overseas shipyards. The firm aims to tap demand in Brazil through local production of high-performance ships now built exclusively in Japan.

South Korean and CHinese rivals have no shipbuilding facilities in Brazil.

Source: Nikkei Weekly