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SINTEF is closing down its research foundation in Brazil

SINTEF is closing down its research foundation in Brazil

Published 04 March 2015
Vice President, Corporate Communications

SINTEF will carry out a controlled closing down of its research foundation in Brazil. The reason is a debilitating regulatory framework which has made it impossible to do business without financial losses. SINTEF will find other means by which to follow up its clients and research partners in the country.

In 2011 SINTEF established a Brazilian research foundation, the Instituto SINTEF do Brasil (ISdB), based in Rio de Janeiro. The idea was primarily to take part in the considerable research market linked to oil and gas activities on the Brazilian shelf, where major technological developments are taking place.

All oil and gas operators in Brazil are obliged to invest one percent of their production revenues in research and development. In 2012 the ISdB was the first international research institute to receive accreditation from the Brazilian authorities, and thus also approval as a supplier of research and development services to the Brazilian oil and gas sector.

Extensive dialogue with the Brazilian authorities led SINTEF to anticipate that a regulatory framework would be put in place making it possible to develop a financially sustainable business. The most important issue was the opportunity to charge hourly rates which, given efficient project implementation, would cover research costs. This criterion was met in connection with the first contracts that SINTEF entered into, but more recently the regulations issued by the authorities have become increasingly debilitating.

This has made it impossible to cover costs, leading to considerable financial losses. For this reason, SINTEF has decided to carry out a controlled closing down of the ISdB. SINTEF's Annual Accounts for 2014 include provision for losses of NOK 30 million in connection with loans to ISdB during the period 2011-2014. ISdB currently employs about 20 persons i Rio de Janeiro.

"It is very regrettable that we are unable to continue doing business in Brazil", says Unni Steinsmo, CEO of SINTEF. "We have made a considerable and dedicated commitment, but we must now accept that it is impossible to continue without incurring significant losses. There is no prospect of the regulations being improved. In fact, quite the opposite. For this reason we have decided to close down our activities before the losses become too great", says Steinsmo. Steinsmo wishes to express her thanks to the personnel who have made such great efforts to establish SINTEF's business activities in Brazil, and to the management, which has faced many challenges leading the institute during this period.

A Task-Force headed by SINTEF's Karl A. Almås has been established to assist in the closing down of the ISdB. This process will ensure that SINTEF meets its obligations to its employees, clients and scientific partners.