Diversification and International Growth
Strengthened by the acquisition of CBPO and Tenenge, two of Brazil’s largest construction firms, Odebrecht expands its international presence and intensifies investments in the petrochemicals industry

Excavating tunnels in the Andes mountain range, where earth tremors shook the construction area up to thirty times a day and temperatures plummeted to 18oC below zero; or building a dam and town of 2,000 people in the midst of internal conflict in Angola are two of the challenges that were joining Odebrecht’s roster of achievements. In Peru, the company’s teams built the 135-MW Charcani V hydroelectric plant at 3,600 meters above sea level. The beneficiaries included residents of the country’s second-largest city, Arequipa.

In Angola, after four years of negotiations involving the Angolan, Soviet and Brazilian governments, Odebrecht began building a key project for the revival of Angola’s economy: the 520-MW Capanda hydroelectric plant, situated 400 km from the nation’s capital, Luanda. Including a 110-meter-high dam and a town with an airport equipped to handle large aircraft to bring in construction materials, the Capanda project created jobs for hundreds of Brazilians and over 3,000 Angolans, who have received training in engineering, civil construction, information technology and health, among other areas, since 1984. Now operational, the plant is a key facility for the resumption of development in Angola. The project has also been a valuable experience for Odebrecht, helping mature its concepts and practices and giving a boost to its international operations.

By 1985, the organization’s projects outside Brazil represented about 30% of its total backlog. Partly based on the philosophical principle of reinvesting the results of entrepreneurial activities, this situation also required making structural changes. As a result, in 1981, the privately owned company that had always been controlled by the Odebrecht family had become a publicly traded firm. Odebrecht Participações e Investimentos S.A. (OPISA) changed its name to Odebrecht S.A., and became the organization’s holding company. It opened its capital to investors and turned company members into shareholders.

Odebrecht S.A. was created with the same objective it has today – preserving the Group’s Philosophical Concepts and establishing business direction to promote the growth of the organization’s subsidiaries and the perpetuity of the Group as a whole. Through the creation of this umbrella company, subsidiaries that had previously been grouped around Construtora Norberto Odebrecht gained a different kind of strategic guidance. This gave rise to the paradigm that would be developed over the following years. The Group pursued a three-pronged strategy: bolstering the Engineering & Construction area in Brazil, which was done by acquiring major Brazilian contracting firms; intensifying the diversification of Odebrecht’s businesses by making further investments in the Chemicals & Petrochemicals area and consolidating oil drilling operations through the purchase of new platforms; and primarily, the expansion of services provided outside Brazil.

Above all, the creation of Odebrecht S.A. reaffirmed the shareholders’ aim of continuing to reinvest in order to create new business and work opportunities in the steady, reasoned manner that was best suited for an open-stock corporation.

The first major milestone in Odebrecht’s trajectory in the 1980s was the acquisition of CBPO – Companhia Brasileira de Projetos e Obras, a São Paulo company founded by engineer Oscar Americano.

At the time, CBPO was Brazil’s sixth-largest contractor in terms of revenue, and had built many important projects in the southern part of the country during its half-century of existence. These included several power plants, such as Xavantes, Capivara, Nova Avanhadava, Rosana and Foz do Areia, whose 160-meter-high dam is the largest concrete-face rockfill dam in the world. But its crowning achievement was Itaipu, the largest hydroelectric plant in the world, which CBPO helped build as a partner in a joint-venture contractor. It also built major highways such as Imigrantes, Trabalhadores and Castelo Branco, and part of the Steel Railway and the Rio de Janeiro and São Paulo metros.

In addition to business reasons, there were also historical motives for the union of Odebrecht and CBPO. The two companies’ paths had already crossed in the mid-1970s, when they worked together to build Rio de Janeiro International Airport. Eventually, experience showed that they could provide each other mutual support, not only to guarantee their growth but above all to ensure the perpetuity of the assets both had built up, particularly in the field of construction technologies.

Oscar Americano, founder of CBPO

The merger benefited both companies. When they began joint operations in 1980, CBPO was about to experience its best year in terms of performance, earning USD 220 million in 1981. Odebrecht had not only made a profitable and productive investment but inherited a technical and administrative staff of the highest quality, working under the leadership of Aluízio Rebello de Araújo, Mario Pimenta Camargo and Oscar Americano Neto, among others.

The consolidation of CBPO into the Group was also an excellent opportunity to groom young entrepreneurs with older members continually encouraging their development. That is how the second generation embarked on the process of succeeding the first generation. In 1985, Emílio Odebrecht became President and CEO of Construtora Norberto Odebrecht. That same year, there were 32,500 members working in the Engineering & Construction area. Together with their dependants, they formed a population larger than most rural towns in Brazil.

One of Brazil’s largest construction companies, CBPO helped build several projects, including the Itaipu hydroelectric plant

By the end of 1985, in an assessment of the construction firm’s growth, Norberto Odebrecht said that all of its results were the outcome of applying a philosophy and basic tenets that the Group’s entrepreneurs should never forget: those of “Truth, achieved through constant fact checking; perseverance in the duty of fighting to the end for planned objectives; always ensuring the Client’s satisfaction; and continually updating our culture and perceptions and making changes, overcoming problems to realize opportunities and their results.”

Perseverance was the fuel that drove Norbe I, the jack-up platform that Odebrecht Perfurações Ltda. (OPL) had purchased in Singapore in 1979 for USD 29 million – half the Group’s capital at the time – to work for Petrobras off the coast of Sergipe. Over time, Norbe I became a school. The offshore drilling segment was changing, and private-sector Brazilian companies were starting to outnumber their foreign counterparts.

This encouraged OPL to drill for oil at water depths of over 90 meters, in addition to learning to work with semi-submersible platforms. A joint venture of Triangle Drilling Ltda. (an Odebrecht subsidiary) and Foramer S.A. of France in 1982 resulted in the creation of Forabrecht S.A., which brought a new piece of equipment to Brazil – the semi-submersible Astérie platform to operate at depths where it was impossible to install platforms on the seabed.

This partnership made it possible to groom Brazilian teams. Three years later, over 500 people had the expertise required to operate platforms Norbe I, II, III, IV and V, the latter capable of drilling at depths up of to 6,00 meters and equipped with several technical innovations. Forabrecht drilled seven wells in 200 days in Congo, and OPL sent platforms Norbe II and V to India at the request of the Oil and Natural Gas Commission, the government agency responsible for oil exports. By the end of the decade, OPL had the largest privately owned offshore oil drilling and exploration fleet in Brazil, totaling eight platforms.

In 1986, the Group made another important move to bolster its Engineering & Construction area by acquiring Tenenge – Técnica Nacional de Engenharia S.A. Tenenge and Odebrecht both had an entrepreneurial attitude, always seeking unique and simple solutions and maximum flexibility, creatively conceived with the client’s available resources in mind. By the time it had become one of Brazil’s top industrial installation copmanies, Tenenge had helped install about 40% of Brazil’s state-owned steel mills, and over one-third of the country’s hydroelectric plants. It simultaneously built major power plants including Ilha Solteira, Capivara, Paraibuna, São Simão and Paulo Afonso IV, in addition to coordinating the joint venture of Brazilian and Paraguayan companies that built the Itaipu hydroelectric plant as well as several projects in the cement, fertilizer and industrial infrastructure sectors.

Tenenge was also active in offshore construction and installation, an area that developed in Brazil through incentives provided by Petrobras. Tenenge had provided services for the oil giant on several occasions, including civil construction and electromechanical installation of the Duque de Caxias Refinery’s thermal power plant. Between 1979 and 1986, Tenenge carried out 13 offshore contracts for Petrobras, and was one of the first companies to install fixed offshore oil platforms in Brazil. It also built large platforms for Petrobras, including Namorado II, Cherne I and Pargo 1A, which helped boost oil production on the continental shelf in the 1980s. Working for the same client, Tenenge led the international joint venture that installed Namorado I, II, and Cherne I platforms in the Campos Basin.

Antonio Maurício da Rocha, founder of Tenenge

Tenenge took part in programs in the petrochemical sector, helping install oil pipelines and build industrial districts in Camaçari, São Paulo, Rio Grande do Sul and Alagoas. Its name is also associated with projects for Cia. Siderúrgica Nacional, Usiminas, Cosipa, Acesita, Cimental, Belgo-Mineira, Açominas and Cia. Siderúrgica de Tubarão. This know-how, developed entirely in Brazil, qualified the company to export its first full-fledged project – the Acepar -Acero del Paraguay coal-fired steel mill, capable of producing up to 150,000 tonnes (metric tons) annually, built between 1984 and 1987. Tenenge also began operations in Chile, where it was responsible for building a number of projects for the oil, mining, electric power and pulp and paper sectors.

Tenenge installed over one-third of Brazil’s hydroelectric facilities and nearly 40% of its state-owned steel mills

Having strengthened the Engineering & Construction area, Odebrecht decided the time had come to forge ahead in the petrochemical sector. It had begun investing in that industry in 1979, when it acquired one-third of the voting stock of Companhia Petroquímica Camaçari – CPC. This was a relatively new business that was full of possibilities, because most of the Brazilian market was supplied by imports. However, like any segment of the heavy manufacturing sector, the chemical industry required long-term strategies and objectives.

When expanding its presence to the petrochemical complexes of São Paulo and Rio Grande do Sul and the chlor-chemical complex in Alagoas, Odebrecht worked on the basis of a common philosophy and strategy. First, it was carrying out a decision to invest in important projects for the national and international markets, thereby contributing to the growth and modernization of the Brazilian economy. Second, it was interested in encouraging technological advances by developing new and better products and providing opportunities for professional growth to company members working at Odebrecht affiliates.

The Group’s policy of reinvesting resources in the sector was carried out directly by Odebrecht Química S.A. and its wholly owned subsidiary EPB – Empresas Petroquímicas do Brasil S.A. Over the course of the decade, Odebrecht acquired stakes in several companies, preparing to acquire controlling interest and consequently take the helm of some of its affiliates. In addition to CPC, the Odebrecht Group’s chemicals affiliates in the 1980s included Salgema Indústrias Químicas S.A., a leading Brazilian manufacturer of chlor-alkalis; PPH – Companhia Industrial de Polipropileno, which owned the nation’s most advanced polypropylene production technology; and Poliolefinas, which produced high- and low-density and linear polyethylene. Odebrecht also acquired a stake in Unipar – União de Indústrias Petroquímicas S.A., an umbrella company for petrochemical manufacturers.

While these advances were taking place in the petrochemicals industry, the Group took even more audacious steps forward in its international operations. In 1988, two years after Portugal joined the EEC (now the European Union), Odebrecht established a presence in Europe by acquiring José Bento Pedroso & Filhos, a Portuguese contracting company.

As an Odebrecht subsidiary, the newly renamed Bento Pedroso Construções S.A. – BPC began making a decisive contribution to the modernization of Portugal’s infrastructure. It has taken part in ventures such as the expansion of National Highway 1, between Lisbon and Porto; Aveiro-Mamodeiro Highway and the Infante Dom Henrique Expressway, in the Algarve; the access road to the city of Coimbra, and the viaduct leading to Açude de Coimbra Bridge. In 1992, BPC won a contract to build part of the new lines being installed for the Lisbon Metro. In the second half of the 1990s, the Portuguese contractor also took part in one of Europe’s most important projects in that decade, the second bridge across the Tagus River in Lisbon, called the Vasco da Gama Bridge.

José Bento Pedroso, founder of BPC

The largest river on the Iberian Peninsula and in Portuguese territory, the Tagus is nearly 1,100 km long. It has its source in Spain and its huge estuary empties into the Mar de Palha (Sea of Straw) in Lisbon. The mouth of the Tagus was the starting point for the caravels that made great discoveries in the late 15th and early 16th centuries. Over the years, Phoenician, Celtic, Greek, Visigoth, Roman and Arab ships have visited the Tagus. Today, thousands of tourists flock to Portugal to see and admire that majestic river.

Opened in August 1966, the 25 de Abril Bridge – the first to span the Tagus – was for many years one of the Portuguese capital’s most important landmarks. In time, however, it could no longer handle the amount of traffic crossing the river. By 1991, there were 270 automobiles per 1,000 residents in Lisbon, a ratio that is considered high for the world’s largest cities. As a result, during peak times it could take an hour or more to cross the bridge.

When the Portuguese government decided to build a second bridge across the Tagus, BPC began studying the project and soon joined forces with other Portuguese and European companies to form the Lusoponte consortium, which would build the bridge and hold a 33-year concession to operate the span.

The consortium won the contract following a fiercely competitive international tender, and began the construction work that culminated in the opening of the Vasco da Gama Bridge on March 19, 1998.

A milestone in Odebrecht’s European operations, the bridge has also become a landmark in Europe, and won an award for its design at the Second World Architecture and Engineering Biennial, held in Madrid, Spain, in 2000.

In1988, Odebrecht established a presence in Europe by acquiring
José Bento Pedroso & Filhos, a Portuguese construction firm

The same year Odebrecht arrived in Portugal (1988), Brazil passed a new constitution creating an institutional situation that would bring new challenges for the organization’s future. Democracy, citizens’ rights and responsibilities, and the involvement of organized civil society had become a permanent part of the nation’s agenda. On that occasion, Norberto Odebrecht observed, “Given this new situation, it is up to our entrepreneurs to mobilize the structural and functional qualifications of their companies and work competently on the basis of effective decisions to ensure the Group’s survival, growth and perpetuity.”

Diversification: A story with many paths

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