French tube maker Vallourec said it will divest of its German assets and make a “progressive” relocation of its oil and gas activities to Brazil to serve the international market, the company said this week.
Vallourec labeled the decision as a “decisive move” to strengthen the company’s competitiveness and profitability. The company said the relocation of assets will take place in two phases: the divestment process of its German assets, and the progressive transfer of its production activity for oil and gas products to Brazil.
Vallourec said the decision will be a “game changer” for the company’s performance in international oil and gas markets. The company said the Brazilian hub will deliver the “full range of premium tubular products to international markets, allowing better competitiveness and enhanced margin and cash flow generation.”
The move would also have a positive CO2 impact, “driven by the excellent carbon footprint of Brazilian operations.”
It also estimated that the move will result in a EUR 130 million run rate EBITDA increase, a EUR 20 million Capex reduction, and a 30 percent reduction of CO2 content of tubes produced in Brazil as opposed to Germany.