Bret Kugelmass
We are here today with Ana Carolina Barretto, who is the Head of Projects Banking and Natural Resource Practice and board member at Veirano Advogados, which is a Brazil project finance firm. Thank you so much for taking the time. Really appreciate it.

Ana Carolina Barretto
Thank you, Bret, it's a pleasure to have the opportunity to speak with you today.

Bret Kugelmass
Yes, and we were told that you are one of the top product finance experts, not just in Brazil, but all of Latin America. So, it's our honor to have you on the call. And I'd love to just start by learning a little bit about you and where you grew up and what it was like.

Ana Carolina Barretto
Sure. I'm originally from Rio. Veirano, our firm, is a national firm, has offices throughout Brazil, but the regional firm started out in Rio. Rio always had this really important natural resources center, because a lot of the main - Petrobras - which is the main National Oil Company is based in Rio. So is Eletrobras, which is now smaller in size, but used to be the largest state-owned utility in Brazil. There's always been this hub of activity there in the natural resources sector. I started working in Veirano as a trainee, I was 19 years old. The very first project that I got involved in was the construction of the Brazil-Bolivia Pipeline project, which is a fascinating project that spans, not just through Brazil, but other countries in Latin America as well. Just in Brazil, the pipeline goes through 5,000 different municipalities. So, it's a huge, huge project, was very complex and it was the very first assignment that I was involved in. I obviously fell in love with it and thought it was a fascinating sector. So, that's how I started out. Then, when I was still a junior lawyer in 2001, Brazil had this major energy crisis. There were blackouts, there was a huge - a series of factors - there was a huge drought. In those days, Brazil relied just mostly on large hydropower projects. It didn't really have any diversified energy matrix that could make up for the drought and there was some deregulation at the time that some people questioned was not that well designed. There was this huge, huge crisis and then the government launched this program, which was called the Emergency Power Program, which basically invited companies that were able to build power plants on a very short timescale. These were mostly thermal power plants and anybody who was able to build really quick got really favorable contracts, long term power purchase agreements at very favorable rates. So, there is this rush at the time for companies that could meet this demand and we had this client that was a Finnish power plant producer - they produce engines and services, not only for the power sector, but also for the ship industry - it's a company called Wärtsilä, and they were, at the time, interested in developing projects. So, I started working with them and it's been a very fruitful partnership. They've been my clients for over 20 years now. We ended up helping them build lots of power plants at the time and it was fascinating-

Bret Kugelmass
What is "lots", is it five, 10, 50, 100? What is a lot?

Ana Carolina Barretto
At that time, we had two in northeastern Brazil, then we had another three in Amazonas in Manaus, so they had a good run at that time.

Bret Kugelmass
When you say thermal power plant, I assume it's fossil fuels. But which one? Was this oil burning gas? What did they burn?

Ana Carolina Barretto
At the time, this was heavy oil mostly. It was what people could get their hands on really fast.

Bret Kugelmass
And where did it come from? Does Brazil produce oil itself? Or does it get it from Venezuela? Or how does it get ahold of oil?

Ana Carolina Barretto
It had a bit of both. Petrobras is an oil producer, but I believe we did also buy from Venezuela quite a lot, at the time. But the energy matrix in Brazil has developed since then, because this was like an emergency problem, right? And then a few years after that, in 2004, the Brazilian government decided that, it's nice to be super green and rely on hydro, but if you have drought, it's a problem. So, they started out, they launched this program which was the Alternative Renewable Incentive Program, which was the very first program through which we started having wind projects in Brazil. They also had incentives for biomass, for solar, and for small hydro projects. This was how the wind industry started out in Brazil. Since then, it's amazing, because they started out needing lots of incentives, right? Prices were really high, it was really on the basis that we really needed to invest, diversify the matrix so that we weren't so heavily dependent on the large hydro dams. And since then, this market has grown so much that, nowadays, wind is really competitive price wise.

Bret Kugelmass
Two questions on that front, what was happening in 2004 that Brazil decided they wanted to become green. I mean, even in the US, we weren't really concerned about green stuff back then.

Ana Carolina Barretto
I think it wasn't necessarily wanting to become green, because Brazil was already green. At the time, I think the energy matrix in Brazil was like 93%, renewable, but it was all large hydro renewables.

Bret Kugelmass
I see, so it was more about diversity of energy generation.

Ana Carolina Barretto
Exactly, and ensuring safety in the grid, so that it wasn't just relying on one specific source of energy. I think that was the main driver. We've had, obviously, since then, lots more gas projects than we used to. And that's also, when we look at where the market is going, I see that growing a lot, comparatively to other countries.

Bret Kugelmass
Even now, even now, you see gas growing in Brazil?

Ana Carolina Barretto
Yeah, absolutely. We've actually just passed the new gas law in Brazil. Gas in Brazil was still basically a monopoly of Gaspetro, which is the gas subsidiary of Petrobras. So, there's this new gas law that incentivizes deverticalization, new players coming into the market and now we have this pre-salt oil, which has very, very deep sea oil. It's a huge reserve. And it's not only there's oil there, but there's also gas, right? So, we worked on this really interesting project, which is the very first power plant in Brazil that will run on gas coming from this pre-salt. For many years, this reserve was there, it was huge, but it was also very expensive to explore, because it's very, very deep. For a long time, the technology wasn't there, wasn't economically viable. Now the pre-salt layer is being explored and we now also have gas from pre-salt so that's also something that is changing the market.

Bret Kugelmass
Like everywhere you go around the world, we're able to extract more gas than ever. The gas plants are extremely easy to stand up. These are, even though they're big facilities, they put them up in less than two years. I mean, the construction sometimes just takes 12 months for like a 600 megawatt gas plant. It's crazy.

Ana Carolina Barretto
Yeah, exactly. Exactly. And I think it is really important to continue to diversify the Brazilian energy matrix. Since then, wind has grown hugely in Brazil. We started having utility scale solar, which has still, it hasn't been very many years that we've had utility scale solar in Brazil, that's also growing tremendously. But I think it's really important to continue diversifying and looking at what else is there? What else can we do?

Bret Kugelmass
Tell me a little bit about how the Brazilian industry might contribute to the power sector. Do they produce some of the parts to these plants in the country itself, or is a lot of it imported.

Ana Carolina Barretto
A lot of it is imported, but a lot of it is also locally produced, and that that I think, may have a little bit to do with how these projects are financed. Up until very recently, the main lender for these types of projects was the Brazilian Development Bank, it's called BNDES and BNDES has this role that they finance, as long as a certain content is locally produced, because the objective is obviously to develop the country, right?

Bret Kugelmass
On that front - sorry to cut you off, but I'm always curious - the Development Bank, so they have a dual mandate, that that allows them essentially, to take a little bit higher risk level on the project itself to then a traditional bank would? Like, for instance, if someone was bringing a new technology, like it's a new wind turbine, it's bigger, it has slightly different blades or something, would the Brazilian Development Bank be a good source of capital for that project? Or would they treat it like any other bank and say, listen, we don't want to debt finance anything that's too fancy?

Ana Carolina Barretto
They should have this mandate, right, of incentivizing new developments, new technology, but I think they're quite traditional, still. The tendency would be, this is taxpayers money here that we're lending, we want to make sure that it's actually something that has been tried and tested. So, they will normally actually only finance equipment that they have approved so there's this concern, obviously, about not being overly adventurous with taxpayers money that is being lent.

Bret Kugelmass
And can you take a project and chop it up into pieces? Let's say that the power generation- let's say it's a like a new type of solar thermal or something and the solar thermal part is new, but the steam turbine is still a standard steam turbine. Can you go to the Brazilian Development Bank to finance just the steam turbine part, because there's some sort of recourse? Or would they not want to touch it because the whole project is new?

Ana Carolina Barretto
No, I think they would be open to that and it's actually something that is somewhat of a change, a development in the Brazilian Development Bank's role. They are a lot more open to co-financing opportunities and to having this role of perhaps helping attract other lenders to finance this market in Brazil. So, I think nowadays, they are a lot more open to the sorts of structures that they would be willing to participate in, as opposed to, in the past, where it was really, there's just one format, and either you fit in or you don't.

Bret Kugelmass
What about other Latin American development banks? Are there other regional banks that also play a similar role?

Ana Carolina Barretto
Yes, absolutely. There's a number of different regional banks that play a role. Particularly, I see CAF - Corporacion Andina de Fomento. They're very involved in financing a number of energy projects and occasionally working in cooperation, for example, with BNDES, where it's projects that have this international dimension. And and another big change that we're seeing, looking at the market, is that it used to be that it was mostly development bank's financing these projects. But with the dramatic decrease in interest rates, it's become a lot more attractive to finance these projects in the capital markets. So we see a lot more - even individual investors in Brazil, there are some tax incentives for individual investors that want to purchase debentures, for example, that are for an aging infrastructure project - so, we see this as a really interesting development as well trying to diversify the sources of funding for this project.

Bret Kugelmass
And what type of interest rates are we talking about? What would be the debt component for any one of these power projects?

Ana Carolina Barretto
Well, it varies a lot depending on the project obviously, but to give you an idea, until maybe, perhaps we're talking two or three years ago, the local, the basic interest rate in Brazil was something like 12 to 13% a year. And now it's dropped to 2, 2 and something, 2 to 2.5% a year.

Bret Kugelmass
Yeah, unbelievable. I mean, and that's interesting, because that falls in line with what I've seen from other export banks from the US around the 5% mark, or less or in either of these Development Bank type programs where it's like, just slightly above LIBOR. What is the reason, what has created the shift where they can maintain such low interest rates?

Ana Carolina Barretto
I think it's mostly been a shift in the Brazilian economy. Brazil faced hyperinflation for many, many, many years. It got control starting as of 1994, we have this new currency. At the time, inflation reached up to like 2,000% a year, it was crazy. I remember the days when you would go buy something in the grocery store in the morning, and then you went back in the afternoon when you wanted to buy the same thing and it was no longer the same price. It was just crazy. So, we have, obviously, this fear of hyperinflation. It's been under control for several years now, but I think it took a very long time for the market to really believe that this was under control.

Bret Kugelmass
I see. So, it was the fear of hyperinflation that kept interest rates high, but now people are no longer as afraid, which means you can lower them again.

Ana Carolina Barretto
Exactly. Inflation has been rising, a tricky, tricky decision for policymakers, right. So, it is expected that interest rates actually may start being raised again in Brazil, because inflation is around the corner and you do have to be careful.

Bret Kugelmass
Come back to what you were just saying about living through a period of hyperinflation. I've actually never really gotten to talk to anyone about this. So, help me understand, what happens to everyone who has money who's upper middle class? Do they just lose everything that they have?

Ana Carolina Barretto
No, it was crazy at the time. If you had money, you could invest it - it was called the overnight market. Because of inflation, the whole economy was indexed to inflation, right? Because it was so high, people who had money made a lot more money.

Bret Kugelmass
They made more money?

Ana Carolina Barretto
Yeah, they made more money, because a lot of investments were indexed to inflation. So, if you have money, you make more money, but you could never really tell what was the actual buying power of the money that you had. It was very hard to get a sense of what that money was actually worth. So, it was very tricky. Whereas, on the other hand, if you had no money, if you had debt, it was horrible, because you were on the other side of that and having to need ever more money to pay for things because the prices kept increasing. It took a very long time for the Brazilian economy to be sort of uncoupled from these protections that were in place that indexed absolutely everything to inflation.

Bret Kugelmass
Wow. Okay, I didn't know about that structure, the indexing to inflation, that makes sense. And how long does that go on for when there's a period of hyperinflation, before people just throw their hands up and say, This is ridiculous, I can't afford food, do something government. Are we talking weeks, months, years? How long does hyperinflation last?

Ana Carolina Barretto
Brazil went through a hyperinflation period for many, many years. They did try lots of things. We had several changes in currency. Just in my lifetime - I'm not that old, right -We had cruzados, then cruzados novos, then cruzeiro, then there were maybe just three or four different currencies until 1994. This was the first government where we had Fernando Henrique Cardoso, who was the president, he was the finance minister at the time that was responsible for what was called the Real Plan, Plano Real, and they have this, again, a change in currency. This is when the Brazilian real, which is the currency that we have today, was created and through a series of policy measures, they did manage to finally get inflation under control. But it's a long, long, long process, though. So, throughout these years, Brazil has been known to be the country with the highest real interest rates in the world. That has only very recently changed. So, what this means for investors is that investors in Brazil were used to just leaving their money in the bank and just even the safest investments possible had really interesting returns. And now, that's no longer the case, so you see a lot more corporate investors, institutional investors, individual investors, looking at how to improve returns on investment. And that means necessarily taking more risks, right?

Bret Kugelmass
And what's the general position towards foreign investment? Does Brazil encourage it? And how would it do so?

Ana Carolina Barretto
Brazil definitely encourages foreign investment, it's a lot more open than it used to be in the past. There were quite a lot of foreign exchange controls in place that obviously made international investors a little worried, but it's changed a lot since then. The regulations have been modernized. There's a new regulation actually been passed in Congress now to even further modernize and liberalize the Brazilian foreign exchange market. So, Brazil desperately needs foreign investment and everybody is very aware of that. I think that the one thing that we haven't been able to solve yet, is that there's a restriction in Brazil to having contracts between two Brazilian entities linked to foreign currency. And again, this is due to the concern relating to inflation and there's this looming worry that, if you start indexing the Brazilian economy to foreign currency, that could be a problem in the future. There have been other economies that have done that, and it hasn't really worked out so well.

Bret Kugelmass
Could that restrict, let's say, a US developer that wanted to big build a big solar farm, if they were afraid of currency risk, would they be able to tie their off tick contract to US currency instead of to the real?

Ana Carolina Barretto
That's my point, if it's two Brazilian entities, let's say, the Brazilian subsidiary of the US company, and the off-taker is, again, a Brazilian subsidiary of a foreign company, if they were two Brazilian entities, in theory, you can't tie that to US dollars.

Bret Kugelmass
Oh, yeah. Okay.

Ana Carolina Barretto
So, obviously, there are some exceptions to that if there is a foreign element, there are workarounds.

Bret Kugelmass
Are there other ways to do it, where you could just sign a services agreement with the US company for advising services that just happens to be the same price as whatever you're going to pay for electricity or something?

Ana Carolina Barretto
Yeah, but there are there are mechanisms that that people do resort to. For example, in producing a foreign party to the agreement, that could be a guarantor, or introducing some sort of international element, but at the end of the day, it's usually a little bit artificial, right? Unless you're talking about an export project, it's not ideal. So, one of the things that is hopefully set to change is precisely removing that restriction, at least for the infrastructure, which would be great, right? Because it would allow a lot more projects to have international financing and then, obviously, it's up to the intrapreneur to do the calculations and to see what hedging mechanisms need to be in place, but for these types of projects to create some sort of foreign currency element so that they can actually resort to international financial markets as well.

Bret Kugelmass
And what are the politics of making a change like that? And what are the politics in Brazil? Like in general, do you need to change the constitution? Do you just need to pass a bill? What do you have to do to make a change just like that,

Ana Carolina Barretto
You need to pass a bill and actually, this bill that I'm talking about - there are two houses of congress in Brazil, there's the Chamber of Deputies and then the Senate - this particular one that I'm talking about actually passed the House of Deputies, so it's gone on to the Senate. So, it's halfway there. Obviously, there are so many things that may seem more relevant or urgent, so priorities in Congress are obviously something that is not that easy to control. But I think at least the finance ministry in Brazil was very much aware of the need to basically interfere less with private parties' decisions, to the extent that it doesn't really harm public policy.

Bret Kugelmass
How do they come to that conclusion? Does it take academics publishing papers? Does it take industry banging on doors? What generally changes the sentiment of ministers position on a topic like this?

Ana Carolina Barretto
I think it's mostly industries banging on doors and that's, I think, a change, to past governments. Over a number of years in Brazil, we had left wing governments in power at the federal level and there were some ideological issues with respect to foreign investors, with respect to privatizations. So, a lot of the decision making process wasn't necessarily driven by what the country needs right now, what stage it is in right now, but rather by ideological views on that. And I think what has happened in this current government, which has a lot of issues that I won't go into - so, you know what I'm talking about, it's just crazy - but at least on the investment and finance front, there are a lot of people there that came from private companies, that worked at banks, that-

Bret Kugelmass
They know what they're doing, from a private sector development perspective,

Ana Carolina Barretto
At least they hear what people have to say, right? So, either they've been through it, and they've seen things that could be improved, or else they are more open to receiving industry representatives, associations that go there and say, This is actually harming my ability to do business. There's this whole trend of trying to make Brazil an easier place to do business in. So, a lot of initiatives that have already been implemented to reduce red tape. There's been this big change now, for example, in the Brazilian insolvency law, that's really new, it just came into effect.

Bret Kugelmass
This is like bankruptcy. Is that your term for bankruptcy?

Ana Carolina Barretto
Yeah, the new Brazilian Bankruptcy Law implemented this really important change, that I think can have a lot of effects in the market, which is introducing this notion that the Brazilian Bankruptcy Law did not have that it's important to be able to allow entrepreneurs to have a fresh start. So, like in the US, for example, people go bankrupt, and then they go on and they do another business, and that one may work out.

Bret Kugelmass
It's the greatest part of our economy.

Ana Carolina Barretto
Exactly. So, what we had in Brazil was not that. People went bankrupt and then it took them 20, 30 years until they were able to release themselves from those liabilities. Basically, if you went bankrupt, you would mostly, in most cases, never ever go into business again. And that's not very helpful for the economy. So that, for example, that has changed. We have this new law now that has just come into effect with a number of new measures seeking to allow companies to make a fresh start and to really, if they go through a bankruptcy, which is unfortunate, that they can pay off what they owe and then that's it and not be exposed to liabilities over a number of years.

Bret Kugelmass
What about rules around like foreign ownership of infrastructure assets? Are there constraints there? And might that be changing anytime?

Ana Carolina Barretto
Yes, we do have this very old law, it was a law of 1972 that said that foreign entities could not own more than "X" amount of rural land. And this old law, very old law, had not been repealed, it was there, but it was considered as not applying anymore because the Brazilian Constitution, which was passed in 1988, says that it's not allowed to discriminate between Brazilian and international investors. So, it's assumed that this didn't really apply. Then when we have the Dilma government, I think it was 2014, the government took this view they were very concerned about Chinese investors buying up farmland in Brazil.

Bret Kugelmass
Yeah, that's happening around the world now-

Ana Carolina Barretto
Around the world.

Bret Kugelmass
Somebody from Ukraine said the Chinese are coming in, buying the land, depleting the topsoil, and then they're just gonna leave.

Ana Carolina Barretto
Yeah, exactly. So, concerned with that, what the government did was, Hey, there's this really old law here. We'll say that it really does apply, the Constitution hasn't repealed it and so they have this understanding, a legal opinion that basically revived this really old law. It was targeted at the agribusiness sector, right, and helping to protect the local agribusiness sector from the sort of influence that could be seen as providing a threat to the safety of food supply in Brazil or something like that. But it also had this very adverse effect that most energy projects in Brazil, they're actually built on rural land.

Bret Kugelmass
Okay, interesting.

Ana Carolina Barretto
Yeah. So, what do you do with all those international investors buying land, not because they're going to plant any crops, but because they're going to build this wind project or a solar project or whatever? We had this big conundrum about what to do about that. And there's a lot of discussion also, a new law has been passed trying to differentiate between what is investment within the agribusiness sector, and what is an investment within a rural land, but for an industrial activity?

Bret Kugelmass
Right, right. Another one we've been following is the nuclear sector. We heard there might be a bill that allowed for foreign ownership of nuclear assets to come in, because we see all these next generation technologies coming to fruition and you guys already have a successful local nuclear industry. So, this could be a chance to grow that as well.

Ana Carolina Barretto
Right. There was a lot of talk at one point about this liberalisation. The government had a plan a few years ago of maybe building six or seven new nuclear power plants in Brazil, also in this bid to diversify the matrix. But then Fukushima happened, and I think interest was severely dampened. There is this project in Brazil, we currently have two power plants in Angra. They were both owned by Eletronuclear. There was this third power plant called Angra 3, which is a project that started construction maybe in the 80s and it's stopped since then.

Bret Kugelmass
I think Siemens was going to build that one, maybe.

Ana Carolina Barretto
Yeah, so, there's a lot of discussions about finalizing that power plant .The government does have this intention to resume construction, but it's obviously a very complex project, because it's halfway built, but it stopped so many years ago. Finishing construction is hugely expensive. Abandoning what is there and building a whole new one is also hugely expensive. So, there's been a lot of talk about how to structure that, but the plan is to move forward with Angra 3. I am not so sure about these other projects that were vetted as sort of possible other alternatives and this alternative of not- because right now, this is a government monopoly, the nuclear industry in Brazil. So, trying to break that monopoly or not? I wouldn't know. At the time, there was a lot of excitement about this, but since Fukushima, I think a lot of people had second thoughts about whether or not that was a good idea.

Bret Kugelmass
And I guess, fast forwarding to today, what types of projects do you focus on mostly now?

Ana Carolina Barretto
I do a lot of different projects. I worked on this really interesting power plant that uses gas from the pre-salt layer that I was talking about. It's a project that is owned by a local firm called Patria, Shell, and Mitsubishi. It was a very, very interesting project. We've been working a lot on some other gas projects to sort of expand gas networks and reach more energy producers. I'm also working on this really interesting second generation biodiesel project in Paraguay, which is fascinating because it's very green, and it can be used, this biodiesel that is generated can be used, for example, to fuel trucks without having to adapt the engines. But the problem with biodiesel is that sometimes you can't use a regular engine, right? You need some sort of adaptation. So, this type of second generation biodiesel can be used directly with no adaptation.

Bret Kugelmass
I see, this plant produces biodiesel. It doesn't use biodiesel to produce electricity.

Ana Carolina Barretto
No, no, it's going to produce biodiesel using the using leftovers from-

Bret Kugelmass
Sugar can husk or something?

Ana Carolina Barretto
Sugar cane husks as well, soy husks, but also - I forgot the name, but it's basically the waste from cattle production which there is a lot of in Paraguay, right. Paraguay is a huge cattle producer.

Bret Kugelmass
Right. Brazil is too, probably no? I feel like all of Latin America has a good cow business.

Ana Carolina Barretto
Yeah, exactly. So, I think it's fascinating because you get to use waste to generate this very clean fuel that can also be used, it can also be used to produce jet fuel, which is one of the most highly polluting activities in the world right now.

Bret Kugelmass
And also prevents it from releasing methane, because I think part of the problem with this is that, if it decomposes to methane, it actually has a worse greenhouse gas effect.

Ana Carolina Barretto
Exactly, exactly. It's a fascinating project. I think there's a lot of focus right now on green projects and green bonds to finance those projects have been heavily oversubscribed in the world. I think there's this world demand for that in connection with ESG, and whatnot. But in the local economies in Latin America, I think we're also seeing that more clearly. It used to be perceived as sort of, this is kind of a rich people concern, let the Europeans worry about it, something like that. And nowadays, there's this real perception that it's very real, and that there is a lot of opportunities for growth of the region, by embracing ESG and embracing green projects.

Bret Kugelmass
Yeah, because these green projects can be complex, which means that you need a lot of sophisticated inputs, whether it be, everything from the equipment itself, all the way to the type of stuff that you do, the expertise that you provide to make a project happen. While ESG might have been this nice thing to have, now it's such a dominant part of the economy that people see opportunities, say, Well, let's get involved. And that becomes self-perpetuating, which is a great thing.

Ana Carolina Barretto
Exactly. In fact, I think a lot more people in the region are seeing the real economic benefits that can be derived from green projects, not just doing something nice for the planet, but actually doing something that is nice for the planet and it is profitable and it is interesting. We're seeing a lot of activity on that front.

Bret Kugelmass
As we wrap up today, maybe you can just kind of offer us some trends that you see moving forward into the future. Over the next five or 10 years, what is it that you see coming down the road that you have some unique insight into?

Ana Carolina Barretto
I think one thing that could be really interesting as a future trend would be green hydrogen. The Brazilian government is actually already looking at that. There's an Energy Policy Council in Brazil and they just had this meeting on April 20 - so, two weeks ago - and they announced that they would be launching a policy for hydrogen in Brazil. So, they're already looking at that and already looking at what needs to be done to to promote this industry in Brazil, and already thinking about regulation, which I think is very innovative, because it's so new all around the world.

Bret Kugelmass
Yeah. Green hydrogen is like the artificial intelligence of the energy industry. Artificial intelligence became so popular and everyone started saying, Oh, what can I do? What can I do? And I feel like green hydrogen is like that for clean energy now,

Ana Carolina Barretto
True with tremendous potential. I thought it was very interesting that the government is already looking at that and already looking at developing a policy.

Bret Kugelmass
Just on that token, are there other industrial players - other than Petrobras, which is the state owned big oil - are there other chemical and oil style companies that are private that are in Brazil that would be able to help develop expertise and equipment around the space?

Ana Carolina Barretto
Absolutely, absolutely. There's a number of huge international players like Shell, like Equinor. They're huge in Brazil and definitely investing. I don't think we should rely on government to lead this. It is definitely the private sector that has to lead this. What I thought was interesting is that governments tend to be reactive, instead of proactive, and I thought it was very interesting to see the Brazilian government already moving to develop a framework for this sector in Brazil.

Bret Kugelmass
Yeah, this is very proactive, because it seems to me - and correct me if I'm wrong - but possibly the thinking is, if we create the right market structure to encourage the development of this technology here, we're going to develop homegrown expertise. And then we're going to be able to export our intellectual property and that homegrown expertise around the world to bring dollars back here over time. Is that the basic idea?

Ana Carolina Barretto
I think, probably, they're not really even focusing on technology. Although this is true. For example, Petrobras has developed lots of technology, for example, this technology to explore Ultra Deep oil. As you know, a lot of it was developed within Petrobras, because they have the challenge. But I don't think they're probably focusing necessarily on technology development. I think what they're probably thinking is that, if they create the right market, this could help attract green hydrogen projects to be developed in Brazil.

Bret Kugelmass
I see. So, just the local development, the actual construction and building.

Ana Carolina Barretto
Exactly, the actual infrastructure that will be required.

Bret Kugelmass
Right. Okay, that makes sense. Final word up to you. What do you want to leave our audience with?

Ana Carolina Barretto
It's a pleasure, pleasure speaking to you. And I think despite all the difficult times that we've been facing, I'm very optimistic about the future and about the region as well.

Bret Kugelmass
Awesome. Ana Carolina Barretto, thank you so much for your time today.

Ana Carolina Barretto
Thank you so much, Bret.