Sete Brasil, which is responsible for contracting the platforms that will be used to explore the giant pre-salt reserves offshore Brazil, is waiting for financing from public banks to pay the shipyards involved in the project. And the yards are depending on those resources in order to retake production.
With a 29-rig portfolio, Sete Brasil stopped paying the shipyards responsible for the construction of the platforms in November 2014, after being involved in Carwash Operation investigations and having a pre-approved financing suspended by the national development bank BNDES. The debt with shipyards amounts to BRL 4 billion.
Sete Brasil has had a small cash outflow on the projects in the second quarter of 2015, says Loh Chin Hua, CEO of Keppel Corp, parent company of Keppel’s BrasFELS. Efforts by Petrobras to cut costs has caused the company to reconsider its strategy to invest in the construction of new rigs. Petrobras will adopt chartering as a “preferred model” rather than investing USD 1.7 billion in the construction of rigs.
Petrobras authorized the shipyards to hire services abroad – as in China, Thailand, Indonesia and Turkey – to speed up deliveries. But the negotiations to resume the contract with consortium QGI, responsible for the construction of FPSO’s P-75 and P-77, in Rio Grande (RS), have progressed.
Work in the shipyard should be resumed this year, and the units should be operating in 2019. There are no definitions at this moment; however, Sete Brasil’s program may be reduced to 19 (or less) rigs.
BrasFELS slows down construction of pre-salt rigs
Keppel Offshore & Marine is one of the shipyards that have received no payments from Sete Brasil since November 2014.
The group is responsible for the construction of six semi-submersible rigs it has on order from the Singapore yard group. Keppel’s BrasFELS unit is building six DSSTM 38E designed semi-submersibles drilling rigs for Sete Brasil. Of these the first three are rigs are 90 percent, 63 percent and 36 percent completed. The six rigs were ordered in 2011 and 2012 with a total contract value of USD 4.9 billion.
Keppel has slowed down construction of the rigs. The group has discussed how to finance the fifth and sixth rigs contracted by Sete Brasil, and any changes in any terms of the contract.
Leasing of shipyard is a viable alternative
The Brazilian government is analyzing the possibility of signing an agreement with the Japanese group Mitsubishi Heavy Industries for the leasing of Rio Grande shipyard. The idea would be to transfer the operation of the yard to the Japanese group without making any changes in the shareholding structure. By leasing the infrastructure, the government hopes for the total removal of financing bottlenecks.
Mitsubishi leads a group of five Japanese companies that, together, own 30 percent of Ecovix, owner of the shipyard. The remaining 70 percent are owned by Engevix. According to newspaper Valor Econômico, Engevix was not involved in the discussion.
Despite the recent difficulties, the government’s efforts to develop the national shipbuilding industry remain unchanged, says Chief of Staff Minister Aloizio Mercadante. According to the minister, a possible reduction in the demand for rigs and platforms could lead to a process of consolidation of shipyards, but the government still aims to promote the sector. Brazil is responsible for one third of the global demand for offshore platforms.