Floater Specialists Line up Bids as Petrobras Limbers up for Libra
Friday 24 March 2017
A select group of leading floater specialists is preparing to submit fresh bids in little more than a week in a Petrobras tender that should kick off full-scale development of the giant Libra pre-salt field in Brazil's Santos basin.
The contractors expected to submit bids on 4 April include Japan's Modec International, BW Offshore of Norway and Dutch player SBM Offshore, though the latter is still formally disqualified from signing new contracts with Petrobras due to a long delay in reaching a settlement with Brazilian authorities regarding irregular commissions paid on the company’s behalf.
The Libra tender is expected to be an alluring prospect for such players, but weeks of judicial uncertainty may have diminished the appetites of others.
A partnership of Belgium's Exmar with Brazil’s QGN was seen as another potential contender after they submitted a bid in a contest for another Petrobras floating production, storage and offloading vessel to be installed at the Sepia field. However, sources said the same line-up would not participate in the Libra race.
The tender to supply a big FPSO unit for Libra had been on hold since January, when Brazilian shipbuilding association Sinaval obtained an injunction by alleging that the contest was weighted against local suppliers.
In an earlier version of the tender, Modec emerged as the sole bidder, with prices that Petrobras claimed were 40% higher than the international norm, blaming local content requirements for this.
Market sources said Modec’s proposed dayrate back then topped the $1 million mark, but Sinaval and others insist this price was distorted by other factors, including the lack of competition.
The Sinaval injunction was partially overturned last Friday, alerting contractors to a two-week deadline for submitting new bids.
The victory in court puts the Libra tender back on track after two months of delays, but there are still question marks hanging over the contest. The injunction and remaining uncertainty about the admissibility of the local content “waiver” seem to have put some bidders off.
Dutch contractor Bluewater was also in the picture for Libra, but is now unlikely to participate.
Uncertainties were highlighted by the legal reasoning of the judge who overturned the injunction that was holding back Libra.
The tender was allowed to continue, but Brasilia judge Neviton Guedes stressed that no contract could be signed until national petroleum agency ANP decides to accept the waiver claim.
The ANP has scheduled a public hearing on the matter for 18 April, and the agency’s director general Decio Oddone has said he hopes a decision will be taken shortly afterwards.
The Libra FPSO will have capacity to produce 180,000 barrels per day of crude oil and 12 million cubic metres per day of natural gas, and is due to come on stream in 2020.
Members of the Petrobras-led Libra consortium took heart this week when another Brasilia judge declined to grant another injunction, allowing bidders to submit technical offers to supply another 180,000-bpd FPSO, the unit destined for Petrobras-operated Sepia.
Modec, SBM, BW Offshore and Exmar submitted technical proposals, and analysis of these is expected to move swiftly to allow commercial bids to be received in early April.
Once again, SBM’s participation in Sepia will ultimately depend on the company settling all potential corruption non-compliance liabilities before the signature date.
The Sepia unit, too, is due to enter production in 2020.
Bluewater was originally working in association with QGN, repeating an arrangement that delievered the P-63 FPSO to Petrobras, but later dropped its Brazilian partner and then declined to bid.
The main part of the Sepia field lies within a transfer of rights area where Petrobras has a 100% interest and is currently barred from selling any part of this to third-parties.
This factor raises risks and pushes up financing costs, critics said.
The absence of Bluewater still raised eyebrows, however, because the company bid for both the Libra and Sepia floaters last year, when tough local content requirements were still in place.
“Bluewater still sees local content as a risk factor, made worse by the uncertainty in the courts and the waiver claim,” a source said.
Other contractors invited to the Libra race include Bumi Armada, Teekay Offshore and Cenertech, but observers said bids from these outsiders are unlikely.
Petrobras’ partners in Libra include Anglo-Dutch supermajor Shell on 20%, France's Total on 20%, China National Petroleum Corporation on 10% and China National Offshore Oil Corporation on 10%.