Petrobras extended the term for certain conditions of an agreement with Sete Brasil relating to a charter and also termination of contracts for 24 drilling rigs

Petrobras reported on Wednesday (24) that its executive board postponed the deadline for the agreement between the two companies, from June 30, 2020 to September 30, 2020.

As a reminder, Sete Brasil was created in 2011 to build, own and operate a fleet of ultra-deepwater and semi-submersible drillships to develop the pre-salt oil fields operated by Petrobras offshore Brazil.

It was supposed to be a 28-rig project, worth around $90 billion in revenue. However, a widespread corruption scandal has emerged in Brazil involving Sete Brasil and Petrobras.

Sete Brasil was unable to obtain the necessary funds to pay for the platforms that commissioned Sembcorp Marine and Keppel. Petrobras also refused to commit to the rig's entire package of contracts.

In April 2016, Sete Brasil was forced to file for bankruptcy due to Petrobras' hesitation in signing the contracts for the platforms ordered.

Petrobras Agreement – ​​Sete Brasil

To better understand this decision by the Brazilian company, it is necessary to clarify what the contract is.

In other words, Petrobras reached a possible agreement with his compatriot to charter four erterminate contracts for another 24 drilling rigs in February 2018.

However, the deal was subject to approval by both companies. At the end of December 2019, the Petrobras approved the final terms of the contract with Sete Brasil, subject to compliance with the above conditions.

The approved agreement maintained the previously agreed and disclosed terms, including maintenance of charter and operation contracts for four platforms, effective for ten years and daily rate of US$ 299.000.

It also involved the termination of contracts entered into for the other 24 platforms, the removal of Petrobras and its subsidiaries from the shareholding structure of the companies Sete Brasil and FIP Sondas, as well as the consequent termination of contracts incompatible with the terms of the contract. the deal.

FIP Sondas is a Brazilian private equity fund, which owns a 95% stake in Sete Brasil. The remaining 5% are owned by Petrobras.

In addition, Magni Partners, winner of the auction in judicial recovery of Sete Brasil, in partnership with Etesco, will charter and operate the remaining four platforms, still under construction.

At the time of approval, Petrobras stated that signing the contracts would formalize the contract, but it depended on compliance with the governance rules of Sete Brasil and other companies involved.

As a result, the effectiveness of the contract and other contracts depended on the fulfillment of conditions that must occur over time, and the latter was supposed to be implemented by June 30, 2020.

The deadline has already been postponed for a few months.

Other Sete Brasil agreements

Sete Brasil in October 2019 also reached agreements with Singaporean rig builders Keppel Offshore & Marine and Sembcorp Marine related to contracts for the construction of six semi-submersible platforms and seven drillships, respectively.

The agreement with Keppel involved a liquidation agreement relating to engineering, procurement and construction contracts for the construction of six semi-submersible drilling rigs for six subsidiaries of Sete Brasil.

Separately, Sembcorp Marine has reached an agreement with Sete Brasil in respect of a total of seven drilling contracts secured by Sete Brasil's various subsidiaries.

Under the agreement, all seven contracts were agreed to be terminated and the parties agreed to mutually release each other from all claims related to the contracts.

For five of the seven drillships, Sembcorp Marine would maintain all work performed. In relation to two of the seven drillships, which had the most advanced progress in construction, the titles of these works would be distributed between the shipyard and Sete Brasil in proportion to the payments made.