Petrobras’ Anchored Drilling Rigs Reverse Auction Sees High Prices

Low Attractiveness to the New Auction System and Limited Supply of This Type of Equipment (With Dynamic Positioning) in the Market Would Have Been the Cause of Prices Above What Petrobras Expected

The auction of three anchored rigs held by Petrobras had disappointing results for the company, with prices significantly higher than expected.
The main reason, according to the market, was the use of a new auction system, called a reverse auction, where companies submit bids and then have access to the competitors’ prices, but without knowing their names, and each company may lower its price.

The bidding process, which has been dragging on since February of last year, had the deadline for the submission of bids postponed twice and did not attract large companies, putting into question the new system fully executed through Petrobras’s business portal, Petrocnet.

The Bidding

The process was divided into two lots, lot 1 involved two units for 750 thousand meters of water depth, and had as the best offer that of the Chinese group new to Brazil PGP (Shandong Offshore), which presented daily rates of US$ 168 thousand per day and in second place the proposal from the Brazilian Constellation (formerly Queiros Galvão E&P) of US$ 168.9 thousand per day.
As the prices were higher than expected by Petrobras, there are doubts in the market whether the oil company will validate the results.

Petrobras expected a rate between US$ 100 thousand to US$ 120 thousand per day for each rig, the Chinese offered the rig Tiger III and the Brazilian offered the semisubmersible Gold Star.
In favor of the Brazilian, the fact that the Chinese have no experience in operating rigs, as they operate in the market as a shipyard.

In the market, it is said that the fact that the new auction modality has only attracted Brazilian and foreign companies without operation in our offshore is due to the novelty of the modality.
Since the beginning, the market has received this type of auction poorly, which according to the companies works very well for small purchases, but not for such a complex technology item as a drilling rig.

The only traditional multinational in our market to submit a proposal was Noble, which presented the fourth-best bid (US$ 197.4 thousand/day).
Companies like Seadrill, Transocean, Ensco, Saipem, Odfjell, and Schlumberger analyzed the bidding document but chose to formally decline from the process, with the first three even having rigs available immediately.

It remains to be seen how the auction for lot 2 will be, which involves an anchored rig for 400 meters of water depth, with the submission of proposals scheduled for May 27 and the auction taking place the following day.
Petrobras expects these rigs to be available in March 2020, the equipment will be chartered for a period of three years, which may be renewed for two additional years and must be ready for operation 270 days after the signing of contracts.

Did you see that Ensco and Rowan have joined and now have 82 Offshore Rigs? Click here and read!