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The board of directors of Brazilian oil and gas giant Petrobras has approved an agreement with Sete Brasil related to a charter of four and termination of contracts for 24 drilling rigs
Petrobras reached a possible deal with its compatriot Sete Brasil to charter four and terminate contracts for another 24 drilling rigs in February 2018. However, the deal was subject to approval by both companies.
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On Friday, December 20, 2019, Petrobras reported that its board had approved the final terms of the contract with Sete Brasil, subject to compliance with the above conditions.
The approved contract maintained the previously agreed and disclosed terms, including maintenance of charter and operation contracts for four platforms, effective for 10 years and daily rate of US$ 299.000; termination of contracts signed 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.
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FIP Sondas is a Brazilian private equity fund, which holds a 95% stake in Sete Brasil. The remaining 5% are held by Petrobras.
According to Petrobras, it will be up to Magni Partners, winner of the auction for the Judicial Reorganization of Sete Brasil, in partnership with Etesco, to charter and operate the remaining four platforms, still under construction.
Petrobras added that signing the contracts that would formalize the contract would depend on compliance with the governance rules of Sete Brasil and other companies involved. The effectiveness of the contract and other contracts, in turn, will depend on the fulfillment of conditions that must occur over time, and the latter must be implemented by June 30, 2020.
Prior to Petrobras board approval, Sete Brasil in October 2019 also reached agreements with Singaporean platform builders Keppel Offshore & Marine and Sembcorp Marine related to contracts for the construction of six semi-submersible platforms and seven drillships. , respectively.
Keppel has entered into an agreement with Sete Brasil's subsidiaries, including Urca, Frade, Bracuhy, Portogalo, Mangaratiba and Botinas, in relation to engineering, procurement and construction contracts for the construction of six semi-submersible drilling rigs for these six subsidiaries from Sete Brazil.
Separately, Sembcorp Marine has reached an agreement with Sete Brasil in respect of a total of seven drillship contracts secured by its various subsidiaries of the various subsidiaries of Sete Brasil. 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, it was agreed that Sembcorp Marine would retain all work performed. In relation to two of the seven drillships, which had the most advanced construction progress, the titles of these works would be distributed between the shipyard and Sete Brasil in proportion to the payments made by Sete Brasil.
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 off Brazil's Atlantic coast.
It was supposed to be a 28-rig project, worth around $90 billion in revenue. However, following a widespread corruption scandal in Brazil involving both Sete and Petrobras, Sete failed to obtain the necessary funds to pay for the rigs it had ordered from Sembcorp Marine and Keppel. Petrobras also refused to commit to the entire package of platform contracts.
In April 2016, Sete Brazil was forced to file for bankruptcy protection due to Petrobras' hesitation to sign long-term contracts for the platforms ordered from the driller.
