Petrobras on the brink of resolution in Sete Brasil rig dispute?
Brazilian state-owned oil and gas giant Petrobras has reached a possible settlement with its compatriot rig lessor Sete Brasil to charter four and terminate contracts for other 24 drilling rigs. However, the deal is subject to approval by both companies.
In a meeting held on Wednesday, February 28, Petrobras’ board of directors approved the key terms for a possible settlement, in the context of the extrajudicial mediation procedure in progress with Sete Brasil – under judicial recovery.
According to Petrobras, the main terms include maintenance of charter and operation contracts referring to four drilling rigs, with termination of signed contracts in relation to the other 24 drilling rigs.
The contracts will have effect of ten years, with daily rate of $299,000, including the chartering and operation of the units.
The terms also include the removal of Petrobras and its subsidiaries from the shareholding structure of the companies of Grupo Sete Brasil and FIP Sondas, so that it no longer holds any shares in this company, as well as the consequent dissolution of all other contracts that are not compatible with the terms of the agreement. FIP Sondas is a private equity fund from Brazil, which holds a 95% interest in Sete Brasil. The remaining 5% is held by Petrobras.
The signing of the agreement between Petrobras and Sete Brasil is conditional upon presentation, by Sete Brasil, of an international-class drilling rig operator with experience in deep waters, in accordance with the approval criteria of Petrobras.
The agreement is further conditioned to the success in the negotiation and approval, by the relevant bodies of both companies, of the final terms and conditions of the documents necessary to the implementation of the agreement.
Sete Brasil was created in 2010 to build, own and operate a fleet of ultra-deepwater drillships and semi-submersibles to develop the Petrobras-operated pre-salt oil fields off Brazil’s Atlantic coast.
This was supposed to be a 28-rig project worth about $90 billion in revenues. However, following a widespread corruption scandal in Brazil which involved both Sete and Petrobras, Sete failed to obtain the funds needed to pay for the rigs it had ordered from Sembcorp Marine and Keppel. Petrobras also refused to commit to the whole rig contract package.
In April 2016, Sete Brazil was forced to file for bankruptcy protection due to Petrobras’ hesitation to sign the long-term contracts for the rigs ordered from the driller.