Petrobras Terminates More Contracts

Petrobras, the embattled Brazilian state-run energy company, has terminated vessel contracts with World Wide Supply, Siem Offshore and Ultrapetrol.

World Wide Supply, a Netherlands-based offshore services company, received a notice of early termination for two platform supply vessels (PSVs) from Petrobras. The company had six vessels working for Petrobras. 

Norway-based Siem Offshore also received an early termination notice for its Siem Carrier, a 1996-build PSV. According to Siem, the termination was due to Petrobras failing to obtain proper operating licenses for the vessel. Petrobras signed a four-year contract to take operation of the Siem Carrier in 2013.

Ultrapetrol, a Bahamian offshore vessel operator, also received a notice from Petrobras that three of its PSV contracts (UP Amber, UP Pearl and UP Esmeralda) have been terminated. 

The company still operate six PSVs with Petrobras under Brazilian flag or with Brazilian Special Registries ("REB Rights"). Additionally, the non-Brazilian flagged RSV UP Coral has recently commenced a six-year contract to provide subsea support services to Petrobras. And, two laid-up North Sea vessels, UP Agate and UP Jasper, are currently participating in tenders to enter service with Petrobras as an RSV subsea support vessel and a PSV with REB Rights, respectively.  

Petrobras has been entangled in Brazil’s largest-ever corruption case and has been forced to write down about $17 billion worth of assets this year.

In June, the company announced that it would slash its capital expenditures to $130 billion (estimated 2015-2019), which is 41 percent lower than the $221 billion it anticipated spending from 2014 to 2018. This is Petrobras’ smallest capital investment plan since 2008.

Petrobras also trimmed its 2020 forecast for global production by nearly a third to 3.7 million barrels of oil and equivalent natural gas per day from its estimate of 5.3 million per day