Petrobras Cancels Seven Tankers at EAS

Transpetro
Tankers Dragao do Mar and Henrique Dias at EAS (courtesy Transpetro)

By MarEx 2016-06-29 21:14:32

On Wednesday, Petrobras' shipping arm Transpetro confirmed that it had canceled orders for seven tankers from the shipyard Estaleiro Atlantico Sul (EAS). Transpetro has already taken delivery of seven and will retain orders for a further eight ships, comprised of three Suezmax and five Aframax tankers. Delivery will be complete by the end of 2019.

The orders were originally placed as part of a fleet renewal program under the leadership of former Transpetro president Sergio Machado – one of the main informants in the Operation Car Wash corruption scandal at Petrobras. 14 vessels of that program have been delivered, and with the latest cancelation, the scope will fall to 27 ships from a planned total of over 40, Brazilian media sources say. 

Since its founding in 2005, EAS has never made a profit; it posted a loss of more than $100 million last year, following an order cancelation for drillships for Sete Brazil. Net revenue was down by nearly 70 percent year-on-year. In response to the downturn, the firm's recent layoffs have reduced support and production staff by half. Additional cuts in management have allowed it to eliminate its central office and consolidate into its operations office. 

Total debt amounted to $600 million and cash on hand to $40 million at the end of 2015. EAS’ shareholders have approved a measure to issue additional shares in 2016 to raise more capital. 

Newly formed competitor Vard Promar – a yard majority-owned by a Fincantieri subsidiary – recently delivered its first ever vessel, an LPG carrier for Transpetro. However, late last year, Transpetro cut two additional LPG carriers from its orderbook at Promar; the vessels were in the early stages of production. “The company is currently reviewing its overall exposure to the Brazilian market, and the termination – if effective – is expected to reduce the company’s overall exposure,” Vard said in a statement. “At the same time, the company intends to claim compensation from Transpetro for damages in relation to the terminated contracts.”