Subsea 7 has warned it expects to lose up to $300million on its Brazilian offshore project at Guará-Lula NE – which will significantly hit hopes of making a profit this year.
The Norwegian firm was awarded a $1billion contract for the Guará-Lula project, part of the deepwater discoveries in the Santos basement, two years ago.
However, ongoing problems with weathers, customs and the supply chain have left it facing delays, leaving Subsea 7 facing losses of between $250million and $300million instead of the previously predicted profit for Brazil.
The company said, as a result of the losses, it no longer exepected full year results to ‘show progress’ compared to 2012’s figures.
“I’m disappointed that we are obliged to take another loss provision on the Guará-Lula project,” admitted Subsea 7 CEO Jean Cahuzac.
“Our current financial results in Brazil are unacceptable and we have put in place a plan to improve margins in this Territory. This plan includes the decision not to bid any further EPIC projects with similar risk profiles.
“Guará-Lula represented 5% of our backlog at March 31, 2013. The remaining 95% of our contract portfolio is performing in line with expectations. Insofar as the global market is concerned, tendering activity remains high and we remain positive about the medium and long-term market prospects.”
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