Leader of the South American petroleum pack by miles is Brazil, its ascendancy largely down to the driving ambition of state-owned Petrobras, the reputation of which is legendary in upstream petroleum, especially deepwater. A measure of that determination is the company’s latest five-year investment plan, rolled out early this year. At $174billion through 2013, it is 55% up on the previous $112.4billion five-year plan.
Exploration and production is up 71%, to $104billion, of which almost 30% is earmarked for ultra-deepwater, where this company and its various licence partners are engaged on one of the most remarkable resource hunts in the history of petroleum.
It is as if Petrobras has not heard that there is a recession gripping much of the globe and that the G20 nations met in London recently in a bid to resolve the mess.
However, the company has been hit and is currently juggling its drilling commitments and new-build orders in a bid to achieve economies. As far back as mid-2008, it decided to postpone the issue of construction tenders for 28 deepwater drilling rigs – in part, it is believed, because of concerns about recession, despite then record oil prices.
The company’s E&P manager, Osmond Coelho, told the 9th Simmons Annual Energy Conference in March (2009) that Petrobras had been considering an additional 24 rigs, but has asked for, and expects to receive, an extension to the relevant licence periods from ANP.
An answer had been expected by the end of March, though there was no news at the time this report was being prepared. According to Coelho, approval would enable reallocation of some of the rigs without risking loss of any of the licences.
Meanwhile, Petrobras is out window-shopping in the Far East, having just visited South Korea, where it plans to plough $40billion into an armada of 30 mobile offshore drilling units (semi-submersibles and ships) for delivery through to 2017. All will be for deep/ultra-deepwater work. On April 20, the company’s chief financial officer, Almir Guilherme Barbassa, said in the wings of a conference in South Korea that five to seven drillships, or semi-submersibles, would be ordered near-term, possibly as early as this month.
Barbassa was reported as saying: “In the next five to six years, we are looking for 240 different vessels … drillships, storage units, supply vessels, transportation vessels and others.”
He said, too, that tenders for eight production ships and seven drillships would be issued shortly. Based on current averages of about $1billion for either type, that alone represents orders totalling $15billion.
Barbassa added: “South Korean shipbuilders are among the best (in the world), with new technology and ways to reduce costs. They are very competitive in the area of drillships and platforms and we welcome their participation.”
Mauro Andrade, Rio de Janeiro-based upstream analyst with Deloitte, confirmed Brazil’s huge hunger for drilling tonnage; indeed, he regards it as “spectacular”.
“Petrobras currently has under contract 11 rigs capable of drilling in up to 900m of water; 18 capable of drilling in 2,000m water depth, and five rigs capable of drilling in depths greater than 2,000m. We are talking about 34 rigs under contract as of December 21, 2008, and Petrobras aims to have 63 rigs by 2012.”
This includes the intended domestic new-builds announced by the company a year ago at OTC in Houston.
However, Andrade expects delivery delays.
“We already know that some of these rigs won’t be available to the market in the timeframe that Petrobras wants. So that’s why they’re extending some existing contracts, especially of those rigs capable of drilling ultra-deepwater. Brazil’s ultra-deepwater market is particularly important, but there are still very few rigs around that can do the job, including being able to carry the amount of equipment necessary needed to reach the objectives.
“Petrobras has five of them under contract, which is quite remarkable. That’s 25% of the total number of rigs capable of drilling in more than 2,000m water depth.”