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November 29, 2010

Petrobras unseals bids for pre-salt rigs

Petrobras has opened the sealed bids submitted in a three part tender intended to lead to the construction, in Brazil, of 28 offshore drilling rigs required for development of the pre-salt zone.

According to Dahlman Rose, the bids came in at "significantly higher-than-market costs as expected."

Several Brazilian shipyards placed bids, but only a handful of contractors participated.

The Brazilian shipyards bid on average $760 million.

Seven domestic shipyards bid for nine ultra deepwater floaters that Petrobras intends to own outright. Those yards were: Estaleiro Atlantico Sul, Alusa-Galvao, Keppel FELS Brasil, Jurong Shipyard, Andrade Gutierrez, Estaleiro EISA Alagoas and OAS-Odebrecht-UTC.

Part 1 of the tender requires two floaters and Dahlman Rose notes that the average bid came in at $910 million, 50 percent above market. Part 2 of the tender requires seven floaters to be built at the same yard; the average bid was $740 million, 25 percent above market.

Just four drilling contractors -- Etesco, Queiroz Galvao, Saipem and Petroserv -- placed bids for Part 3, which is for 19 floaters that Petrobras intends to charter following construction in Brazil.

"Interestingly," comments Dahlman Rose, "the bids represented a total of only 12 rigs, fairly short of the 19 desired. Of the bidders, only Saipem can be viewed as a major player. The average bid placed for all was $705,000/day, ranging between $640,000/day and $790,000/day. These are at a substantial premium to the current market of about $400,000/day, roughly 75 percent higher."

"Considering Petrobras recently awarded 6-yr contracts to a JV between Delba and Queiroz Galvao for two Korean-built drillships at $382,000/day, we find it difficult to believe Petrobras will continue on with this project as is," says Dahlman Rose. "The contracts were awarded against drillships recently ordered from Samsung for about$600 million."

"Of the three parts of the tender," says Dahlman Rose, "only Part 2 seems likely to continue, despite the rigs being priced at a 25% premium to market. However Part 1 and Part 3 need to be adjusted as the bids are at a significant premium to market and short of the desired number of rigs."

You can download the bid results HERE


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