Tuesday, May 26, 2009

Offshore Drilling Rigs for Petrobras: No Problem?

Last month I posted this piece about a potential drilling rig shortage for Petrobras; this new piece suggests there could be a supply glut. Okay, I'm confused.

Petrobras will drive the demand for deep-water rigs but the brazilian giant should be in no hurry to commit to newbuilding contracts given the excess floater supply through mid-2012, according to ODS-Petrodata’s Gavin Strachan.

Strachan estimated that about 20% of the floaters under construction have not been contracted. The excess supply will allow Petrobras the option to either charter or purchase rigs to meet its drilling requirements, he said.

Petrobras has unveiled plans to commission the construction of 28 floaters for long-term charters to be deployed in the gigantic oilfields off Brazil from 2013 to 2017. These rigs are expected to have a rated water depth of about 7200 feet.

Given most units under construction are built to drill in 10,000 feet of water, Strachan said Petrobras is more likely to consider the purchase options if there are any "distressed newbuilds" in the market.

According to market data collected by ODS-Petrodata, recent day rate for a seven-year floater charter from a local contractor exposed to the Brazilian market only is about $350,000.

- Brewskie

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