OSX Brasil SA (OSXB3), the oil services company controlled by Brazilian billionaire Eike Batista, is targeting billions of dollars in contracts from state-controlled Petroleo Brasileiro SA (PETR4) after winning a construction license.
The Rio de Janeiro-based company plans to submit bids to build some of the 21 rigs to be contracted this year by Sete Brasil, a joint venture between Petrobras and state-run pension funds, Chief Financial Officer Roberto Monteiro said yesterday in a telephone interview. OSX currently only has orders from OGX Petroleo & Gas Participacoes SA, also owned by Batista.
OSX received a license last week allowing it to build a shipyard in Rio de Janeiro state and will start clearing land in coming days, Monteiro said. Petrobras approved the construction of seven deep-water rigs in February for $4.64 billion, or $662 million each, as part of a program to add 28 rigs to its fleet.
“By getting the license now we are able to start construction in the next few days,” Monteiro said from Rio de Janeiro. “Now we are moving full steam ahead.”
OSX plans to finalize an $850 million project finance loan for its second offshore platform in one to two months, he said. OSX is seeking a better rate than the 4.25 percent over Libor that it paid for a similar 8 ½ year loan last year, he said.
Brazil’s oil and gas industry needs $400 billion in goods and services through 2020 for production and refining projects, according to the ONIP industry group.
OSX expects to supply $30 billion worth of equipment to OGX, also based in Rio de Janeiro. OGX, which expects first production in October, plans 1.38 million barrels a day of output by 2019 and will receive its first platform from OGX in late August. OSX has about $4.8 billion in existing orders from OGX, Monteiro said.
OSX sees total demand for rigs and platforms in Brazil at about $200 billion over the next 15 years. Petrobras is doubling its deep-water fleet to tackle projects in the Atlantic Ocean, including the 6.5-billion-barrel Lula field, the largest discovery in the Americas in over three decades.
Brazilian laws require Petrobras, OGX and other oil companies to buy a majority of goods and services from Brazilian suppliers, benefitting local shipyards including OSX. Still, Brazil doesn’t have enough existing shipyards to supply equipment demand, according to Monteiro.
“It’s challenging to build a unit at international prices and meanwhile build a yard,” he said. “We have our own profitability standards that we would like to meet.”
OSX fell 2.65 reais, or 0.6 percent, to 432.35 reais at 2:09 p.m. New York time. The company has fallen 10 percent this year.
To contact the reporter on this story: Peter Millard in Rio de Janeiro at +55-21-2125-2531 or Pmillard1@bloomberg.net
To contact the reporter on this story: Peter Millard in Rio de Janeiro at Pmillard1@bloomberg.net
To contact the editor responsible for this story: Dale Crofts at email@example.com