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STX OSV to Double Brazil Output on Petrobras Spending

Nov. 15 (Bloomberg) -- STX OSV Holdings Ltd., the biggest maker of oil-rig support vessels, plans to double capacity in Brazil as Petroleo Brasileiro SA works through the world’s largest oil-exploration investment plan.

The offshore-vessel maker will begin production at a second yard in Pernambuco, northeast Brazil in 2012 and begin deliveries the following year, Chief Executive Officer Roy Reite said in a Nov. 12 interview. Alesund, Norway-based STX OSV has orders for eight ships to be built at the new facility.

The shipbuilder last week raised S$257.3 million ($199 million) in a Singapore initial public offering to pay for expansion plans, including the new Brazil yard. Keppel Corp. and Sembcorp Marine Ltd., the world’s two biggest makers of shallow-water rigs, are also adding facilities in the South American country after state-controlled Petrobras raised $70 billion selling shares in September to fund drilling plans.

“Brazil is investing a lot of money to develop abundant resources off its coast and they will need more equipment,” said Cho In Karp, head of research at Heungkuk Securities Co. in Seoul. “It’s one place you don’t want to miss out on.”

Brazil Demand

Plans for the new yard were driven by Brazil’s local content requirements and the advantages of being in the country, said STX OSV Senior Vice President Holger Dilling. The Brazilian government has instructed Petrobras to use domestic suppliers to help boost the nation’s industrial development.

“Brazil is the fastest growing offshore market in the world,” Reite said in Singapore. “We have been there for nine years and we have Brazilian partners, so we know this market very well.”

The yard will only build vessels for the Brazilian market, Dilling said. There will be enough demand to support the company’s two yards in the country, he said.

STX OSV expects to maintain its almost 50 percent share of the specialized high-end segment of the offshore support vessel market in Brazil, Reite said. These ships include platform supply vessels that are bigger than 4,500 deadweight tons and anchor-handling tugs that have more than 20,000 brake horsepower engines.

The company is also developing deepwater vessels and ones able to work in harsher environments as oil companies widen their search for new fields, Reite said.

“If you go into difficult areas, technology will be more important,” he said. “To create a ship that suits those difficult tasks is what we think will be the most important driver in the coming years.”

The shipbuilder may consider acquisitions or ventures, he said, without elaboration.

Surging Orders

Rebounding oil prices have spurred investment in offshore vessels globally, helping STX OSV more than double orders this year. The company had won contracts worth 10.2 billion kroner ($1.7 billion) as of Oct. 5, compared with 4.46 billion kroner for the whole of last year. Its backlog reached 17.5 billion kroner, or about 18 months’ work.

The company jumped 2.5 percent on its Nov. 12 trading debut to close at 81 Singapore cents. The shares fell 2.5 percent to 79 Singapore cents as of 12:10 p.m. today.

STX Group of South Korea acquired the offshore-vessel builder through the takeover of Aker Yards ASA, which was completed in February, 2009. Aker, which also builds cruise ships, was subsequently renamed STX Europe ASA.

Petrobras plans to spend $224 billion in the five years through 2014 to boost output and refining capacity, including buying drill-ships, semi-submersibles and offshore support vessels. The Rio de Janeiro-based company said it will revise its investment plan next year to include new oil reserves it bought from the government as part of its share sale.

To contact the reporter on this story: Kyunghee Park in Singapore at

To contact the editor responsible for this story: Neil Denslow at

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