Petrobras Rig Supplier Seeks Work Abroad to Cut Brazil Risk

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Odebrecht Oleo & Gas SA, the oil services arm of Latin America’s largest builder, is seeking to expand outside its home base of Brazil where the group is fighting a contract ban by its main client, Petrobras.

OOG, as the unit that invested over $5.5 billion to build offshore drilling operations is known, is bidding for businesses in Angola and Mexico after opening offices there last year as a way of diversifying operations, Chief Executive Officer Roberto Simoes said in an interview in Rio de Janeiro.

“We are already taking part in some bids in these two countries,” Simoes, 58, said Thursday. “On top of geographical diversification, it also gives us client diversification, which is an important risk to mitigate.”

Petroleo Brasileiro SA, as the oil producer at the center of Brazil’s biggest corruption scandal is formally known, banned more than 20 suppliers facing allegations in the case -- including Odebrecht SA, Camargo Correa SA and Andrade Gutierrez SA -- from bidding for new contracts. The decision buffeted oil industry suppliers at a time of slumping prices.

OOG, which counts Temasek Holdings Pte as a shareholder, is requesting Brazil’s controller general to speed up an investigation into the contracts to be able to lift the Petrobras ban, Simoes said.

“Obviously we are working to reverse that, it’s our biggest priority,” he said. “There is no Odebrecht Oil & Gas executive named in any process or testimony. We are certain of our innocence.”

Cartel Allegations

Supplying offshore rigs to Petrobras accounts for most of OOG’s revenue. It also has a production vessel in the North Sea under a long-term contract with ConocoPhillips. Odebrecht SA is Brazil’s top construction company and had gross revenues of 108 billion reais ($34 billion) last year from operations ranging from infrastructure and arena management to petrochemicals.

The corruption scandal broke in March of last year when police arrested a former Petrobras refining chief, accusing him in court documents of colluding with a well-known Brazilian money launderer to hide or distribute kickbacks as part of a plan to inflate construction contracts. Part of the money, according to prosecutors, went to finance campaigns and bribe politicians through intermediaries to guarantee they would vote in line with the ruling party while enriching themselves.

An Odebrecht construction unit will be among a group of companies that will face a cartel accusation in the coming months, according to prosecutors Carlos Lima and Deltan Dallagnol.

“I don’t have any doubt that the company will be included,” Lima said in an interview from Curitiba, Brazil on Wednesday.

The company, which didn’t immediately respond to a request for comment for this story, said in previous statements it wasn’t part of any cartel and won all contracts legally.

Simoes said Odebrecht units are independent and that OOG has no connection with any affiliated company under investigation.

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