Brazil sees silver lining in BP spill: more rigs
* Brazil may pick up rigs idled on moratorium
* Could help the country's offshore campaign
* Deep water rigs in tight supply around the world
By Brian Ellsworth and Joshua Schneyer
RIO DE JANEIRO, June 11 (Reuters) - Brazil could benefit from the BP Gulf of Mexico spill as a U.S. moratorium on offshore drilling boosts available rigs for the country's deep water oil exploration program.
Even as an ecological catastrophe makes the future of U.S. offshore drilling less certain, Brazil is plowing ahead with a $220 billion five-year plan to tap oil fields even deeper than BP's (BP.L) ill-fated Gulf well, which is still leaking crude.
With an estimated 35 rigs idled in the Gulf of Mexico, Brazil is already receiving inquiries from companies looking to move their rigs here, where vast discoveries in recent years may soon turn the country into a major crude exporter.
"What is bad for some may be good for others," said Fernando Martins, Latin America Vice President for GE Oil and Gas, which provides services to drillers in Brazil.
"Since operators are shutting down at least temporarily in the U.S. Gulf, some companies are planning to move their rigs to Brazil now," he said, without offering details. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Full coverage of the BP spill
Graphic showing key Brazil oil projects
Factbox showing deep sea rigs halted [ID:nN01124070] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The spill has temporarily halted new drilling in the Gulf of Mexico and Alaska, and has spurred Norway, which 40 years ago pioneered offshore drilling, to halt new licensing for now.
Brazil's state oil company Petrobras (PETR4.SA) (PBR.N), which already produces around a quarter of the world's deep water oil, could be an obvious candidate to take newly available rigs.
Petrobras declined to comment on the issue.
But Mauricio Tolmasquim, a top Brazilian government energy advisor, said this week that he expected the Gulf spill to benefit Petrobras by making more deep water rigs available -- adding that cost savings could be offset by higher insurance premiums for drilling operations.
Brazilian officials, including government leaders and Petrobras executives, have said Brazil has no intention of slowing its offshore development as a result of the spill.
STRONG RIG DEMAND
Analysts say oil companies operating in the Gulf of Mexico -- most notably BP and Chevron (CVX.N) -- may have to decide between paying standby fees while the rigs are idle, moving them to other projects, or canceling the contracts.
The U.S. moratorium may last longer than six months because of U.S. sentiment against offshore drilling and plans for an overhaul of safety standards.
This could provide further incentives to move rigs to Brazil or West Africa, which together with the Gulf of Mexico have over the last five years been the principal areas of deep water exploration.
"The largest question investors should ask is whether the moratorium is lifted after six months or will there be a much greater delay," said UBS analysts in a research note.
Production from deep waters has doubled over the last decade to reach 9 percent of the world's total as easy-to-reach onshore oil fields dry up, according to industry estimates, boosting demand for deep water rigs beyond the pace of production.
This rapid deep water growth may leave oil majors unwilling to cancel rig contracts, despite the expense of keeping them idle, for fear of losing rigs they need down the road.
"If I'm Chevron, I know I've got Petrobras looking over my shoulder, and if I cancel that rig I'm taking the chance that I might not get it back," said Kurt Hallead, an analyst with RBC Capital Markets, who covers oil services.
Petrobras, which pumps the vast majority of Brazil's crude, said in its 2009 business plan that it would lease eight deep water drilling rigs this year and a total of 14 in 2011 and 2012.
By 2013 it will begin receiving the first of 28 new rigs to be built in Brazil by local shipyards, giving it a fleet of more than 60 deep water rigs by 2017.
UBS estimates that there are currently 23 ultra-deep water drilling rigs in the Gulf of Mexico. This type of rig could be attractive to Petrobras or other major oil companies operating offshore Brazil.
"Who could benefit from the moratorium? Petrobras ... should benefit as some U.S. (Gulf of Mexico) rigs begin looking for new markets at a time when Petrobras is tendering for a large number of deepwater rigs," UBS said.