* 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 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
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
"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
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
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
"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.