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Drillers keep eyes on Petrobras plans for new rigs
May 13, 2011 / 5:46 PM / in 6 years

Drillers keep eyes on Petrobras plans for new rigs

* Drillers seek clarity on 21 new deepwater rigs

* Petrobras: to build in Brazil, bid decision this month

* Petrobras results on Friday, drilling plan update due

By Braden Reddall and Denise Luna

SAN FRANCISCO/RIO DE JANEIRO, May 13 (Reuters) - Brazil’s plans to build 21 offshore rigs are being closely watched by drilling contractors because any delay would lead to an increase in demand for existing rigs.

Dozens of new deepwater units are already being built by the private-sector contractors that are banking on growing demand from Brazil to prevent the global deepwater drilling market from becoming over-supplied.

State-owned company Petrobras (PETR4.SA)(PBR.N) awarded a contract for the first seven of 28 planned deepwater rigs to a Brazilian shipyard in February. [ID:nN11155800]

But Noble Corp (NE.N), owner of the world’s second-largest rig fleet, disclosed in a filing with U.S. financial regulators last week that Petrobras informed the company that it had canceled bids for the remaining 21 rigs.

This led Noble to believe Petrobras would “tender for needed units in the marketplace as opposed to building new units in Brazil.” A spokesman for the Switzerland-based company declined to comment further.

Petrobras reports quarterly results later on Friday, and details on the rigs may emerge then or in an update of its $224 billion plan to develop a vast offshore region known as the subsalt, expected by Monday. [ID:nN11251124]

Renato Duque, Petrobras director for services, said the company would open the bidding and that the construction would be in Brazil, but the timing remained unclear. “We will decide in May when the bid will begin,” Duque told Reuters.

Other drillers who seem less certain about Petrobras’s intentions will be just as interested in what it decides.

“Petrobras could order additional rigs from Brazilian shipyards or contract the needed rigs from the international rig market,” Pride International Inc PDE.N, a major Brazilian contractor that Ensco Plc (ESV.N) is buying, said in a filing with the U.S. Securities and Exchange Commission last week.

“Rigs obtained from the international rig market could represent additional demand in the short-term,” Pride added.

An executive at industry leader Transocean Ltd RIGN.VX said he believed Petrobras was looking for two deepwater rigs, and analysts are just as convinced that Brazil’s moves will affect the entire market.

“Ultra-deepwater rig demand is global, but is also currently accentuated by [Petrobras‘s] urgency in contracting ships to develop huge reserves discovered a few years ago,” Gimme Credit analyst Phil Adams said in a note to clients. (Editing by Steve Orlofsky)

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