| RIO DE JANEIRO, April 3
RIO DE JANEIRO, April 3 Brazilian state-run oil
company Petroleo Brasileiro SA suffered another
setback in its effort to boost oil output last month when
Italian contractor Saipem SpA dropped a 2.3 km steel
pipe into the Atlantic Ocean.
On March 16, the rigging used to wrangle the pipe into
position on a floating oil platform failed, and the high-grade,
metal-alloy tubes plunged about 1,800 meters (5,900 feet) to the
seabed, a total, crumpled loss.
The pipe itself was worth about $2 million but the cost of
the accident will be much higher, two sources with direct
knowledge of the situation told Reuters.
By setting back efforts to expand Roncador, Brazil's No. 2
oil field, by at least a month, Petrobras will lose tens of
millions of dollars in oil output, salaries and equipment leases
when it can least afford it.
"The series of management and engineering problems the
company faces is flabbergasting," said Cleveland Jones, a
professor and researcher with Brazil's National Petroleum and
Gas Institute at the State University of Rio de Janeiro.
"This may have been an unfortunate accident, but it comes as
the company's organizational problems are becoming more
Petrobras's oil and gas production in February fell again
from a year earlier, extending more than five years of stagnant
This is starving Petrobras of revenue and helping drive up
debt. Despite a $221 billion five-year investment plan, the
company has had little success transforming giant new offshore
discoveries into increased output.
Petrobras said in February it plans to boost output in
Brazil by between 6.5 and 8.5 percent to as much as 2.07 million
barrels per day (bpd) in 2014. That would be its first
year-on-year gain since 2011.
With production from older fields falling, delays with new
fields could put that goal at risk. Already the world's most
indebted and least profitable major oil company, Petrobras will
find it harder to finance its investment plans and pay returns
to investors without higher output.
Brazil's government, the company's main shareholder, also
needs the output to help pay for a massive increase in education
and health programs.
The Roncador accident will put off work until later this
month at the earliest as Petrobras and Saipem design a remedial
plan, the sources said on condition of anonymity.
Petrobras, in response to questions from Reuters, said the
accident will not affect efforts to raise output at Roncador.
New pipe will be supplied to Saipem from Petrobras's existing
stock, the company added. Saipem declined to comment.
Otherwise it would take about six months to order and
manufacture a replacement. The lost pipe was to have connected
the platform to an oil pipeline on the seabed.
The P-55 "semi-submersible" platform in Roncador, designed
to produce 180,000 bpd in a field that produced 255,000 bpd in
February, was already months behind schedule when the pipe was
lost. Petrobras had originally expected to start output at the
field last year.
Had Roncador been an isolated case, Petrobras would likely
be able to shrug it off. But the P-58 and P-61 platforms in the
nearby Parque das Baleias and Papa Terra fields are also behind
In total, two of the seven production systems scheduled for
startup last year are still offline. The P-58 began production
on March 17.
The P-62 production ship, which arrived in Roncador in
January, suffered a fire in a diesel electricity generator.
Brazil's labor ministry has barred the ship from producing oil
until safety issues are resolved.
The generator supplied power while workers installed
electrical, anchor and other essential systems at sea.
Those systems were not complete when the ship was unveiled
to great fanfare at a Brazilian shipyard Dec. 17 by President
Dilma Rousseff, who is eager to showcase Petrobras's offshore
engineering prowess in an election year.
"All big companies have their problems, but Petrobras has
become a creature of politics," said John Foreman, a long-time
Brazilian oil- and mining-industry executive and geologist with
J. Forman Consultoria in Rio. "Political goals are different
than engineering realities so communication breaks down and you
get these very basic engineering process errors."
While Petrobras has managed to complete a record number of
production vessels in recent months, several have gone to sea
without the "sub-sea" systems that control well flow and channel
the oil to the platforms, a serious problem in an industry where
the cost of leasing and operating platforms can cost half a
million dollars a day or more.
"The irony is that these costly mistakes are the result of
trying to cut costs," said a senior industry official with
direct knowledge of Petrobras offshore contracts. "They forced
everybody to re-bid their jobs at lower prices, and when the
ships finally arrived they had nothing to hook them up to."
(Additional reporting by Stephen Jewkes in Milan; Editing by
Todd Benson and Leslie Adler)