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Subsea 7 cancels contract to build plant at LLX's Brazil port
February 8, 2013 / 9:21 PM / 5 years ago

Subsea 7 cancels contract to build plant at LLX's Brazil port

* Subsea 7 planned to fabricate rigid pipe at port

* Port of Açu close to main Brazil oil fields

* Batista’s LLX lost port steelmill tenant in Nov.

RIO DE JANEIRO, Feb 8 (Reuters) - The Brazil unit of Subsea 7 SA, the Luxembourg-based offshore engineering and construction company, canceled a contract to rent space for a rigid underwater pipe fabrication plant at a Brazilian port, LLX Logistica SA, the port’s owner, said Friday.

Under a contract announced May 28, Subsea 7 agreed to rent land adjacent to LLX’s Port of Açu northeast of Rio de Janeiro, LLX said in a statement.

“There is no immediate perspective of a renewal of the contract,” the statement said.

Subsea 7 officials at the company’s London operating headquarters and in Rio de Janeiro could not be reached for comment.

LLX, controlled by Brazilian billionaire Eike Batista, is building the Port of Açu to ship iron ore from Anglo American Plc mines in Brazil’s interior and to house a shipyard, tank storage facilities, docks, steel mills and equipment fabrication plants aimed at serving Brazil’s oil industry.

The Port of Açu is adjacent to Brazil’s offshore Campos Basin, the source of more than 80 percent of Brazil’s oil. It is also one of the few ports available to oil companies and their contractors near the Santos Basin, a new frontier region immediately south of the Campos Basin.

Much of LLX’s revenue will come from renting out land adjacent to the port. In November Wuhan Iron and Steel Group, China’s fourth-largest steel producer, said it had shelved plans to build a steel mill at the port.

LLX shares have lost about a fifth of their value this year.

On Friday, the company’s stock fell 1 percent to 2.02 reais, a more than two-month low, in Sao Paulo trading.

Subsea 7 stock was unchanged at 133.1 Norwegian Krone in Oslo on Friday. (Reporting by Jeb Blount; Editing by David Gregorio)

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