Keppel FELS Brasil secures two FPSO topside contracts worth R$500 million

Keppel Offshore & Marine Ltd (Keppel O&M), through its subsidiary Keppel FELS Brasil, has secured two contracts totalling R$500 million (approx. S$381.4 million) – one from Single Buoy Moorings Inc. (SBM), and another from the joint venture company MODEC and Toyo Offshore Production Systems (MTOPS).

Mr Chow Yew Yuen, President (The Americas) of Keppel O&M, said, “Keppel has worked closely with various international drillers and fleet owners operating in Brazil for some 30 years. Today, in replicating Keppel O&M’s proven systems and practices in Brazil, we are able to offer a full range of offshore solutions in construction, conversion, repair and modification, as well as the fabrication and integration of production topsides, among others.

“We are heartened that SBM and MTOPS have reaffirmed our position as the choice solutions partner in Brazil’s offshore and marine industry with these contracts to fabricate and integrate modules for their latest FPSOs. As we grow our competencies and track record as the most established shipyard in Latin America, we will continue to nurture win-win relationships with our valued customers. We see the market improving and our yard has the capacity and capability to take on more jobs.”

Keppel FELS Brasil’s contract with SBM is for the fabrication and installation of topside modules on the Floating Production Storage and Offloading (FPSO) vessel Cidade De Paraty, which was awarded in association with Queiroz Galvão Óleos e Gás S.A. (QGOG) and is currently undergoing conversion at Keppel Shipyard in Singapore.

Mr Chow added, “Like our recent delivery of P-57, this project demonstrates the synergy of the Keppel O&M shipyards in providing a comprehensive suite of services to our customers and brings to bear our near market, near customer strategy.”

Work is expected to commence at Keppel FELS Brasil’s BrasFELS shipyard in Angra dos Reis, Rio de Janeiro in the first quarter of 2011. The vessel is scheduled to arrive in the first quarter of 2012 with delivery in the fourth quarter of 2012.

The work scope will include the fabrication and installation of six process modules and a riser gantry as well as the installation and integration of another six process modules supplied by SBM.

The FPSO Cidade de Paraty will be deployed in the pre-salt region of the Santos Basin and will have a production capacity of 120,000 barrels of oil per day, and be able to compress 5 million cubic metres of gas per day.

In its contract with MTOPS, a joint venture company between MODEC and Toyo Engineering Corporation, BrasFELS will undertake the module fabrication and integration of the FPSO Cidade de Sao Paulo MV23, which was awarded in association with Schahin Engenharia S.A.

Work is expected to begin at BrasFELS in the first quarter of 2011. The yard’s scope includes the fabrication of topsides modules such as riser manifolds, laydown areas and the flare tower, as well as the assembly and integration of fabricated pancakes/skids.

To be completed in the 4Q 2012, the FPSO will be deployed in the pre-salt region of the Santos Basin. The FPSO will have a production capacity of 120,000 barrels of oil per day, and be able to compress 180 million cubic feet of gas per day and store 1,600,000 barrels of oil.

Ongoing at BrasFELS is the upgrading and repairing of Noble’s Brazil-based drillships with delivery stretching into 2012.

The abovementioned contracts are not expected to have a material impact on the net tangible assets or earnings per share of Keppel Corporation Limited for the current financial year.

Petrobras will spend $3.5 billion over the next four years double biofuels output

Will the waterways soon be flooded with biofuel tankers?

Brazilian state-run energy giant Petrobras (PBR, PETR4.BR) will spend $3.5 billion over the next four years to more than double biofuels output, positioning the company to take advantage of global demand for clean, renewable sources of energy.

“We are preparing for a global scenario in which the demand for biofuels is expanding,” Miguel Rossetto, chief executive of Petrobras biofuels unit Petrobras Biocombustivel, said in an interview.

Petrobras created Petrobras Biocombustivel in 2008 to be the platform for its entry into Brazil’s biofuels sector, where sugarcane ethanol has been in use since the 1970s. But the world’s need to reduce carbon emissions, including firm targets set by some countries, means that demand for biofuels such as ethanol and biodiesel will likely explode in coming years.

The transition toward low-carbon economies is already “definitive,” Rossetto said, “and the evolution of the low-carbon economy for the fuels sector is already a reality in some countries and will be a growing reality for the rest of the world.”

“The pace of growth, the volume of growth and the size of these markets are what’s in play,” Rossetto said. “But the course of expansion for renewable energy markets for us is a given.”

Petrobras Biocombustivel currently operates or has stakes in 14 biofuel mills, including 10 dedicated to ethanol production and four for biodiesel, Rossetto said.

The company plans to spend $2.5 billion to boost ethanol and biodiesel production, with about 80% of the total earmarked for ethanol projects, Rossetto said. An additional $1 billion will be spent on infrastructure development, including Petrobras’ participation in a $3.3 billion ethanol pipeline project, as well as research and development.

Ethanol production is targeted for 2.6 million cubic meters by 2014, up from output of one million cubic meters in 2010. Biodiesel production, meanwhile, is expected to climb to 750,000 cubic meters in 2014, up from 500,000 cubic meters at the end of last year.

The company’s primary focus is to meet rising demand in Brazil, Rossetto said. Brazil not only mandates a 25% blend of ethanol into gasoline at the pump, the country also has a massive flex-fuel fleet of light vehicles that can operate seamlessly on ethanol, gasoline or any combination of the two fuels.

Demand for biofuels from the petrochemicals sector is also growing as the industry moves toward greater production of so-called green plastics. Local petrochemicals giant Braskem (BAK, BRKM5.BR), in which Petrobras holds a 49% stake, consumes about 400,000 cubic meters of ethanol per year.

Brazil’s appetite for biodiesel is expected to grow “very strongly,” given the heavy use of diesel fuel in the country’s transportation sector, Rossetto said. And while the government currently requires a 5% blend of biodiesel with diesel fuel, called B5, that’s likely to rise in coming years.

“We believe that in 2011, the government should start an initiative to put in place a regulatory regime for biodiesel. The idea is to increase the biodiesel blend to 10%, starting in 2012,” Rossetto said.

While high tariffs present a barrier to ethanol exports, Rossetto said that a recent biodiesel joint venture with Portugal’s Galp Energia (GALP.LB) opens a golden door to the European market.

Petrobras will produce palm oil on plantations in Para state, then ship it to a refinery in Portugal capable of producing 250,000 cubic meters of green biodiesel by 2015.

“We think that Europe will not be able to supply via its own production the biofuels necessary to meet the mandate to use 10% biofuels in its transportation sector by 2020,” Rossetto said. “(Europe) should be importers of biofuels.”

Petrobras approves order for 7 deepwater rigs for $4.64B

Petrobras’ board of directors approved the bidding process for the construction, in Brazil, of the first seven of a total of 28 offshore drilling rigs intended to meet its long-term drilling program with priority given to the pre-salt wells. The new rigs are expected to come into operation in 2015. The remaining 21 rigs will also produced in the country.

During the construction period, 32,000 thousand direct and indirect jobs are hoped to be created in eight years. In the operation phase, meanwhile, there will be 10,000 new positions (direct and indirect) for a period of 10 years.

The winner of this first lot was the Estaleiro Atlântico Sul shipyard (EAS), located in the state of Pernambuco, for a final price of $4,637,000,130.00, i.e., $13,000,000.00 less than the original proposal. Slated to start operating in 2015, each rig’s final price was set at $662,428,590.00.

The charter contract will be signed with Sete Brazil S.A. (Sete BR), which will take on the construction contract with EAS. Sete BR is a company formed by the Fundo de Investimentos em Participações – FIP Sondas, which is managed by the Caixa Econômica Federal (CEF), owns 90% of the company, and will have market investors as shareholders, including Brazilian pension funds and investment banks. Petrobras will hold a 10% stake in the new company.

Sete BR will allow companies that are experienced in operating rigs while providing services hired by Petrobras to be partners and co-owners of the drilling vessels. The daily charter rate has already been defined and, when added to the current average operation rate, totals $430,000 to $475,000 per day, in line with the most competitive rates practiced on the international market.

To finance rig construction, Sete BR will count on its own capital, on capital provided by partners, and on resources derived from long-term funding granted by the National Development Bank (BNDES), which will fund the portion related to the Brazilian good and service content for the construction of each rig. Additionally, there will be resources coming from the export development agencies of the countries that provide the content to be imported and from commercial banks. To their benefit, the funders will have a performance guarantee hired by the EAS shipyard and a credit guarantee contracted by Sete BR, both supplied by the Shipbuilding Guarantee Fund (FGCN), which had its capacity expanded specifically to address this type of guarantee.

With the Rig Project, Petrobras aims to foster conditions for it to be technically and economically feasible to build next-generation platforms to operate in deep and ultra deep waters in Brazil, as it did with production platforms, which today are entirely produced in the country and within global quality parameters.

The Executive Board also decided to cancel another bid that was in progress for the hiring of up to two drilling rigs on account of the prices that were quoted, as they were not advantageous to the Company.The third bidding process, to charter lots of up to four drilling rigs, is still under review and is expected to be completed within 30 days.

Chilean Naval Aviation upgrade, a pressing operational need?

Those familiar with the business world recognize the use of a common vision to stretch the imagination of a corporation, create new expectations and cause a sense of urgency for the proposed changes. Once the goals and the strategic vision are set, the direct involvement between potential suppliers and the leaders of the organization about to initiate the changes are one of the first steps towards information exchange and cooperation. Kind of the "be there, make ithappen" new business style.

This might be the case of Chilean Naval aviation. Out of all the South American nations, Chile – along with Brazil -- is the one with the most urgent and obvious need for an aircraft carrier and embarked aviation fighter squadrons. The increasingly active and more evident involvement of the Chilean Navy throughout international naval exercises such as the exclusive RIMPAC (Japan, Australia, Canada, United States, etc.) is a clear sign that change might be under way. However, and due to the strict discipline of the Chilean Navy officer corps, their leaders and aviation pilots are not vociferous and publicly aggressive as they should be regarding new requirements. Chile is traditionally Latin America's major sea power. Although it lost its position of quantitative primacy to Brazil late in the 20th century now ranks second in terms of size and firepower amongst regional navies. Technologically speaking the Chilean Navy remains unmatched on a qualitative basis throughout Latin America

Chilean thinkers like Daniel Prieto Vial (Chilean defense consultant) view the future of strategic environments revealing danger and opportunity. Danger -chaos in the littorals- is characterized by myriad clashes of national aspirations, religious intolerance and ethnic hatred. Unfortunately, today more than 75% of the Chilean economy depends largely of the safety arrival of its cargo ships to international ports (not to mention the total dependence on the timely arrival of foreign oil.) Failure to accomplish the above may very well threat the very existence of the nation. Opportunity for future enemies emanates from advances in information management, battlefield mobility and the lethality of conventional weaponry in irregular warfare. Such changes in the operational environment (already in use by some unstable and aggressive nations) representing both new threats and enhanced capabilities for piracy, sea crime, commercial area denial, etc., raise many questions regarding how the Chilean government is preparing its naval forces for the future.

I have been asked to provide an insight into today's Chilean Navy and specifically today's naval aviation. As a result, I would like to briefly outline plans for the introduction of future equipment and to give an indication of past and present lessons from around the world in order to "uncover" the striking need in this particular nation for modern embarked air power. In Chile, the Navy and its pilots need AV-8B Harriers and they are looking for a way to get what they want. The recent disband of Harrier Squadrons in England could well be an attractive opportunity for Chile. But since there are no official government plans to acquire naval fighters, they might need some external help to convince legislators that this is what they should have in order to properly protect their economic future and commercial sea lanes.

The modern strategic environment in international waters is one of regional rather than global crisis with intra-regional conflicts (revolutions, terrorism, civil war, guerrilla, piracy, etc.) quickly replacing more traditional inter-regional conflicts. Advanced navies such, England, Italy and Spain have recognized this shift and the increased requirement to counter potential economic threats, when and where they arise, with military force. As we are all learning in the 21st century, you can no longer keep on dealing with criminal and terrorist organizations as if they were traditional nation states. Negotiating with them should not be an option.

Modern navies have demonstrated that embarked aviation has much to offer to help preserve and strengthen international security in the difficult and uncertain circumstances of our world today. However, from a local perspective, it is important to note that within the generation of current congressmen in Chile there is not a single member ever to serve in the Armed Forces, therefore their views and understanding of international conflicts and threats is at best… quite limited. As a result, placing urgency in the acquisition of new and costly weapon systems for the navy, it is not a major concern. We recognize that economical problems and funding will be major issues before acquiring a small aircraft carrier, but pursuing the acquisition of a modest embarked fighter force should not. Since Harriers can take off and land from small ships, the Chilean navy can take them on board of its frigates and destroyers when going at sea, adding tremendous firepower, tactical mobility and playing a major role in the activation of a fighter force ready to protect its economic interest beyond territorial waters.

This alternative offers an advantage when an enemy has the capability to operate fast attack boats against commercial vessels. This particular naval posture offers unique abilities by matching demands for full dimensional protection of commercial ships with responsive maneuver and engagement capabilities for a minimal operational cost. For the future, a more aggressive and decisive approach, by both, Chilean politicians and foreign defense companies should ensure that the Chilean navy is well placed for the next century, and able to provide the Chilean government and its western allies with a flexible and deployable force capable of generating enough air power for current and future operations as diverse as warfighting and peacekeeping. Protecting sea lanes might be the new task of the South Pacific navies. There is no reason to believe that the Chilean Navy and its naval aviation forces should not be part of it.

Transpetro opens 342 positions for Brazil’s Merchant Marine officers

Monday, Transpetro, Petrobras’ subsidiary for transportation logistics, called for the immediate admission of 342 officers of the Merchant Marine to man the vessels operating in its fleet. The period to register for the contest – which is free of charge – ends on April 4. The public notice and the registration form are available on the company’s website or can be picked up at the addresses that are listed in the notice itself. The minimum pay is R$7,620.93, or approximately USD4568.90.

To fill these 342 openings, Transpetro foresees for the registration of the 394 best qualified candidates. In total, 204 candidates will be registered for the position of 2nd nautical officer, of which 177 for immediate admission, and 190 candidates for the 2nd engine officer, of which 165 for immediate admission. The registration includes the technical qualification stage, which is classificatory and eliminatory.

Transpetro’s sailors work 60 days on board and get 30 days off in the case of dynamic positioning and oil vessels. For maritime navigation ships, the system is 90 on board by 45 days off, while for offshore vessels and tankers, the scheme is 35 by 35 days.

Transpetro must hire some 1,700 seafarers of all categories until 2013. The growing demand for these professionals is a result of a heated naval sector, due mainly to the Program for the Transpetro Fleet Modernization and Expansion Program (Promef), with the order of 49 vessels from Brazilian shipyards.