Baker Hughes to Bid for Petrobras Production-sharing Contract

By Marta Nogueira and Alexandra Alper
Wednesday, October 3, 2018

General Electric Co's unit Baker Hughes is preparing an offer for a production-sharing deal with Brazil's Petrobras, a Baker Hughes executive said on Tuesday, as the state-run oil company seeks creative ways to boost output from mature fields.

Reuters reported in June that Baker Hughes was considering a bid, while Halliburton Co and Schlumberger NV were already preparing them, seeking to clinch Petrobras' first-ever tender for a production sharing deal with an oil services company.

"It's a lot of work. Anything that is the first time requires lots of work," Alejandro Duran, Baker Hughes' Brazil country manager, told Reuters in an interview. He added that talks with Petrobras were already under way.

He said Baker Hughes will host additional meetings in Houston soon to discuss the issue.

"It is interesting, Petrobras coming to the market with a new thing. It has to be a win-win. That is the most important thing now."

Petrobras did not immediately respond to a request for comment.

Petrobras, the world's most indebted oil company, is looking for ways to squeeze better returns from some of its aging fields as it focuses its limited capital budget on developing the country's prolific pre-salt fields, where billions of barrels of oil are trapped under a thick layer of salt offshore.

A deal would represent a novel way for it to boost output from mature fields without losing control or risking capital, by partnering with one of the world's largest oil service providers.

It would also allow services companies to put to use expensive equipment idled for years as Brazil's oil industry was hammered by low oil prices and a massive investigation into corruption at Petrobras.

The state-owned oil company is paying an $853 million fine to the U.S. Justice Department to settle charges related to that probe, which found evidence that political appointees on its board and elsewhere handed overpriced contracts to engineering firms in return for illicit party funding and bribes.

The oil services companies are expected to compete in the tender by promising to boost production from the Potiguar basin's waning Canto do Amaro field in northern Brazil, where production began in 1986, and offering a bigger share of output to Petrobras, sources said in June.

Based on the results from the project, Petrobras will decide whether to apply this model in other areas, the oil company said in July, confirming the Reuters story.

Proposals were originally due in June, but at least one company sought an extension.

Duran said he thought proposals were due this month but could be extended again.

The winner would be responsible for investment and operation and maintenance costs for the wells. The tender includes a 15-year contract and Petrobras would remain the operator.

GE's Baker Hughes has not typically taken stakes in customer projects. However, last year it announced a deal with Twinza Oil Limited to provide a range of services for the development of an offshore gas field in Papua New Guinea.


(Reporting by Marta Nogueira and Alexandra Alper; Writing by Alexandra Alper; Editing by Christian Plumb and Matthew Lewis)

Categories: Contracts Energy Offshore Energy Underwater Engineering Deepwater Subsea Industry News South America

Related Stories

Woodside to Shed Some Trinidad and Tobago Assets for $206M

China Unveils Plans for New Offshore Wind Farms to Tackle Carbon Emissions

MODEC and Samsung Team Up to Install Carbon Capture Tech on FPSO

Sapura Energy Nets $720M from Multiple Drilling Services Contracts

CNOOC Starts Production at Offshore Oil Filed Equipped with CCUS Tech

Europe's Gas Uncertainty Help Drive Asian LNG Spot Prices Higher

Offshore Service Vessels: What’s in Store in 2025

RINA to Conduct Pre-FEED Study for Petronas’ CCS Project in Malaysia

Driven by Oil & Gas, Norway Wealth Fund Approachs $2 Trillion

Valeura Boosts Production at Jasmine Field with Five New Wells Now Onstream

Current News

CNOOC Makes Major Oil and Gas Discovery in South China Sea

Valeura’s Assets in Gulf of Thailand Remain Operational After Earthquake

Op-Ed: Kazakhstan’s National O&G Firm Positioning Itself as Global Energy Player

Woodside to Shed Some Trinidad and Tobago Assets for $206M

CNOOC Sees 11% Profit Growth in 2024 Driven by Record Oil Production

‘Ultra-Mega’ Offshore Deal for L&T at QatarEnergy LNG’s North Field Gas Scheme

Keel Laying for Wind Flyer Trimaran Crew Boat

MODEC Gets Shell’s Gato do Mato FPSO Ops and Maintenance Job

EnerMech Names APAC Regional Chief

CIP Reaches Financial Close for Offshore Wind Farm in Taiwan

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com