Keppel terminates work on Brazil rigs as Sete's funds dry up

It won't resume construction until payments are made.

After receiving no payment for almost two years, Singapore's largest shipbuilder reiterated that the Sete Brasil rigs will remain unfinished until its disgraced client starts paying up again.

In a statement released along with the company's first-quarter results, Keppel Corporation's CEO Loh Chin Hua said that the group's offshore arm will continue to face headwinds on back of low oil prices and the Brazil corruption scandal.

"Brazil, which has traditionally been one of Keppel O&M's key markets, continues to be mired in economic and political challenges, as well as the Lava Jato corruption scandal. Shareholders of Sete Brasil have yet to reach a decision on the future of the company. As I announced at the start of the year, Keppel has stopped construction on Sete Brasil's rigs since end-2015 and we will not resume construction until payment recommences," Loh said.

He also noted that while oil prices have somewhat recovered in the beginning of the year, major companies are still aggressively slashing expenses to stay afloat.

"The sustained low oil price environment continues to take a toll on the global oil and gas industry, which is in the midst of one of the most severe downturns in recent years. In the global offshore industry, we are seeing layoffs, mergers as well as large reductions in capital expenditure as the industry prepares for a longer winter," he said.