Winning and rigging soon: More than eight $1B contracts from Petrobras

Keppel is rumored to be in final negotiations with Petrobras on two of the eight FPSOs. Jurong Shipyards and the Mendes Junior-OSX consortium are the other forerunners. 

Each job could be worth at least US$500m for the Singapore yards. All the eight contracts are likely to be awarded by end of this year and the first two units are to be delivered in 2015.

These projects on top of the US$4 billion drilling rig projects from Petrobras already imply record contract wins for Singapore yards. 

Here's more from the research by DBS Vickers:

Potential eight FPSOs contracts from Petrobras. According to Upstream, Keppel Fels, Jurong Shipyards, and the Mendes Junior-OSX consortium, are the forerunners to snatch a share of multibillion dollars contracts from Petrobras covering the integration of eight floating production, storage and offloading vessels to be used on pre-salt fields off Brazil. The hulls for these FPSOs, worth about US$3bn, were awarded to Ecovix in 2010, and are currently under construction at its Estaleiro Rio Grande shipyard in southern Brazil.

Two orders each - for Kepfels and Jurong Shipyard. It is understood that each of the three leading bidders could be in line to secure two of the floater integration jobs each, while the remaining two will be split between the best performing among the initial contract winners.

Keppel and SMM are well positioned. According to multiple sources, Keppel is already in final negotiations with Petrobras and is believed to be in best shape among all the competing contractors to secure integration work on two of the eight FPSOs given it is one of the most reliable shipyards in Brazil, and the yard there is not filled yet. SMM is also well positioned to secure a contract for the integration of two FPSOs at its new shipyard facility in Espirito Santo state. SMM held a ground breaking ceremony for the new Brazilian yard in Dec 2011, the basic workshops and infrastructure will be ready in 2013, while dry docks should be ready in 2015.

Contract value estimated to be bigger than US$500m per FPSO. The private bidding processes held in February and prices were not open publicly. It is estimated that each FPSO topside integration project will cost up to US$1bn, but the contract value for Kep and SMM cannot be ascertained at this stage, as it depends on the number of modules to be integrated by the Singapore yards. Each job could worth conservatively US$500m for the Singapore yards.

First two units to be delivered in 2015, the balance by 2016-2017. Each FPSO will have the capacity to produce 150,000 barrels per day of oil and 8million cubic metres per day of natural gas. Petrobras expects the first two replica units to start up in 2015 in the Lula Alto and Lula Central areas, with the remaining six from 2016 and 2017. Six FPSOs will be deployed in the giant Lula field and two in the nearby Sapinhoa field, formerly known as the Guara accumulation. Hence, all the eight contracts are likely to be awarded by end of this year. Assuming both Kep and SMM secure two projects each totalling US$1bn, this will be on top of the US$4 billion drilling rig projects from Petrobras - implying record contract wins for Singapore yards this year.