Brazil Shipyard EAS Ends $6 Billion Deal to Make Petrobras Rigs

Brazil Shipyard EAS Ends $6 Billion Deal to Make Petrobras Rigs

By Christiana Sciaudone Yasmine Batista

4:02 PM BRT

February 23, 2015


(Bloomberg) — Sete Brasil Participacoes SA, the company founded to lease oil rigs to Petroleo Brasileiro SA, said it’s considering legal measures against a shipyard that pulled out of a $6 billion deal to build drillships.

Estaleiro Atlantico Sul, or EAS, owned by Grupo Camargo Correa and Grupo Queiroz Galvao, notified the company that it’s canceling the contract, Rio de Janeiro-based Sete Brasil said today in an e-mailed statement. Sete Brasil didn’t disclose any further details from the cancellation letter. O Estado de S. Paulo newspaper reported today that missed payments from Sete spurred the decision.

The cancellation is another setback for Sete Brasil after a former executive and Petrobras manager said in testimony made public Feb. 5 that he took bribes from shipyards, allegedly including EAS, in exchange for contracts. Numerous phone calls and e-mails to EAS for comment weren’t answered.

The accusation of corruption increases concern that national development bank BNDES will further postpone the often-delayed disbursement of a 10 billion-real ($3.5 billion) loan that Sete Brasil needs to avoid default, four people with direct knowledge of the situation said earlier this month. They asked not to be named because the matter isn’t public.

Sete Brasil’s troubles illustrate how far-reaching the scandal at state-run Petrobras has spread, affecting Brazil’s biggest builders and leading politicians. Days before resigning as Petrobras’s CEO this month, Maria das Gracas Foster said the company identified at least 4.1 billion reais in losses from a scheme in which company executives are alleged by federal prosecutors to have taken bribes from a cartel of construction companies and shared the proceeds with politicians.

Oil Discovery

Gracas Foster has not been accused in the criminal investigation of any wrongdoing.

Founded after Petrobras made the Western Hemisphere’s biggest oil discovery in 30 years, Sete Brasil was a cornerstone of the government’s campaign to push companies to use locally made parts and equipment. Sete Brasil said on its website it planned to spend about $25.7 billion by 2020 to make deep-water drilling platforms, creating about 150,000 jobs.

Sete Brasil’s plans to have 29 drillships built are fundamental for the domestic naval industry and the development of the country, the company said today in the e-mail.

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