China's loan to Petrobras may help pay most 2016 debt

[RIO DE JANEIRO] China's loan to Brazil's Petrobras announced Friday is for US$5 billion to US$10 billion and can be paid in cash or oil at China's request, and may help pay the bulk of the US$12 billion in debt the state-run oil company must pay this year, a source involved in debt talks told Reuters late Friday.

The loan from the China Development Bank was first agreed to in early 2015, and when added to a US$5 billion CDB loan made in 2009, increases the bank's debt exposure to Petroleo Brasileiro SA as Petrobras is formally known, to as much as US$15 billion, the source said.

Petrobras, the world's most indebted oil company, said in a securities filing earlier on Friday that the agreement included supplying Chinese companies with fuel, similar to a deal reached in 2009.

Under that deal Brazil guaranteed the supply of 200,000 barrels of oil a day to China's state oil firm Sinopec for the next 10 years.

Pemex Negotiates Lower Rates to Rig Suppliers as Oil Tumbles

By Ben Bain, Andrea Navarro and Adam Williams 

Petroleos Mexicanos is seeking to renegotiate existing rig contracts as part of the state-owned oil company’s efforts to cut costs amid tumbling oil prices. 

The company began discussions earlier this year with some contractors to lower rig rates and other services, Chief Financial Officer Mario Beauregard said in a telephone interview today. Pemex may offer extended agreements or other incentives to make up for the lower rates, Beauregard said. It’s also working on other budget cuts to offset lower revenue, as required by law, he said.

“There’s a very high correlation between rates and the price of oil,” Beauregard said. “We have to adjust in a coordinated way to the new circumstances.”

More than 10,000 people working at Mexican oil service companies are being laid off since last week as Pemex cut outsourcing contracts in the face of the global slump in crude prices. The U.S. benchmark crude price has reached a 5 1/2-year low this month. Output has climbed to the highest on record amid forecasts for weak demand.

Drilling rig contractors with the most exposure in offshore in Mexico are Perforadora Mexico, which currently has five drilling contracts; Paragon Offshore with seven and Diamond Offshore, with five rigs, according to Andrew Cosgrove, energy analyst for Bloomberg Intelligence.

“Certainly, lower oil prices throughout the world are going to put the pricing power in the hands of E&P companies,” Cosgrove said.


While the outlooks on Mexico were split among oil service companies in October 2014, Schlumberger said today there was “decreased work scope due to budget constraints and weather.”

Beauregard said the discussions are being handled on a case-by-case basis and declined to provide specifics on the size of the changes Pemex is seeking.

The $950 million of 2020 bonds from Offshore Drilling, a unit of Mexico City-based Grupo R, have lost more than 25 cents in 2015, tumbling to a record-low 60.2 cents on the dollar, according to data compiled by Bloomberg.

COSCO Singapore issues profit warning as drop in oil prices hurts offshore industry

SINGAPORE: The Singapore-listed COSCO Corporation (Singapore) said on Friday (Jan 9) that its 2014 profits will be "significantly lower" than a year ago as the plunge in oil prices has affected the global offshore and marine industry.

COSCO, a Chinese ship-building and marine engineering firm, said its COSCO Nantong unit will discontinue building the hull and the topside module for a vessel called an Octabuoy - a move that will result in a one-off charge of around S$90 million. This is because COSCO Nantong has not been able to find a new buyer for the vessel, which had been ordered by a customer that is now insolvent.

"The steep fall in crude oil prices over recent months has had an adverse impact on the global offshore marine industry. This has made it even more difficult to secure a buyer for the Octabuoy as industry players have cut back even further on new orders," COSCO said in a statement.

Crude oil prices have fallen by more than half to around US$50 (S$62) a barrel, sparking fears that firms involved in offshore exploration and production could delay or even cancel orders for rigs and other equipment. Singapore is the world's biggest maker of jack-up oil rigs, and its marine and offshore industry generates over S$10 billion a year in output.

COSCO said it will report full-year earnings on Feb 16.

- CNA/ac

Shanhaiguan yard awaits final go-ahead to build jack-ups

By Xu Yihe

                         

Chinese yard Shanhaiguan Shipbuilding Industry is finalising orders involving engineering, procurement and construction contracts to build two jack-up drilling rigs, with two options, marking its first foray into the offshore drilling rig fabrication industry, writes Xu Yihe.

Rig problems delay development drilling work at Prelude

By Russell Searancke

 20 June 2013 22:59 GMT

Shell has not yet started the US$260 million development drilling phase at its Prelude liquefied natural gas project off Western Australia because of rig problems, writes Russell Searancke.


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