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SapuraKencana upbeat on Brazil contracts, new prospects

SapuraKencana upbeat on Brazil contracts, new prospects
Malayian oil and gas (O&G) services firm SapuraKencana Petroleum (SapKencana) reassured that its operations in Brazilian waters are on a long-term contract with Brazilian national oil company Petrobras and are not under any threat of cancellation in spite of the oil giant’s fiscal difficulties, local media reported.

“We have been doing work there for almost two and half years and we have been operating at close to full utilisation.

“We are being paid within 30 days upon submission of our invoices. So far, we have not seen any issues of funding or payments from Brazil,” president and group ceo Shahril Shamsuddin said.

Shahril added that the operating expenditure per barrel from deepwater sources in Brazil amounts to about $10 per barrel.

In fact, the cheap cost is a strong incentive for Petrobras to continue extracting oil to maintain its cash flows, he noted.

“This is where their cash comes from, so they will always ensure that oil is being extracted. These are the fields we are working on; it is something that cannot be disrupted, pretty much like how Petronas is to Malaysia.

“We continue to see a very strong business proposition in Brazil,” he remarked.

In Brazil, the company has five vessels operating and another that will commence works in the third quarter of this year.

The 10-year long term contract for the provision of support vessels for pipe-laying works is estimated to be worth above MYR10bn ($2.5bn).

More than half of its total outstanding orderbook of MYR20bn is concentrated in the Americas with about MYR11.5bn coming from the continent, the bulk of which comes from the Petrobras contract.

Additionally, the group is bidding for $7bn worth of new projects, Shahril added.

“In reality only about MYR5bn worth of jobs can be completed within a particular year. So we need to secure another MYR5bn to replenish the order book to current levels.

“The only way to do that is to scour the globe for opportunities, and we can also look for many smaller jobs as opposed to one big contract,” he explained.