Korea to get Brazilian boost

Brazil’s oil major Petrobras visited South Korea on 20 April and held a presentation meeting on its giant oil development project revealing that it will place orders for eight FPSOs and seven drillships in stages by next year.

South Korean shipbuilders’ market share in the sector exceeds 80% and they are highly likely to win most of the orders worth over $10bn from the second half this year. Almir Guilherme Barbassa, Petrobras’ CFO and the representative of the delegation visiting South Korea, made public the company’s business plan on oil development, refining and shipping worth a total of $177.4bn.

It has been known that Petrobras is planning to order FPSOs and drillships but it had not announced its detailed business scheme. Barbassa said “I hope South Korean shipbuilders will actively participate in the projects which have got high competitiveness in the sector.” He said the most important factors in choosing the contract winner are technological prowess and price, suggesting the company’s preference of South Korean shipbuilders to those in Singapore and Japan.

The total contract price of the 15 offshore units is expected to come to $12bn and South Korea’s big three shipbuilders are forecast to receive most of the orders. An official at the Ministry of Knowledge Economy also said, “Brazil’s President Luiz In?cio Lula da Silva is to visit South Korea in October and around the time, massive contracts may be signed.”

Hyundai Heavy Industries, STX Offshore & Shipbuilding, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering are meeting the delegation of Petrobras to discuss the newbuilding project. Barbassa also said that Petrobras intends to order some 240 ships including bulkers for the next five to six years.

He said the main standards for selecting the contract winners would be whether the shipbuilders have made investment in Brazil and whether they would transfer technologies. The usage proportion of Brazilian raw materials is also included in the standards.

Samsung Heavy and Daewoo Shipbuilding will be in a better position to win orders for offshore facilities such as drill ships and semi-submersible drilling rigs, due to their experience and know-how. The other two shipbuilders, Hyundai Heavy and STX Shipbuilding, may also win orders as Petrobras is expected to place orders for 28 offshore facilities and vessels with overseas suppliers.

The Korean government said it will provide strong support to help the shipbuilders win orders from Petrobras at the meetings. Brazil has suggested that the two countries do a barter deal in which South Korean shipbuilders provide the South American country with drill ships or floating production, storage and offloading platforms in return for stakes in oil fields in the Santos area, according to the Ministry of Knowledge Economy.