Petrobras stabilizes P-34, faces safety violations, fraud charges

Oct. 18, 2002
While Petroleo Brasileiro SA (Petrobras) has stabilized its P-34 floating production, storage, and offloading vessel, the Brazilian state oil company now is facing court action related to fraud charges and safety violations in connection with the P-34 and other production facilities.

By an OGJ correspondent

RIO DE JANEIRO, Oct. 18 -- While Petroleo Brasileiro SA (Petrobras) has stabilized its P-34 floating production, storage, and offloading vessel, the Brazilian state oil company now is facing court action related to fraud charges and safety violations in connection with the P-34 and other production facilities.

P-34 stabilized
Petrobras told OGJ the P-34 no longer faces the risk of sinking. The company has overcome the final 5° list experienced by the FPSO and has suspended the contingency plan it had put into place for the vessel. Petrobras had been struggling to right the P-34 since Oct. 13, when the vessel suddenly slid sideways in the water, listing as much as 32° (OGJ Online, Oct. 14, 2002).

The $200 million, 17,900 ton P-34, installed between Barracuda and Caratinga fields in the Campos basin off Rio de Janeiro state, Brazil, was handling 34,000 b/d of 25° gravity crude oil.

Following the safe evacuation of the crew, a team of specialists boarded the P-34 and reestablished emergency conditions for electricity generation. The company also pumped 6.5 million l. of seawater into the starboard tanks, using support vessels, which lent stability and righted the vessel. Resources from the FPSO itself are being used to reestablish the original conditions of stability for the vessel.

A team is still analyzing possible causes of the electrical failure that caused the incident. Among other measures, experts, in order to determine precisely what caused the electrical or electronics failure, are examining the FPSO's "black box" (similar to those used in aircraft) that stores data about vessel operations.

Another team is reestablishing safety systems for water, air conditioning, and other systems.

A Petrobras official said it is still uncertain when the platform will become fully operational again.

Safety record criticized
Meanwhile, the Association of Petroleum Engineers (AEPET) said it would denounce Petrobras to the federal prosecutors office (Ministério Público Federal) for the string of accidents involving Petrobras platforms that have taken place and for accidents that have killed numerous Petrobras employees and others since 1998.

Carlos Minc, a state legislator in Rio de Janeiro state and chairman of the legislature's environmental committee, said that 80% of Petrobras platforms do not have environmental licenses. He also criticized Petrobras for what he claimed was its poor safety record on platforms and refinery equipment, which has resulted in accidents and several oil spills within the last few years.

For example, in April 2001, Ibama, Brazil's federal environmental agency, fined Petrobras $10 million for oil spills from two platforms in the Campos basin. Explosions on the P-36 in March 2001 killed 11 workers, and the platform spilled 1.2 million l. of diesel and 300,000 l. of crude after it sank.

The P-36 was built in 1994 by the Italian company Ficantieri. Petrobras hired Petromec, a subsidiary of Brazilian company Maritima Construcoes Navai, to convert the rig into a submersible production platform for $354 million. P-36—the world's largest semisubmersible drilling-production platform—was delivered in 1999 and began to produce oil and gas in May 2000 (OGJ Online, Mar. 16, 2001).

In addition, defective valves on the P-7 platform were blamed for a spill of 26,000 l. of crude Apr. 12, 2001 (OGJ Online, April 23, 2001).

Other spills have occurred as the result of poor equipment maintenance in refineries, contends Minc and environmental organizations.

Financial fraud charged
Adding to Petrobras' woes, Brazil's Federal Audit Court (TCU) has charged Petrobras with a multimillion dollar fraud in relation to the company that built the P-37 FPSO as well as the stricken P-34 and the ill-fated P-36.

The P-37—built by Maritima in the Jurong shipyard, Singapore—is installed in 905 m of water in the giant Marlim oil field of the Campos basin and handles production of 150,000 b/d of crude oil and 6,200 cu m/day of natural gas, a Petrobras official told OGJ. Crude production began in July 2000. In January 2001 a gas leak on P-37 killed two people (OGJ Online, Mar. 19, 2001).

Petrobras is charged with having paid $51.8 million more for building the P-37 platform than the $288 million contract with Maritima required.

TCU announced that, because Maritima did not pay its suppliers and service providers to build the P-37, Petrobras paid an additional $51.8 million to Maritima's suppliers and service providers.

The bid notice issued by Petrobras in 1997 for contracting a company to build the P-37 was also irregular, legal experts told OGJ, because it did not require competing companies to prove they had the minimum capital to participate in a $288 million tender.

Petrobras claims that it made the deposits in Maritima's bank account and paid the suppliers in accordance with an item in the Federal bid law. But TCU considers the Petrobras procedures illegal.

After a detailed examination of Maritima's accounts, TCU ordered Petrobras president Francisco Gros and former Petrobras president Henri Philippe Reichstul to testify to explain what happened.

Because of what it described as Maritima's poor track record, TCU also questioned Petrobras' choice of the company to build the P-37.