Petrobras, Halliburton sign Barracuda-Caratinga contracts

Brazil's Petroleo Brasileiro SA and Halliburton Co., Dallas, announced Wednesday that they've signed more than $2.5 billion in contracts under which the firms will jointly develop the Barracuda and the Caratinga oil fields in the Campos basin off Brazil. Petrobras will act as operator of the deepwater fields, but Halliburton will perform the bulk of the work under the terms of the contracts.


RIO DE JANEIRO�Brazil's Petroleo Brasileiro SA and Halliburton Co., Dallas, announced Wednesday that they've signed more than $2.5 billion in contracts under which the firms will jointly develop the Barracuda and the Caratinga oil fields in the Campos basin off Brazil. Petrobras will act as operator of the deepwater fields, but Halliburton will perform the bulk of the work under the terms of the contracts.

The firms announced early this year that they were nearing a formal agreement on the Barracuda-Caratinga project (OGJ, Feb. 7, 2000, p. 31). Details of the deal structure were unknown at that time.

Under the contracts signed this week, Halliburton's Brown & Root Energy Services (BRES) and Halliburton Energy Services business units, together with Petrobras's exploration and production unit, will develop the fields. Work is scheduled to begin this month.

The principal agreement includes a lump-sum engineering, procurement, and construction (EPC) contract between BRES and Barracuda & Caratinga Leasing Co. BV (BCLCO). BCLCO is a special-purpose company established by Japanese companies Itochu Corp. and Mitsubishi Corp.�in connection with the project finance structure negotiated by Petrobras�for the development of the two fields.

The EPC contracts include work related to construction of 51 wells; fabrication and installation of flowlines and risers; construction and installation of two floating production, storage, and offloading vessels (FPSOs); and commissioning, start-up, and operations support for both fields. Each FPSO will have a storage capacity of 2 million bbl and a production capacity of 150,000 b/d of oil. Work representing more than 40% of the value of the FPSOs will be performed in Brazil, including the hull conversion of one ship.

"The Barracuda and Caratinga awards represent an important recognition of Halliburton's capability in the technically challenging development of deepwater oil and gas resources," said Dave Lesar, president and COO of Halliburton. Water depths at Barracuda and Caratinga range from 600 m to 1,350 m.

Petrobras expects production from the fields to reach 247,000 b/d of oil and 3.4 million cu m/day of natural gas by 2004-05.

Project financing
Petrobras says the Barracuda-Caratinga project involves the largest contract ever signed in its 47-year history. The contract complements financing contracts signed this week in New York, where Petrobras inked a deal for a $3.59 billion international credit package. Of the total, $2.5 billion is for Barracuda-Caratinga and $1.1 billion for development of Espadarte, Voador, and Marimba fields, also in the Campos basin.

This brings total financing for exploration and production projects in the Campos basin to $4.45 billion, including $850 million in financing for Cabiunas field, says Petrobras.

The Barracuda-Caratinga and Espadarte-Voador-Marimba projects are backed by Brazil's National Economic and Social Development Bank (BNDES), Japan Bank for International Cooperation (JBIC), and Japanese companies Itochu Corp., Marubeni Corp., Mitshubishi Corp., and Mitsui Corp.

BNDES will finance local equipment purchases for the projects, says Petrobras Pres. Henri Philippe Reichstul. Japan's Ministry of Trade and Industry (MITI) and the Multilateral Investment Guarantee Agency (MIGA), a financial institution linked to the World Bank, are offering insurance from financial and political risks for the Barracuda-Caratinga project.

The Barracuda-Caratinga project will involve total investments of $3.01 billion, including interest rates. The project will be financed by JBIC ($1.14 billion), BNDES ($760 million), a syndicate of banks ($500 million), Itochu and Mitsubishi ($100 million), and by Petrobras' own financial resources ($518 million). The bank syndicate includes Deutsche Bank, Paribas, Hypo Vereinsbank, and the Industrial Bank of Japan, although Bank of America, Sudameris, Santander, DKU, Dresdner, and ING may join the consortium.

Espadarte, Voador, and Marimba fields are already producing. The additional financial resources will be used for concluding the development project.

JBIC will provide financing of $508 million; BNDES, $260 million; a commercial bank syndicate, $200 million; Japanese companies Mitsui and Marubeni, $123 million; and Petrobras, $139 million. Total projected investments are $1.23 billion.

Participating in the project financing will be Tokyo Mitsubishi, Fuji, Chase, ABN-Amro, ANZ, CSFB, Credit Agricole-Indosuez, and Dresdner. MITI and MIGA also will assume the political and commercial risk for Espadarte-Voador-Marimba.

Combined production from these fields is expected to reach 147,000 b/d of oil and 2.5 million cu m/day of natural gas in 2001.

For the Barracuda-Caratinga project, the time span for the financing is 10 years. For Espadarte-Voador-Marimba, the financing period is 7 years.

Both financings are structured as project finance. Investments will be owned by specific-purpose companies located outside Brazil, which will make the financing available to Petrobras as mercantile leasing, or freighting in the case of the FPSOs. In this way, there will be no effect on Petrobras's indebtedness, said Reichstul.

At the end of the projects, Petrobras will be able to acquire the equipment outright.

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