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Strategy for Construction of up to 28 Drilling Rigs in Brazil

Petrobras Petrobras Company's Executive Board has approved the strategy to hire up to 28 new drilling rigs to be built in Brazil, with increasing national content, and to be used for ultra-deep water exploration, including the fields located in the pre-salt layer. The rigs are due to be delivered between 2013 and 2018.

A first phase foresees the hiring of a minimum lot of 9 rigs. Of this first lot, seven vessel-type units will be built, based on consolidated technologies widely used in the global market, and constructed in a single shipyard. Contracting these seven rigs from a same shipyard will allow the winning bidder to make the investments that are required in order for it to construct the needed infrastructure and to achieve the necessary economies of scale.

The two other units, which may be either vessel-type rigs or semi-submersible platforms, will be built separately and may use technologies that incorporate concepts new to the market, but which will afford Petrobras greater economic and operating benefits.

In addition to building these nine units, the Company will simultaneously conduct a process among all rig operators in which Petrobras would charter up to four units per operator. The rigs to be chartered would be built in Brazil. Under this strategy, the charterers themselves would be responsible for constructing rigs in Brazilian shipyards.

The process involved the bids to chartering and constructing all of the units is expected to be released as early as September 2009.

The volume of orders will not only make feasible the expansion and upgrading of existing shipyards, as well as the creation of new, modern shipyards in Brazil. It is expected that the investment in new and existing yards will lead to the implementation of a new Brazilian naval industry that can compete with the best international shipyards in the offshore industry segment.

Due to the characteristics of these drilling rigs, building them in Brazil will also promote a major expansion of the related industries in goods and services that supply the shipyards' productive chain.

To assist in this process, Petrobras is analyzing how it may facilitate access to credit for the Brazilian suppliers who will form the supply chain for the drilling rigs to be chartered.

To make it feasible to execute this huge project, which will certainly drive the Brazilian economic development and may generate upwards of 40,000 new direct and indirect jobs after all orders have been placed, the Federal Government will allocate, via the Guarantee Fund for Naval Construction, R$4 billion exclusively to support the construction of these 28 drilling rigs.

Published 11/09/09

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