GE O&G has signed a three-year frame agreement valued at approximately $30 million to supply 26 subsea wellhead systems and associated services to Shell Brasil Ltda. for exploration and production projects offshore Brazil. The agreement means GE Oil & Gas will supply all Shell Brasil's requirements for subsea drilling systems for all offshore exploratory and development wells to be drilled by Shell Brasil at least until the end of 2013.
Under the agreement, GE will supply 13 MS-700 Slimbore and 13 MS-700 deepwater high capacity (DWHC) systems. The GE MS-700 is the only subsea wellhead system on the market with metal-to-metal sealing, and has demonstrated high reliability for projects offshore Brazil.
Suheyl Ozyigit, Wells Delivery Manager for Shell Brasil said, "Based on our previous experiences, we are confident that the new agreement with GE will help us to reach our ongoing exploration and production goals. The agreement also meets our delivery requirements, provides competitive pricing and includes substantial local content."
Fernando Martins, Vice President—Latin America, Drilling & Production, GE Oil & Gas, said, "We're very pleased to again have been selected to help Shell Brasil achieve its deepwater production goals. The new frame agreement builds upon our successful relationship with Shell Brasil and further supports our growing role as a technology supplier for projects offshore Brazil, one of the world's most active oil and gas development regions."
GE's MS-700 technology offers high flexibility in terms of casing programs and is designed to help Shell Brasil reach exploratory and development targets in ultra-deep water reservoirs efficiently, saving operational rig time and costs. Most of the new projects will be located in the Santos and Campos basins offshore Brazil.
Under the new frame agreement, Shell Brasil will be able to leverage the operational lessons learned and benefits coming from earlier applications of the same MS-700 Slimbore technology. GE had a similar contract with Shell Brasil from 2007-2010 for the supply of wellhead systems for the BC-10 phase 1 development.
Much of the equipment will be manufactured at GE's facility in Jandira, São Paulo State, Brazil. Shipments are expected to start by September 2011.
The latest agreement with Shell Brasil underlines GE's position as a leading supplier of subsea drilling systems for offshore operators in Brazil. Since 2007, when GE acquired VetcoGray, the GE drilling & production business has provided more than 300 subsea wellhead systems to 11 different operators for projects offshore Brazil.
Underscoring its commitment to Brazil, GE has announced that it plans to invest $500 million to expand its operations in the country, including the establishment of a multi-disciplinary Research and Development Center in Rio de Janeiro. Among the focus areas for the new center will be advanced technologies for the oil and gas sector. In addition, GE's recent acquisition of Wellstream, a leading producer of flexible pipe equipment, significantly expands GE's capabilities to serve the Brazilian offshore market.
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