Brazilian Government Plans to Open Talks with Keppel, Sembcorp Marine

The Brazilian government planned to commence discussions with Singapore's Keppel Corp. Ltd. and Sembcorp Marine Ltd., 2 of the world's largest rig builders, to find solutions to the challenges they encountered in the country, including issues arising from an going corruption probe, a senior official said during a visit to Singapore, local daily Straits Times reported Saturday.

Both companies have been named in the corruption scandal involving Brazil's state-owned Petroleo Brasileiro SA (Petrobras). Sete Brasil Participacoes, whose main customer is Petrobras and the key client for the 2 Singaporean rig builders, has filed for bankruptcy. Sete Brasil's move has created uncertainties for the 2 Singapore shipyards regarding the rig building contracts placed by the Brazilian firm.

"The discussions have been held by the companies themselves so far," Dr Marcio Felix, secretary for oil and natural gas at Brazil's Ministry of Mines and Energy told the Straits Times.

"We in the ministry will be open to starting a real dialogue with them, so we can try to understand the problem and how we can look at how we can work together to find a possible solution," Felix added.

"We don't have a solution today, but we want to work towards retaining this long-term relationship with the two companies."

The Brazilian official said the "impressive track record" of Keppel and Sembcorp Marine has been beneficial to the Brazil's oil and gas industry.

Both Singapore firms have refuted several allegations made since the corruption probe began in Brazil, including bribing officials to secure rig building contracts from Petrobras. The latest allegation was made in early August, when a former third-party commercial representative for Keppel, Zwi Sknonicki, told a judge that 5 leading company executives had authorized the bribe.

Earlier in April, Keppel CEO Loh Chin Hua said the firm has ceased construction of Sete Brasil's rigs since end 2015 and it would not resume work until payment resumes. The firm is constructing 6 semisubs for Sete Brasil, while Sembcorp Marine, which has set aside $245 million in provisions for the Sete Brasil's contracts in financial year 2015, had contracts to build 7 drillships for the troubled Brazilian company.

Chee Yew has covered the upstream and downstream sectors of the oil and gas industry in Asia for more than 15 years. Email Chee Yew at cheeyew.cheang@rigzone.com

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