Subsea 7 Lose $47 Million Contract

Published at 05:27PM - 01/06/16

Subsea 7 announced today that its day-rate contract for the company’s Pipelay Support Vessel (PLSV) Seven Mar has been terminated ahead of schedule.

The PLSV was working offshore Brazil for the state-owned oil giant Petrobras and the contract was due to expire at the end of this year

“As a result, the Group backlog has diminished by approximately US$47 million (£32.57 million)”, the company informed in a statement.

Subsea 7 Lose $47 Million Contract

The early termination of the contract, effective from May 31, is justified by the fact that the Brazilian maritime law prioritises Brazilian vessels over international vessels of a similar specification. As a result, the operating licence for Seven Mar has expired, Subsea 7 explained.

In Brazil, vessels must have their Certifications of Charter Authorisation and Temporary Foreign Vessels renewed annually to be able to operate in the South American country. Under Brazilian law, when a foreign-flagged vessel renews the certifications, this renewal process can be cancelled by the existence of a similar Brazil-fagged vessel, which will then take over the foreign vessel’s employment contract.

Contract-Rich Q1 And Q2 For Subsea 7

Nevertheless, it has been a busy first two quarters of the year so far, for the global offshore contractor.

Earlier last month, Subsea 7 announced the award of a major engineering, procurement, construction and installation (EPCI) contract valued in excess of £900 million. Under the contract awarded by Beatrice Offshore Windfarm Limited, Subsea 7 is to provide EPCI services to the Beatrice offshore wind farm offshore Scotland.

The previous month, the company had announced the award of an engineering, procurement, installation and commissioning (EPIC) contract for the UK North Sea by Apache North Sea to work on the development of the Callater field, located northeast of Aberdeen.