Diminishing loans delay oil rig orders

Houston: As many as 20 of the 100 deepwater oil rigs on order worldwide may be delayed or cancelled as loan availability erodes, possibly slowing developments including the biggest petroleum discovery in the Americas in three decades.

About half of the 20 rigs in question are rented for when they are completed in two to three years, no longer enough to ensure financing for units that can cost $800 million (Dh2.93 billion) to build, said Brian Uhlmer, an analyst at Pritchard Capital Partners in Houston. The drillers building those rigs are mostly fledgling contractors and may lack enough cash to satisfy lenders amid a global credit crunch, he said.

Norway's Sevan Marine has lost 70 per cent of its value this month amid concern it won't get financing for two drilling units.

Houston-based Atwood Oceanics Inc. said October 16 that it won't exercise an option to build a deepwater rig at Jurong Shipyard Pte. Ltd. in Singapore. New rigs were being ordered to ease a shortage of deepwater gear needed to exploit offshore prospects like Brazil's Tupi, announced in November by Petroleo Brasileiro, or Petrobras.

"Petrobras would probably be the dominant oil and gas company that gets hit by this," Uhlmer said.

Jose Sergio Gabrielli, chief executive officer at state-controlled Petrobras, said the Rio de Janeiro-based company may need to help find financing for some of its suppliers. "We are concerned about the supply chain of products for Petrobras," Gabrielli told reporters at a conference in Houston last week.

Chief Financial Officer Almir Barbassa, speaking on the sidelines of the same conference, added that some suppliers are affected by the loss of trust by lenders.

"This causes much more problem to our supply chain, as Gabrielli said, than to ourself directly, but we cannot survive without our supply chain," Barbassa said.

"We feel that they are going to find some way to finance themselves."