Petrobras, Halliburton settle Barracuda-Caratinga dispute

Brazil's federal energy company Petrobras (NYSE: PBR) and KBR, a subsidiary of US services company Halliburton (NYSE: HAL), have finalized an agreement that resolves all outstanding issues regarding the US$2.5bn Barracuda-Caratinga project, the companies said in separate statements Wednesday evening. Both sides have blamed each other for the lengthy delays and cost overruns in project completion, and the issue has been the subject of legal and arbitration hearings. The latest agreement confirms the previously announced non-binding agreement of October 2004. KBR's engineering, procurement, installation and construction (EPIC) contract included construction of 54 wells, fabrication and installation of flowlines and risers, construction and installation of two floating, production, storage and offloading (FPSO) vessels, and the commissioning, start-up and operations support for the Barracuda and Caratinga fields, both of which are in the offshore Campos basin. The Barracuda P-43 FPSO set sail from a Rio de Janeiro shipyard on October 13, and "we look forward to the sail away of the [P-48] Caratinga vessel," Halliburton COO Andrew Lane said in his company's statement. The P-48 is also being built in Rio de Janeiro, and in October Lane said it would sail this month. The projects will increase Brazil's oil production by 15%, an important step in meeting the projected 5.9% average annual production growth through 2010 detailed in Petrobras's 2015 strategic plan, Petrobras said.