Brazil's offshore rig spot market projected to flourish

Brazil is expected to see its offshore drilling rig spot market flourish in the coming years, local infrastructure company Prumo Logística's CEO, José Magela, said during a press conference in Rio de Janeiro.

The conditions for the development of short-term negotiations, he said, have been set by recent tax incentive measures for the oil industry approved by the federal government, allowing dehired rigs to remain in Brazilian waters for up to three years.

Previously, rig operators were forced to move the imported equipment at the end of their contracts or close maintenance deals with local shipyards to keep them in Brazil, under penalty of being heavily taxed.

"Given such restrictions, oil companies would mostly hire drilling rigs under long-term contracts, therefore raising the risk exposure," Magela told reporters.

Through its Dome subsidiary, a joint venture with Brazilian-Dutch association GranIHC, Prumo is preparing to offer warm-stacking services, maintaining dehired rigs ready to resume operations when demanded by oil and gas operators.

Currently there are two offshore rigs stacked at Prumo's Açu complex, in Rio de Janeiro state: the Amazônia and Pantanal rigs, which have been acquired by local holding Bambu Participações from engineering group Schahin.