Indian firm given more time to appeal against Petrobras tender cancellation

Brazil's state-run oil company Petrobras has extended the deadline for India's Shapoorji Pallonji Energy Private Limited to file an appeal against its decision to cancel the Barracuda/ Caratinga FPSO tender to March 19. 

Petrobras' notice extending the term for appeal 

In the cancellation notice, Petrobras said "the tender was revoked due to an unavoidable and unforeseen event that altered the economic viability of the project in the current contracting model, constituting an obstacle to contracting."

Shapoorji, the sole proponent in the tender, submitted an offer of a daily rate of approximately US$1.6mn. A source familiar with the matter told BNamericas that Petrobras' initial budget was slightly lower than US$1mn but that it was open to close the deal at around US$1.2mn. 

Although possible, it is unlikely that the indian company's appeal will be successful, as the underlying reason for the cancellation of the tender is believed to political in nature. 

The expectation is that Petrobras will relaunch the tender under the BOT (build-operate-transfer) format, where the contracted firm is responsible for building the FPSO and operating it for six years before Petrobras takes over the production unit.

Besides facilitating financing, such a format favors construction in Brazilian shipyards, since Petrobras bears the financial risk of the works. This is in line with President Luiz Inácio Lula da Silva's desire to attract large construction work projects to the country. 

"Petrobras must have a vocation for helping to develop the country. The stronger Petrobras is, the stronger Brazil will be. We'll continue building ships, rigs and platforms, producing oil and refining oil because this mission is in your hands, the people of Petrobras," he said on February 17 during the ceremony marking the revival of the local naval and offshore industry at the Angra dos Reis terminal (Tebig) in Rio de Janeiro state.

Petrobras' 2025-29 business plan foresees the FPSO starting operations in 2029. 

Capable of producing 100,000b/d of oil and 6Mm³/d of natural gas, the platform will be connected to 21 producing wells and eight water injection wells.