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Baker Hughes said to be favorite for main Petrobras drilling job

PETER MILLARD

HOUSTON (Bloomberg) -- Baker Hughes Inc. is poised to win the biggest contract in Petroleo Brasileiro SA’s $1.5 billion to $2 billion offshore drilling program after placing the lowest cost bid, two people with knowledge of the tender said.

The contract represents half the drilling work being offered by the world’s biggest ultra-deepwater producer over the next four years, the people said, asking not to be named because the information hasn’t been made public.

Schlumberger Ltd. offered the cheapest bid for a second package representing 30% of offshore wells and Halliburton Co. placed the lowest cost offer for the remaining 20% of work, they said. Baker Hughes will charge Petrobras less per well compared with the other two drilling packages that have smaller volumes of work, the people said.

Petrobras, based in Rio de Janeiro, invited bids for fresh contracts after a reduction in the company’s drilling fleet eroded suppliers’ margins, the people said. Halliburton had the 50% package under the previous contract, they said. The value of the three new contracts is subject to change depending on levels of activity.

Schlumberger declined to comment on the results of the tender in an emailed response while Baker Hughes didn’t immediately offer comment when contracted by email and Petrobras said it doesn’t comment on bidding processes.

“Tenders were submitted last week but there haven’t been any official awards made at this point,” Emily Mir, a spokeswoman at Halliburton, said in an emailed response.

Suppliers to Brazil’s oil industry have cut staff over the past year to adjust to lower-than-expected demand as Petrobras seeks to contain costs. The company trimmed its five-year business plan to $220.6 billion earlier this year.

08/21/2014

 

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