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Re: Seadrill evades second Petrobras junk tender I figured I had to do the post because the US media, including the US O&G trade media, has not yet adequately covered the problem that Brasil's anti-corruption law has caused to the offshore energy space. Here's a brief summary, to the best of my knowledge ... This anti-corruption law in Brasil (you probably need to google something like P.L. 16/13066 to find it) was signed in to Brasil's national law in 2016, to be effective 2 years after it was signed, meaning new federal government contracts put out for bid after a specific date in 2018 (I can look up the exact date if interested). Because of all the corruption that has been roiling Brasil for several years ... involving about a dozen of their largest Brasil headquartered construction firms getting together to decide who would bid on each large federal government construction contract ... then each submitted their bids accordingly to get to the decided winner. aka Lava-jet, or car-wash Of course, the bids were inflated, with huge cash money kickbacks paid the ruling political party, and well as politicians, and extra profits for the construction firms ... on a huge scale. The conglomerate Odebrecht was named as the kingpin of the construction firms ... it also happened in Mexico, Peru too ... involving same construction firms. You might have read about the former President of Peru committing suicide last week, when he was about to be brought in on charges for this. Two of Brasil's most recent Presidents are in jail for their participation in activities that were investigated in the Lava-Jet crime, as has the then President of Odebrecht. Some of the construction firms also had O&G firms, which were black listed from any new contracts by Petrobras. Odebrecht being one of them (now re-named as Ocyan). I'm not certain if QGOG (now called Constellation) was also involved and backlisted. Both Ocyan and QGOGConstellation were granted OK to bid on some new O&G contracts with Petrobras starting sometime in late 2018 as I recall. To make a long story short, Brasil has a new law, 13066, which essentially requires that the written bids on federal government contracts (including government controlled, and publicly traded NOC Petrobras) be open in public (which was the case before) AND I have read that the new law requires the dollar amount of each bid be posted on a website and every company that submitted a bid can go to that site and see what amounts were bid (but it does not list the name of each bidder). Then, EVERYONE WHO BID CAN CHANGE THEIR BID !!! And apparently more than once !!! As I recall, if you want to change your bid you must beat the lowest bidder by at least 10%. I think this is called a modified reverse auction. The intention was that this process would pertain to ANY purchase made by a government agency ... not merely construction contracts. So, be it a contract to provide boxes of copier paper for the year, or a contract for leasing a fleet of trucks, or a contract to repave 5 miles of road, or to build a power plant ... all contracts get treated the same. IMO they didn't think through what it means for contracting large, technically sophisticated, and different ocean going vessels ... which can be quite different from each others performance, safety, cycle time, experience of workers, and such. Essentially they are forced to view chartering drilling rigs as if they are buying a bunch of pencils .. with the low bid winning regardless of the huge differences from rig to rig, and company to company. So, IMO it's pretty much a f*#&ked up process for offshore drilling rigs and FPSO's. I understand the offshore O&G firms are pretty upset with this process. T.D. |
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