Brazil: BW Offshore getting ready to tow damaged FPSO

BW Offshore has informed that the FPSO Cidade de São Mateus still has not been towed back to shore, almost a year after an explosion aboard the vessel resulted in deaths of nine offshore workers. 

Even though the accident happened almost a year ago, on February 11, 2015, the vessel still has not been towed back to shore for damage assessment and repairs due to, as BW Offshore said, delays in the approval process in Brazil.

BW Offshore, a provider of floating production services to the oil and gas industry, reported on Monday that the FPSO Cidade de São Mateus has been freed of gas and condensate, offloaded and it has been prepared for tow. Riser and mooring disconnect started in December.

The FPSO Cidade de São Mateus has been off hire since the explosion in February 2015. The vessel was operating offshore Brazil for the state-owned oil company Petrobras since 2009. The contract will expire in 2018 unless Petrobras uses its option to extend until 2024.

The next significant step, the company said, is to tow the vessel to a yard for repairs. As the unit is still at the field, it has been challenging to get access to make an accurate assessment of all the damages, BW added.

Loss of hire insurance

According to its owner, the FPSO Cidade de São Mateus is covered by a loss of hire insurance from May 12, 2015, for a period of 12 months. The accident and its consequences will to a large extent be covered by these policies and BW Offshore is working closely with insurers and their loss adjusters in the recovery operations, the company noted.

Given the delay to the disconnection, the unit is expected to be without rate for some time before repairs can be carried out and the unit returns to the field. The length of this period is still uncertain, BW Offshore reiterated.

During fourth quarter 2015, the company recorded an additional impairment of $85 million to reflect losses related to non-recoverable costs as well as direct damages to the FPSO Cidade de São Mateus as a result of the accident in February 2015.

The impairment is based on a preliminary assessment as the unit is still on the field awaiting to be towed to a yard where further assessment will be done and repairs will be undertaken. The repair of the FPSO is covered under the company’s Hull and Machinery insurance.

Sinks to loss

BW Offshore’s net loss for the fourth quarter 2015 amounted to $234.5 million, compared to a $12.7 million profit in the same period the year before.

The company’s operating revenues for the quarter amounted to $318.8 million, versus $264.8 million in the fourth quarter 2014.

Furthermore, the FPSO operator’s EBITDA for the fourth quarter amounted to $165.5 million, an increase from $109.2 million in the 4Q 2014.

BW Offshore explained that EBITDA has been positively affected by an insurance recoverable of $85 million recorded in further quarter versus $75 million in third quarter for repairs to FPSO Cidade de São Mateus. This has been offset by certain one off provisions made during fourth quarter.

Offshore Energy Today Staff