SBM Offshore’s $400M FPSO deal opens doors to ‘innovative’ financing avenues

Netherlands-based SBM Offshore, a provider of the design, construction, installation, and operation of offshore floating facilities, has made its first foray into sale and leaseback financing with a multimillion-dollar refinancing of a floating production, storage, and offloading (FPSO) vessel operating off the coast of Brazil.

While disclosing the signing of a non-recourse sale and leaseback financing agreement, amounting to $400 million, for the FPSO Cidade de Paraty with a tenor of eight years, SBM Offshore confirmed the timeline for the completion of the transaction, which is expected to be before the end of April 2025, following the fulfillment of certain closing conditions.

This FPSO is part of a special purpose company’s portfolio, owned by affiliated companies of SBM Offshore (63.125%) and its partners (36.875%). Under the terms of the agreement, the special purpose company will transfer the ownership to four Chinese leasing companies.

However, the Dutch player and its partners will continue to operate and maintain the asset until the end of the initial charter and operate contracts for the remaining 8.5 years. The FPSO Cidade de Paraty has been formally on hire since June 2013.

Commenting on the financing deal, Douglas Wood, CFO of SBM Offshore, highlighted: “We are very pleased to have signed the refinancing of FPSO Cidade de Paraty, the company’s first sale and leaseback financing.

“With this strategic transaction we are demonstrating once again the value of our unique lifecycle offering not only from an execution and operation standpoint but also in our ability to continue to provide innovative long-term financing solutions for our clients. We appreciate the continued support from our Chinese leasing partners.”

The unit works under a twenty-year charter and operate contract on the Lula Nordeste development in Brazil’s pre-salt area within the Santos Basin in block BM-S-11, located approximately 300 kilometers offshore in 2,100 meters of water depth.

The FPSO Cidade de Paraty has installed topside facilities with a weight of around 14,000 tons to process 120,000 oil barrels per day (bpd), associated gas treatment for 5 million standard cubic feet per day with compression and carbon dioxide removal, and a water injection facility for 150,000 bpd.

This financing arrangement comes a month after SBM Offshore confirmed the arrival of another FPSO to the pre-salt layer of the Santos Basin.

This will be the fifth addition to one of Petrobras’ oil fields off the coast of Brazil once it flows its first oil later this year.