Óleo e Gás Suspends Payment for OSX-3 FPSO

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March 16, 2015

FPSO OSX-3 pictured at her May 31, 2013 naming ceremony in Singapore. Photo credit: OSX

reuters_logo1RIO DE JANEIRO, March 16 (Reuters) – Oleo e Gas Participações SA, a Brazilian oil company under bankruptcy protection, on Monday said it suspended payments for an oil-production vessel to bankrupt ship-leasing company OSX Brasil SA for six months.

Oleo e Gas, formerly known as OGX Petroleo e Gas Participações SA, said in a statement that it made the decision after being unable to come to an agreement on Friday over future payments to OSX for the OSX-3 floating production, storage and offloading ship (FPSO) in a hearing before a bankruptcy judge in Rio de Janeiro.

Oleo e Gas uses the OSX-3 to manage production at its Tubarão Martelo oil field northeast of Rio de Janeiro in the offshore Campos Basin.

Oleo e Gas and OSX were both part of Brazilian tycoon Eike Batista’s EBX energy, mining, transportation and shipbuilding conglomerate, which collapsed in 2013 under debt, missed oil production targets and project delays.

Officials at OSX, which depends on Oleo e Gas for nearly all of its revenue, were not immediately available for comment.

Oleo e Gas also said it had “amicably” agreed to take over the operation and maintenance of OSX-3 from OSX. Oleo e Gas will pay OSX an undisclosed amount of compensation for the company’s loss of revenue from a contract to operate and maintain the FPSO.

On Feb. 27, Oleo e Gas said it was reviewing the viability of oil production at Tubarão Martelo after a sharp drop in world oil prices cut off funds needed to expand output in the field.

Without new financing, Tubarão Martelo output will fall to about 8,000 barrels of oil a day in 2015, the company said in a securities filing. The goal was to raise output to 12,700 barrels a day this year. Production was about 11,280 barrels a day in January. (Reporting by Jeb Blount; Editing by Lisa Von Ahn)

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