By Marta Nogueira (Reuters) – The transportation unit of Brazil’s state-controlled oil company Petrobras said on Thursday that it planned to cancel orders for 17 tankers and other vessels designed to upgrade the largest shipping fleet in the Americas.
“We decided to revoke the contracts for those ships,” Antonio Silvino, head of Transpetro, told reporters during a presentation at Rio Oil & Gas conference.
He said three other vessels, currently under construction at Petro Eisa 1 shipyard in Rio de Janeiro, could also be canceled because the contractor is going through financial difficulties.
The cancellations mark the unraveling of Brazil’s PROMEF project, a signature program of former Brazilian President Luiz Inacio Lula da Silva. His goal was to revive the country’s shipbuilding industry using the country’s now-busted oil and commodities boom and orders from Petrobras, as the oil company is known.
The cancellations represent more than a third of the 46 ships ordered by Transpetro under the program starting in 2003.
For a while it worked, with dozens of major vessels and oil production ships on order, Brazil’s existing shipyards expanded and new ones built.
The ship contracts, though, became embroiled in the giant price-fixing, bribery and political kickback scandal at Petrobras.
Failure to deliver well-built, competitively priced vessels on time also weighed on the industry, which has been hit by mass layoffs, bankruptcies and contract cancellations.
Transpetro’s Silvino said the fact the company is cancelling the orders does not necessarily mean it will operate with a reduced fleet.
He said the company is evaluating options to increase the number of ships that will be offered on lease to Petrobras. Transpetro also plans to offer services for other companies in the sector, said Silvino.
From the total number of 46 vessels originally included in the PROMEF program, 17 were delivered, 17 have been canceled, three are under risk of being canceled and nine are under construction in other shipyards.
Additional reporting by Jeb Blount; Writing by Jeb Blount and Marcelo Teixeira; Editing by Jonathan Oatis
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