Petrobras recently concluded the contracting process of awarding vessel charters to renew the OSV fleet that supports its oil and gas activity in offshore Brazil. This was the first opportunity for owners to bid to construct new vessels for long-term charters in Brazil in over ten years. Ultimately, twelve contracts were awarded and split between two vessel owners with Edison Chouest Offshore’s Brazilian entity was awarded contracts for six new OSVs. 

The biggest significance of this process is the length of the contracts awarded. As we have discussed many times, to induce owners to invest in new build vessels and for owners to secure financing, contract durations for new OSVs must be significantly longer than they have historically been. A five-year charter term used to be enough allow banks to loan the debt needed, but this will no longer be the case. The contracts awarded to the successful bidders in this recent Petrobras tender (Edison Chouest included) were all twelve years long. 

Any new OSVs built for service in the US GOM should be expected to see similar, if not longer, contract durations when awarded. Currently, there are no active requests for bids to construct new vessels within US operations. Given the involvement of such a bid process, considering the cost of construction, and the complexity of financing these expensive vessels, a formal RFQ could yield successful contract awards no less than six to nine months after the RFQ process begins. 

It is not a matter of if, but when vessel charterers in the US GOM follow Petrobras’ lead.