South Korea’s STX Group is looking to sell its 51% stake in STX OSV, the world’s biggest producer of oil-rig support vessels, in an attempt to raise capital to repay its debts. They are hoping that the sale may draw a premium of more than 30% due to the favourable position that the company holds in Brazil and the profits that it could experience following the largest crude oil discovery in the Americas since Mexico’s Cantarell field in 1976. In order to access the estimated 50 billion barrels of crude Petrobras are intending to invest $225 billion, of which STX OSV are hoping to take a large share.
STX OSV already operates one shipyard in Brazil, and is currently building another with the plan to complete and go into production in 2013. Um Kyung A, an analyst at Shinyoung Securities, said that, “having not just one but two yards in Brazil is what makes STX OSV all the more attractive because Brazil requires the vessels and rigs it uses to be built in the country.”
Oil is still trading at over $100 a barrel, and current sources are depleting rapidly, forcing the development of deeper and deeper wells. Steve Robertson, a director at the England-based researcher Douglas-Westwood, said that “increasingly both national oil companies and independent oil companies will have to move offshore and move to harsher environments.” Deep-oil explorers are predicted to spend $232 billion over the next five years, with Petrobras of Brazil spending more than anyone else.
Deepwater rigs are more technically challenging to run, due to the fact that they cannot be anchored to the seabed, and therefore require more support vessels than shallow water rigs. According to Jose Sergio Gabrielli, CEO of the Brazilian owned Petrobras, they will need approximately 568 new ships and 95 floating production vessels as part of its plans to drill the oil field which lies nearly 4 miles below the Atlantic Ocean bed. A substantial order for STX OSV and whoever their owners might be; they received orders for 28 vessels last year, worth $1.94 billion.
The future potential of the market in Brazil seems to be in no doubt, nor the huge capital that will be invested there, and it also seems that STX OSV is in prime position to take advantage of that market. Whoever has the few billion necessary to buy the shipbuilders is sure to enjoy a few years of healthy profits.
By. James Burgess of Oilprice.com