BW Offshore to recoup losses from fire

Floating production unit operator BW Offshore has taken a hit in revenues and profits following a fatal fire on one of its vessel offshore Brazil. 

However, the firm says it will recoup its losses after the fire on the Cidade de São Mateus floating production, storage and offloading (FPSO) vessel on 11 February this year, which saw nine of the 74 crew die and 26 require medical attention. 

A joint investigation into the incident, by Petrobras and BW Offshore, was completed April 15, but so far little has been made public, although BW Offshore says it will share the findings with industry stakeholders. An initial report from the local union, Sindipetro-ES, said the explosion was due to a gas leak in the pump room. 

The FPSO, which was operating on the Camarupim and Camarupim Norte fields for Petrobras, about 120km offshore Espirito Santo state, has been shut-down since the accident. Work is ongoing on cargo offloading and clearing the process train of gas and liquids before it is removed from the field to be taken to a yard for repairs. 

Norway-headquartered BW Offshore says the cost of repairs are still being assessed, but, it says that has insurance covering crew, pollution, clean up, vessel damage, and loss of hire, which means the firm should be able to recoup its losses.

The firm’s Q1 2015 net profit slipped from US$12.7 million to $5.8 million, with operating revenues also slipping by $28 million to $235.8 million, mainly due to Cidade de São Mateus being “off-hire.”

Despite the difficulties offshore Brazil, BW Offshore, which operates 17 FPSOs, 14 of which are owned, said, although the oil price had impacted the short-term outlook, it had seen an increase in project activity. In April, the firm signed a deal to operate the new-build Catcher FPSO for Premier Oil in the North Sea, starting 2017, for seven years with 18 years of extension options, and also renegotiated a contract with Ithaca Energy on the Athena FPSO, also in the North Sea. It also signed an agreement with PetroRio for a one-year extension for the lease and operation of the FPSO Polvo to Q3 2016, with options to 2022. 

BW says the Catcher project is on track, with subcontracts awarded to Aibel, for the topsides engineering, IHI (Japan) for the FPSO hull, APL (NOV) for the turret mooring system, DNV GL for classification and veritication, and Dyna-Mac (Singapore) for topside module fabrication. 

BW says all its other FPSOs, except the Azurite, which is being marketed for new projects, were on contract per the end of the quarter. Further, the firm expects activity to increase in front end engineering and design work and bidding in 2H 2015, with results expected in 2016. Activity on prospects including the Leviathan, Kudu and Etan projects continues. “FPSO concept still very much in pole position for offshore developments,” the firm concluded in its Q1 presentation.