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SembMarine calls off Oro Negro contracts for 3 jack-ups

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Sembcorp Marine said before Wednesday trading hours its rig-building unit, PPL Shipyard Pte Ltd, has terminated contracts with Integradora de Servicios Petroleros Oro Negro, SAPI de CV and its subsidiary Oro Negro Vastus Pte Ltd for three jack-up rigs.

SEMBCORP Marine said before Wednesday trading hours its rig-building unit, PPL Shipyard Pte Ltd, has terminated contracts with Integradora de Servicios Petroleros Oro Negro, SAPI de CV and its subsidiary Oro Negro Vastus Pte Ltd for three jack-up rigs.

Mexico-focused Oro Negro has ordered these jack-up rigs at over US$200 million apiece from PPL Shipyard.

The rig owner and operator had placed orders for half a dozen jack-ups with PPL between early 2012 and late 2013, just before oil prices collapsed in the second half of 2014.

These rig orders were then premised on a surge in offshore drilling demand that was projected to come with the liberalisation of Mexico's oil and gas (O&G) sector. That surge in offshore drilling activity did not materialise with oil companies having held back on capital expenditure plans after oil prices crashed.

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Mexico's national oil company Pemex has just turned profitable the last three quarters after having sustained losses through a prolonged low oil price environment lasting over two years since 2014.

But the recovery in Mexico's O&G sector may have come too little too late to deliver the glittering promise that was to support what is remaining of Oro Negro's massive rig-building programme at PPL Shipyard.