Cordiant invests in $864 million project to construct a deepwater drillship for leading Brazilian conglomerate

Cordiant Capital Inc. (“Cordiant”), the leading emerging markets private debt fund manager, is investing USD15 million in a USD864 million project for the construction of a deepwater drillship for a leading Brazilian conglomerate. The drillship will help Brazil further expand its fast growing oil & gas sector.With oil production growing at an average rate of 6.9% per annum since 2005, Brazil is the third largest oil producer in Latin America and the 13th largest in the world. Recent discoveries - all of which are located offshore - have opened the possibility for Brazil to become an even more important oil producer and exporter.
Cordiant is providing the 10-year loan to the Schahin Group, a leading conglomerate with over 40 years’ track record in some of Brazil’s most important industrial sectors, including oil & gas, engineering, real estate development, telecommunications and energy.
The project will generate 250 new jobs in Brazil. The company currently employs a total of approximately 4,500 people.
Schahin is one of the top three local offshore drilling operators. It is one of the few Brazilian companies that have the technical expertise to operate drillships using “dynamic positioning” – an advanced computer technology that enables a vessel to control its position automatically. The system is essential for deep sea operations where mooring or anchoring is not feasible.
The state-of-the art drillship is capable of operating in water depths of up to 3,000m, with drilling depths of up to 12,000m below the seabed, reaching a maximum depth of 15,000m.
The vessel is being built at Samsung Heavy Industries Co. Ltd. in Korea. Once completed, it will be chartered to Petrobras S.A. under a 10-year charter and service contract for deployment in Brazilian offshore waters. Petrobras is the third largest energy company in the world. Schahin has worked extensively with Petrobras in operating at deepwater depths over the past 13-years.
David Creighton, President and CEO of Cordiant, comments: “Long term global demand for oil continues to rise and Brazil is an important source of untapped offshore reserves. There is a great potential for the country to become a global oil power, but this requires considerable infrastructure investments.”
“There is a substantial lack of finance for long term infrastructure projects in emerging markets and funding has become even scarcer as banks pull out of the market as a result of the Eurozone crisis.”
“Many financially sound projects are waiting to see the light of day and the partial withdrawal of global banks from this kind of lending means that there is a growing pool of attractive opportunities for private loan providers like us.”
The transaction adheres rigorously to the Equator Principles with regards to environmental protection, industrial safety, and occupational health standards. The Equator Principles were developed in accordance with the International Finance Corporation and World Bank performance standards.
As part of the licensing process, an environmental impact assessment was undertaken for the drillship, addressing issues, such as waste and effluent management procedures, emergency responses (e.g. in the event of spills) and training requirements. IBAMA, the Brazilian environmental agency, will also inspect the rig prior to issuing the license to ensure that all operational control systems adequately satisfy its environmental standards.
Petrobras has a certified ISO 14001 and OHSAS 18001 Environment, Health and Safety & Security Management System (EHS&S -MS) and Schahin, as its contractor, is regularly audited to ensure its EHS&S procedures comply with Petrobras’ requirements.
Cordiant is funding the transaction from its Cordiant Emerging Loan Fund III (CELF III).
Source: Cordiant Capital