Spat Delays Dismantling of FPSO in Brazil
April 16, 2025
A dispute between state-run oil company Petrobras and steelmaker Gerdau will delay the first dismantling of an oil production vessel in Brazil by at least a year, people familiar with the matter said, in a setback for local shipyards.
The operation had been hailed as a chance to reinvent Brazil's struggling shipbuilders as industrial recyclers, generating jobs as Petrobras plans to spend $9.9 billion in the next five years to retire another 10 ships of the same kind.
The 45,000 ton FPSO, called P-32, was set to wrap up its decommissioning by December 2024 under a new Petrobras sustainability program.
Instead, the work began only last month, according to the head of a local metalworker's union in Rio Grande do Sul state Benito de Oliveira Goncalves. He said a dispute between Petrobras and Gerdau over removing petroleum residues from the vessel had stalled work for more than a year.
Another person familiar with the matter, who asked not to be named, said the ship arrived in the yard with 30 million liters of oily water and 270,000 liters of marine diesel on board, without a consensus on how to pay for its removal.
The marine diesel has been pumped out and sold to a local refinery, Goncalves said, but the oily water still needs to be cleaned out before the hull can be broken down. By next month a firm should be hired for that work, the other person said.
A Petrobras executive, who also requested anonymity, said the oil company and steelmaker were in talks without an agreement on how to split the additional costs. It was not clear who had paid for the extra services so far.
Asked about the dispute, Petrobras said any contractual issues are discussed privately between the parties. Gerdau said the dismantling operation is under way, with all necessary procedures being conducted "responsibly".
Ecovix, which runs the Rio Grande shipyard, declined to comment.
Gerdau acquired the P-32 and a second vessel, P-33, for an undisclosed amount in 2023, in a deal giving it the right to dismantle and recycle scrap metal from the vessel.
It was a landmark contract, introducing a new business model for Brazilian shipyards that have been struggling for years. President Luiz Inacio Lula da Silva, a former metalworker, has made it a priority to generate jobs at the shipyards with Petrobras, which has also commissioned several new ships.
However, the dispute over P-32 means that the Rio Grande shipyard in southern Brazil has yet to benefit from the new decommissioning work. The costs with the vessel at the shipyard have already exceeded the value of the dismantling contract signed between Gerdau and Ecovix, around 30 million reais ($5.13 million), one source said.
The delay in dismantling P-32 also means that the shipyard may lose the contract to break down P-33, the source said, as it has other work lined up, including four vessels for Petrobras.
(Reuters - Reporting by Fabio Teixeira and Marta Nogueira; Additional reporting by Rodrigo Viga Gaier; Editing by Brad Haynes and Chizu Nomiyama)
