Seacrest Petroleo Files Arbitration Request Against Petrobras Over Pipeline Repair Failures
Seacrest Petroleo, an independent oil & gas production company based in Brazil’s Espírito Santo, has taken legal action against Petrobras, the state-owned oil & gas giant, over alleged subsea pipeline repair failures. The company has filed a request for arbitration with the International Court of Arbitration of the International Chamber of Commerce (ICC) to seek indemnification for damages caused by Petrobras’ failure to complete repairs to the Terminal Norte Capixaba (TNC) subsea pipelines.
A court in Rio de Janeiro issued an injunction on December 27, 2024, preventing Petrobras from taking action for 30 days regarding the non-payment of approximately $71 million by Seacrest Petroleo’s subsidiaries, SPE Cricaré and SPE Norte Capixaba, for the acquisitions of the Cricaré and Norte Capixaba Clusters.
Background of the Dispute
Seacrest Petroleo acquired the Cricaré and Norte Capixaba Clusters from Petrobras with the understanding that the state-owned company would complete necessary repairs to the subsea pipelines crucial for oil production transport. However, Petrobras has allegedly failed to fulfill its obligations, leading to severe financial losses for Seacrest Petroleo.
According to Seacrest Petroleo, the failure to restore the pipelines to their required specifications has resulted in the company selling off-spec oil blends at significant discounts to Brent prices, impacting revenue, profitability, and reputation.
Legal Action and Claims
Seacrest Petroleo and its subsidiaries seek indemnification for damages totaling $71.2 million incurred due to Petrobras’ continued failure to complete the pipeline repairs. The company has requested the suspension of the $71 million payment obligations to Petrobras for the oil assets until the dispute is resolved.
Despite sending indemnity claim letters to Petrobras in April and December 2024 outlining the damages, Seacrest Petroleo maintains that Petrobras has not taken adequate steps to address the issues with the subsea pipelines.
Conclusion
The arbitration request filed by Seacrest Petroleo marks a significant development in the ongoing dispute with Petrobras over subsea pipeline repair failures. The outcome of the arbitration proceedings will determine the extent of Petrobras’ liability for the damages incurred by Seacrest Petroleo and its subsidiaries.