Petrobras has cancelled its four-year charter of DryShips’ oil spill recovery vessel (OSRV) Vega Inruda, which is the second contract termination the shipowner has received from the Brazilian state oil company within two months.
Vega Inruda‘s charter was due to expire on August 30, 2017, but the termination was effected on April 8, DryShips said today. The contract had an optional four-year extension period attached, which had not been exercised.
“This termination represents a loss in contracted EBITDA of approximately $2.9m for the balance of 2016,” the NASDAQ-listed shipowner commented.
The ship was one of six offshore supply vessels (OSVs) acquired in October by DryShips from Nautilus OffShore Services. At the time of the acquisition, each of the six vessels was on a four-year timecharter to Petrobras until 2017, with options for a four-year extension peiod attached. Today, the contracts for just four vessels remain.
In February, Petrobras cancelled its four-year charter of DryShips’ platform supply vessel (PSV) Vega Crusader, which the owner said would incur a $2.2m loss in contracted EBITDA. The PSV had been earning $21,950 per day, according to Nautilus’ website in October.
Vega Crusader‘s contract was due to expire on January 8, 2017, but the early termination was effective on March 6 this year.
Petrobras has been using a legal loophole to shed its contracts with vessels owned by foreign companies. In Brazil, vessels must have their Certification of Charter Authorisation (CAA) and Registration Certificate of Temporary Foreign Vessels (AIT) certificates renewed annually in order to operate in Brazilian waters under a foreign flag.
Under Brazilian law, when a foreign-flagged vessel comes to renew its CAA and AIT certificates, the renewal can be ‘blocked’ by an unemployed Brazil-flagged ship that is built to the same specification, which can take over the foreign vessel’s employment contract.
In September 2015 alone, Petrobras used the rule to prematurely terminate its timecharter of two offshore supply vessels owned by Norway’s World Wide Supply, plus its contract for a Siem Offshore PSV and for three PSVs owned by Ultrapetrol.