Brazil’s Petrobras has terminated its day-rate contract for Subsea 7’s pipelay support vessel (PLSV) Seven Mar (pictured) ahead of schedule.
The vessel’s contract was due to expire at the end of this year but was terminated as of May 31, Subsea 7 said today.
The Oslo-listed shipowner said the cancellation would incur a $47m loss from its group contract backlog.
“Brazilian maritime law prioritises Brazilian-flagged vessels over international vessels of a similar specification. As a consequence, the operating licence for Seven Mar has expired, which resulted in the early termination of the contract,” Subsea 7 explained in a filing.
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.