Peregrino phase 2 on stream
Peregrino phase 2 on streamEquinor

Prio shares drop as Brazilian regulator halts FPSO production

Published on: 

Brazilian oil company Prio said on Monday that local regulator ANP had ordered a production halt at the Peregrino FPSO, citing the need for improvement in risk management documentation and adjustments to the unit's deluge system.

The move sent shares in the independent oil producer lower, as the Peregrino field accounts for a significant portion of Prio's output and the company has recently moved to purchase the stake it does not already own in the asset.

Peregrino is currently operated by Norway's Equinor, which has begun making the necessary adjustments, Prio said in a securities filing. Works are expected to take between three and six weeks, it added.

Prio is a partner in the Peregrino consortium and is set to become its operator after agreeing earlier this year to buy Equinor's 60 per cent stake in the oil field for up to $3.5 billion.

It had already purchased the other 40 per cent from China's Sinochem last year, in a nearly $2 billion deal.

Equinor said in a statement that it was, "strictly following the authorities' requirements and working on the ANP findings". It added that Peregrino produced 97,500 barrels of oil equivalent per day in the second quarter.

Sao Paulo-traded shares of Prio fell more than five per cent following the news, the biggest decline on Brazil's benchmark stock index Bovespa, which was up one per cent.

Analysts at Santander estimated that a five-week stoppage could translate into lost revenue of around $192 million.

"We remain unsure whether production will resume immediately following the adjustments, given that ANP will likely have to re-inspect the unit following maintenance," they added in a note to clients.

(Reporting by Gabriel Araujo. Additional reporting by Leticia Fucuchima. Editing by Mark Potter)

logo
Baird Maritime / Work Boat World
www.bairdmaritime.com