Sapura: No bribery in Brazil deals

“Sapura Energy and its group of companies strongly refute any involvement in any form of bribery or corruption in its business dealings in Brazil and anywhere else in the world, ” the company said in a statement.

PETALING JAYA: Sapura Energy Bhd has denied allegations of any involvement in bribery with regard to Brazilian state-owned oil company Petrobras’ contracts, as the Malaysian company faces another corruption probe in Brazil, its second one in that country.

The contracts involve Sapura Energy and Seadrill.

“Sapura Energy and its group of companies strongly refute any involvement in any form of bribery or corruption in its business dealings in Brazil and anywhere else in the world, ” the company said in a statement.

Sapura Energy also noted that it had in the past cooperated and would continue to cooperate with any investigation or regulatory authority in relation to bribery and corruption allegations.

“The company has a strict policy against bribery and corruption and has internal policies and procedures to mitigate this risk, ” it said.

Sapura Energy also noted that it was cleared of all allegations of bribery or corruption in the earlier investigation by Brazilian authorities in 2016 and 2017.

“As part of its governance and processes, we have a clause in all our agreements on anti-bribery which will make the agreement void if bribery is involved or is suspected to be involved, ” Sapura Energy said yesterday.

“We have in the past taken immediate steps to cease contractual obligations whenever a suspicion of bribery or corruption was raised. These facts demonstrate and are clear evidence of the company’s commitment to its zero-tolerance policy towards bribery and corruption, ” it added.

Reuters had reported that the investigation by the Brazilian authorities is an attempt to deepen ongoing probes into three contracts worth US$2.7bil that was signed between Sapura Energy and Petrobras back in 2011.

The contracts are for the construction and charter of three pipe-laying support vessels, known as PLSVs, and it is still in effect today, the report said.

According to the report, prosecutors said there was an alleged scheme in which Sapura, in a joint venture with Seadrill, paid bribes worth 1.5% of the contracts it won with Petrobras. The prosecutors claimed some of the bribe money made its way back to two “high-ranking” Sapura Energy executives in Malaysia. The executives were not named.

AmBank Research, in its report yesterday, said it estimates that the Sapura/Seadrill joint venture contributed a pretax profit of RM123mil (US$30mil) in its first half of Sapura Energy’s financial year 2021 ending Jan 31.

This is compared to the group’s pretax profit of RM90mil, which includes contract adjustments and variation orders amounting to RM82mil, with all six pipe-laying support vessels (PLSVs) which are currently being used.

The research house said firm charters for Petrobras contracts have been completed for the first three PLSVs that were delivered in 2014–2015.

Meanwhile, the second charter has a remaining order book of RM3.8bil, AmBank Research said.

“The PLSV Sapura Esmeralda is currently deployed on a short-term contract until April 2021 for Eni’s Amoco project off Mexico while we understand that Sapura Diamante and Topazio are on charter in the Campos Basin, off Brazil, ” the research house said.

“While the second charter will still continue to be undertaken by the joint venture partners, there is a likelihood of substantive penalties if the authorities are able to prove the corruption cases, ” it noted.

AmBank Research also highlighted Sapura Energy’s huge debt of RM10bil that still needs to be refinanced with 14 banks by December.

It noted that this refinancing could necessitate an additional equity-raising exercise that will translate to massive dilutions given the current low share price.

“Even though Sapura Energy registered an improvement in its first half results, we remain cautious of any potential cost provisions and asset impairments by the fourth quarter, given that Petroliam Nasional Bhd registered a first half loss of RM18bil, together with other oil majors, ” it said.

It is cautious on Sapura Energy’s outlook, noting that it could still experience potential losses and asset impairments in the upcoming quarters amid revenue deferrals.

“Even though the group is bidding for RM29.4bil of new jobs with additional prospective projects worth RM63bil, the order book could still decline over the next two quarters as clients are likely to postpone the awards until next year if the current gloom in the offshore outlook persists, ” it said.

Sapura Energy’s shares closed unchanged in yesterday’s trade at 11 sen.

Oil prices stayed weak on the international market with Brent crude oil traded almost flat at press time at US$41.83 per barrel after falling to a day low of US$41.27 earlier.

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