Bermuda-based transportation company Teekay Offshore has announced it has secured a contract extension with oil multinational Petrobras for one of its floating production storage and offloading units (FPSO) in Brazil.

The extension relates to the employment of the Piranema Spirit FPSO in the Brazilian Piranema field. Petrobras is the operator of the field with a 100% equity interest. It has depths varying from 1,200m to 1,600m with recoverable oil volumes of approximately 76 million barrels.

The contract extension began in February 2019, and is for a period of three years. The agreement also includes Petrobras’ termination rights with ten months’ advance notice.

Teekay entered into a settlement agreement with Petrobras in October 2018 regarding the charter of the Piramena Spirit FPSO. Teekay agreed to reduce the charter rate for the Piramena Spirit by approximately $11m as a result of this settlement. This reduction was credited to Petrobras in the fourth quarter of 2018, from funds accrued in Teekay’s financial statements over 2016 and 2017.

The Piramena Spirit FPSO, first acquired by Teekay in 2011, has an oil production capacity of 25,000 barrels per day (bpd) and a storage capacity of 250,000 barrels of oil.

In January 2019, Brazil’s secretary of privatisation Salim Mattar announced the Brazilian government’s plans to sell most of Petrobras’ 36 subsidiaries over the next four years. This move likely contributed to Teekay’s contract extension, ensuring the continued demand for FPSOs in Brazilian waters and consolidating Petrobras’ efforts to enhance production in Brazil.