LUXEMBOURG– Subsea 7 (Oslo Børs: SUBC) has warned of an increase in its estimated full-life project loss on the deepwater Guará-Lula NE project in the Santos basin offshore Brazil.
The project entered the offshore phase in the current quarter. There have been delays due to continuing problems with the supply chain, and pipeline fabrication is behind schedule due mainly to customs clearance issues and adverse weather conditions in the Brazilian winter season.
Subsea 7 now expects full-life project costs to increase by between $250 million and $300 million, compared with its previous forecasts.
CEO Jean Cahuzac said: “I’m disappointed that we are obliged to take another loss provision on the Guará-Lula project. Our current financial results in Brazil are unacceptable and we have put in place a plan to improve margins in this territory. This plan includes the decision not to bid any further EPIC projects with similar risk profiles.”
Guará-Lula represented 5% of the company’s backlog on March 31, 2013.