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Transocean (RIG -0.8%) says the federal court in Rio de Janeiro served it with a preliminary...

Transocean (RIG -0.8%) says the federal court in Rio de Janeiro served it with a preliminary injunction requiring it cease operations in Brazil within 30 calendar days. RIG currently has 10 rigs under contract for work in Brazil; for the six months ended June 30, Brazilian operations accounted for ~11% of consolidated operating revenues.
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Comments (16)
  • Herr Hansa
    , contributor
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    This will affect Petrobras, and Brazilian oil production too, since Petrobras have some rigs contracted with Transocean.
    27 Sep 2012, 03:19 PM Reply Like
  • Cincinnatus
    , contributor
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    Where's the narcissistic child-King in the Oval office on this? He's financing Petrobras and Brazil's oil service industry to the tune of $2 billion while Brazil tries to kill off any activity by US firms in Brazil (and Petrobras is active in the Gulf of Mexico to add insult to injury). He's either stupid and incompetent or he's clearly trying to weaken US industry.
    27 Sep 2012, 03:21 PM Reply Like
  • Herr Hansa
    , contributor
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    I'm not sure I understand your comment. Transocean is headquartered in Switzerland, not the United States. Chevron is a US company, if that is what you mean. Should the US President intervene in Brazilian legal cases on behalf of American companies? Would you like to see the US ban Petrobras, or suspend their GoM operations?

     

    I don't particularly care for your current President, but would a tit-for-tat trade war really be the way to solve this? Trade with Brazil is important for the US, and for Brazil. Why should the US dictate to Brazil how they should handle this case? If Brazil f's up on this one, foreign companies will leave their oil sector willingly, without intervention of other governments.
    27 Sep 2012, 03:28 PM Reply Like
  • Cincinnatus
    , contributor
    Comments (3653) | Send Message
     
    Transocean until relatively recently was headquartered in the Cayman Islands. They moved the headquarters to Switzerland for reasons that have nothing to do with where their major operations are - Houston being the largest. Weakening them is effectively weakening US industry - that their executive office is in the Cayman Islands, Switzerland, or Timbuktu has absolutely no impact on that.

     

    Are you claiming that they have extensive drilling operations in Switzerland?

     

    You also can't have it both ways. Why should the Obama administration be involved in financing their oil industry if we're not to interfere? This is a trade dispute - nothing less than that. Brazil having now had foreign firms help prove their resource now wants to break out of legal contracts and obligations. This is exactly what international trade is about and administrations are always involved in that. It's why the WTO exists in the first place.
    27 Sep 2012, 04:02 PM Reply Like
  • Herr Hansa
    , contributor
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    So you want a trade dispute. You also appear to think the US should dictate the direction of Brazilian courts, because the US has companies and investment in Brazil. Should Brazil give up their legal system and sovereign rights because of US investments?

     

    How would you word a WTO complaint in this? This is a legal matter due to a spill, and even the Brazilian oil authority sided with Transocean and Chevron. It is the judges in this matter who are moving against the wishes of the Brazilian government. Perhaps the US should send troops so the Brazilian government can regain order?

     

    I'm well aware of the Houston offices of Transocean, because I have been in them a few times. I've also worked with a few of the companies who supply Transocean. They are a global company, and not strictly an American company.
    27 Sep 2012, 04:13 PM Reply Like
  • Cincinnatus
    , contributor
    Comments (3653) | Send Message
     
    It is a trade dispute, period. Wanting has nothing to do with it.

     

    P.s. I've never seen you post anything that wasn't worded as an apology for the Obama administration even while claiming not to be an apologist.
    27 Sep 2012, 04:16 PM Reply Like
  • Cincinnatus
    , contributor
    Comments (3653) | Send Message
     
    Here's one article from the time. You can argue with them as to whether or not Transocean has significant US operations. I've not heard anyone but you claim otherwise. This can be found on the oilandgasinvestor website.

     

    ===
    Transocean will relocate 14 officers, including Transocean chief executive officer Bob Long, and some support staff to Geneva.

     

    Transocean’s operations will continue to be conducted through existing subsidiaries. Houston will continue to be the company’s largest office and will also continue to provide corporate, technical and support services to worldwide operations.

     

    “The redomestication will provide us with an improved ability to manage our businesses and better focus on strategic growth markets by locating our principal executive offices more centrally within Transocean’s area of worldwide operations,” Long says. “Furthermore, Switzerland has a stable and developed tax regime and a network of tax treaties with most countries in which we operate. As a result, the redomestication will improve our ability to maintain a competitive worldwide effective corporate tax rate.”
    27 Sep 2012, 04:21 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3080) | Send Message
     
    How about this, I don't like Obama. Good enough for you? I'm also German, so I don't vote in your elections. I don't like Romney either. In a way it is a shame that Ron Paul is so marginalized, because despite his Federal Reserve rhetoric, he has some good ideas.

     

    The problem I see is with Congress. Unless that impasse on the fiscal cliff is solved, the US will be in trouble next year. That is regardless of who sits in the oval office, because the President is not a king who dictates policy.
    27 Sep 2012, 04:21 PM Reply Like
  • Cincinnatus
    , contributor
    Comments (3653) | Send Message
     
    Nope. I'm referring to numerous past posts of yours, not just this one. And my last name is German, but that's totally irrelevant.
    27 Sep 2012, 04:22 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3080) | Send Message
     
    Okay, so let's go with trade dispute. How would you word the complaint for the US against Brazil?
    27 Sep 2012, 04:22 PM Reply Like
  • Cincinnatus
    , contributor
    Comments (3653) | Send Message
     
    How about the obvious? That this is a naked attempt to restrict a market and exclude foreign firms and break existing contracts and obligations.

     

    Something along the lines of what we've done with China. See case #2 in the following for an illustration.

     

    http://1.usa.gov/PawIGR

     

    There are numerous precedents for effectively restricting markets to foreign competition and investment. The prerequisite though is you go to the party directly first. Just going directly to a WTO complaint is not the right first step.
    27 Sep 2012, 04:38 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3080) | Send Message
     
    Sounds a bit too much like conspiracy theory the way you put it. What do the judges have to gain in this?

     

    http://reut.rs/OsiEOx

     

    Lots of evidence that Petrobras is fighting on behalf of Transocean. After the large share issue not long ago, the Brazilian government owns most shares of Petrobras. Current offshore rig utilization is near 90%. It is also slow to move rigs, or to get other rigs in position to replace. Chinese built rigs intended for Petrobras are behind schedule to replace so many rigs, and the cost estimates have ran over the original projections. Replacing Transocean with Chinese sourced rigs cannot be done quickly, nor would it be a good strategy. This is why Petrobras is providing legal support for Transocean.
    27 Sep 2012, 05:01 PM Reply Like
  • Cincinnatus
    , contributor
    Comments (3653) | Send Message
     
    I agree Petrobras sees the problem, but like Vale the government has them by the nuts and is squeezing them hard. It's the government that's the source of the nationalistic asset grab. That very fact that Petrobras and ANP have said no negligence was involved yet the government is still pursing this ban points to it being all politics and nationalism.
    28 Sep 2012, 01:17 AM Reply Like
  • Herr Hansa
    , contributor
    Comments (3080) | Send Message
     
    If the portion of the Brazilian government that owns Petrobras prevails, then it means increased revenues for greater oil production. If the judges win, then it means an economic decline for Brazil. Think I will go with the money side on this one, though I'm not buying shares of Petrobras.

     

    Vale is an interesting case study in this. They have assets globally, yet where they invest depends upon their choices. The Brazilian government might not like that they have little say in Vale operations, though if there was an additional share issue, with many shares going to the government, then it would match earlier Petrobras action. Rather than that happening, and despite the unresolved tax case, the Brazilian government extended a loan to Vale to double the size of the rail operations in the north of Brazil, which will help increase iron ore output. Interesting time line of events in this one.

     

    Disclosure: long VALE
    28 Sep 2012, 01:26 PM Reply Like
  • Hurst
    , contributor
    Comments (2) | Send Message
     
    How much this news effects RIG's value and future trendind?
    27 Sep 2012, 04:00 PM Reply Like
  • Jan H. Lessner
    , contributor
    Comments (815) | Send Message
     
    PBR and the Brazilian Oil authority ANP supported and defended RIG. And obviously they are fully aware, that the court decision is a joke.

     

    But if the US should complain, shurely UK should also intervene against court decisions against BP next year.

     

    Keep cool. This court decision will be overruled. If the market wouldn't expect this, we would see PBR stock price declining stronger than RIG.
    28 Sep 2012, 07:32 AM Reply Like
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