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Petrobras (PBR), Vallourec Team Up for Offshore Development

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Petrobras (PBR - Free Report) , the renowned Brazilian oil and gas company, awarded a significant contract to Vallourec S.A., a leading provider of tubular solutions, to supply premium carbon steel tubes with Glass Reinforced Epoxy ("GRE") liners and corrosion-resistant alloy accessories.These advanced products are expected to play a key role in various offshore development wells, primarily in the pre-salt Campos Basin offshore Brazil. This new contract is an extension of a three-year agreement between the two companies for the supply of Oil Country Tubular Goods tubes, initially announced in January 2023.

Overview of the contract:

Premium Materials: Under this new contract, Vallourec would provide PBR with 1,800 metric tons of high-quality carbon steel tubes with GRE liners. These liners are crucial as they enhance corrosion resistance, a critical factor in the harsh conditions of offshore environments.

Corrosion-Resistant Accessories: In addition to the GRE-lined tubes, Vallourec would supply complementary corrosion-resistant alloy accessories. These accessories ensure a complete and robust solution, enhancing the overall durability and longevity of the equipment used in offshore drilling operations.

Focus on Campos Basin: The equipment supplied by Vallourec will be deployed in offshore development wells, primarily within Brazil's Campos Basin. This region is known for its prolific pre-salt oil and gas reserves, making it a significant area for PBR’s exploration and production (E&P) activities. The corrosion-resistant properties of the GRE liners reduce maintenance requirements and extend the service life of the tubes, resulting in lower operational costs and increasing productivity for PBR’s E&P activities.

Expanding Existing Agreement: This contract supplements a three-year deal established in January 2023, solidifying Vallourec’s position as a key supplier for PBR. The expanded agreement highlights the strength of the partnership and Vallourec’s commitment to supporting PBR’s offshore operations.

Comprehensive Services: Vallourec’s commitment extends beyond just supplying materials. It would also manage stock, prepare equipment for rig use, oversee transportation and provide integrated field services. These services include receiving, inspecting and supervising the installation of pipe strings, ensuring that operations run smoothly and efficiently.

Local Manufacturing: To support this contract, Vallourec would leverage its Brazilian facility in Barreiro, Minas Gerais, promoting local production and contributing to the local economy. This facility is expected to play a crucial role in manufacturing the equipment, ensuring that high-quality standards are met.

Proven GRE Technology: The GRE technology incorporated in the tubes is a result of a partnership between Vallourec and Tuboscope NOV. This collaboration ensures that the technology used is reliable and field-tested, providing a robust solution for the demanding conditions of offshore oil and gas exploration.

Vallourec's Track Record With Petrobras: This contract added to Vallourec’s growing list of achievements for Petrobras. In 2023, Vallourec secured major orders to supply line pipes for important phases of the Buzios oil field development project. These demonstrate Vallourec’s ability to deliver high-performance solutions tailored to the needs of Brazil's offshore oil and gas industry.


The collaboration highlights PBR’s confidence in Vallourec’s expertize. The use of advanced GRE technology and Vallourec’s comprehensive services ensure efficient and reliable operations in the demanding Campos Basin environment.

Zacks Rank and Key Picks

Currently, PBR carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector might look at some better-ranked stocks like Archrock, Inc. (AROC - Free Report) and Sunoco LP (SUN - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), and SM Energy Company (SM - Free Report) , carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is valued at $2.96 billion. The company currently pays a dividend of 66 cents per share, or 3.49%, on an annual basis.

AROC, together with its subsidiaries, works as an energy infrastructure company in the United States. The company operates under two segments — Contract Operations and Aftermarket Services.

Sunoco is valued at $5.4 billion. It is a major wholesale motor fuel distributor in the United States, distributing over 10 fuel brands through long-term contracts with more than 10,000 convenience stores, ensuring consistent cash flow.

SUN’s extensive distribution network across 40 states provides a robust and reliable source of income and the Brownsville terminal expansion should add to its revenue diversification.

Denver, CO-based SM Energy is valued at $5.41 billion. The company currently pays a dividend of 72 cents per share, or 1.53%, on an annual basis.

SM, an independent energy company, engages in the acquisition, exploration, development and production of oil, gas and natural gas liquids in the state of Texas.

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