Brazil’s QGI Oil & Gas consortium has ditched more than US $1 billion worth of modules integration work on two identical Floating Production, Storage and Offloading (FPSO) vessels destined for one of Petrobras’ highest-profile developments, after clashing with the besieged state-owned operator over contractual terms.

The consortium is understood to have abandoned the work on the P-75 and P-77 units, due to be placed on the deepwater Buzios (formerly known as Franco) pre-salt oil and gas field in the Santos Basin offshore Brazil.

Petrobras had awarded QGI – a consortium formed by Brazilian construction firms Queiroz Galvao and Iesa Oil & Gas – the contract worth about $1.58 billion for the integration work on the two 150,000 b/d FPSOs in September 2013. QGI was reportedly attempting to get approval from Petrobras to make changes to the original project workscope (not unusual in Brazil), which would have meant new disbursements by the operator on top of what had been previously agreed.

QGI was said to be asking Petrobras for an additional cool $300 million, but sources indicate Petrobras was adamant about not approving the extra cash, and simply told QGI to get on with the project, leading in turn to QGI saying Petrobras had failed to fulfil certain contractual clauses.

The end result is that Petrobras may now have to opt to get the integration work carried out abroad, following a whole new tender process. However there could well be further negotiations in the pipeline, it is further understood, as a delay to this field development’s onstream schedule is undesirable for all concerned. Buzios holds recoverable reserves put at more than 3 Bbbl.