Egypt’s Petrobel Terminates $172,000-a-Day Transocean Rig Lease

By Joe Carroll

March 3 (Bloomberg) -- Egyptian General Petroleum Corp., the North African nation’s state oil company, terminated a $172,000-a-day contract for a Transocean Ltd. rig after crude prices dropped more than $100 a barrel.

Geneva-based Transocean, the world’s largest offshore driller, said today in a public filing that it will challenge the validity of the termination by Egyptian General’s Petrobel unit.

The GSF Key Singapore, a so-called jack-up rig with retractable legs that extend to the seafloor, is on its way to an Alexandria, Egypt, shipyard for storage, Transocean said in the filing. Transocean didn’t say why Petrobel terminated the agreement.

Petrobel agreed in September to lease the vessel through June 2010 for $172,000 a day, an 11 percent increase from the previous day rate of $155,000 for the rig. Jack-up rigs generate less than half the day rate of deepwater rigs and contribute less than one-fourth of Transocean’s revenue.

Transocean canceled a record $550,000-a-day contract in January with Burgundy Global Exploration Corp. after the Philippines-based company ran out of cash. A second vessel, the Sedco 712, was idled in January after Oilexco Inc.’s North Sea unit sought protection from creditors.

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.