SINGAPORE - Keppel Corp. (BN4.SG) is in talks with Queiroz Galvao Oleo e Gas, a Brazilian rig operator, for a potential order to build two rigs at a total cost of US$1.4 billion.

Queiroz Galvao will order the rigs if its bid to supply the vessels to state-run energy giant Petroleo Brasileiro SA (PBR), or Petrobras, is successful, Guilherme R.V. Lima, the chief financial officer of the operator told Dow Jones Newswires in an interview Saturday.

" We are negotiating with FELS Brasil [Keppel's Brazilian subsidiary] for two deepwater semi-submersible rigs. The contract will depend on whether are successful in a Petrobras tender. We have good working relations with Keppel and if we win the contract, we would like to place the order with them," he said.

Lima spoke after the naming ceremony of a rig built by Keppel for the operator in Singapore. The new rig is likely to be handed over on April 1 and will be chartered to Petrobras for six years, he said.

A Keppel spokesman said US$1.4 billion is the total expected cost of the two rigs and the value of the Singapore company's actual order, if placed, will be less.

Petrobras said Friday that the company's board had approved the contract for the first seven of 28 drilling rigs to be ordered to tap recently discovered offshore oil deposits. Pernambuco-based shipyard Estaleiro Atlantico Sul, or EAS, won the contract with a bid of $4.64 billion, or about $662 million per rig.

The rigs are expected to enter operation by 2015. EAS is controlled by a consortium that includes Queiroz Galvao, another Brazilian construction firm called Camargo Correa and South Korea's Samsung Heavy Industries.

The rig tender is the latest step in a series of large offshore equipment contracts Petrobras plans in order to develop the presalt oilfields. Development of the fields could generate as much as $240 billion in orders for goods and services, according to a recent study by the Brazilian National Development Bank, or BNDES.

Keppel and rival Sembcorp Marine Ltd. (S51.SG), among the world's biggest rig builders, are vying for the new orders in Brazil and elsewhere across the world as higher crude oil prices spur investments in exploration and production. CLSA predicts that 64 new rig orders worth an estimated US$33 billion are up for grabs in 2011, compared with US$7.8 billion of business generated last year.

" Keppel and Sembcorp Marine are well placed to gain new orders in 2011 thanks to their modern yards, outstanding track records and strong presence in Brazil. We expect them to spot the most lucrative contracts in the market," CLSA said in a note earlier this month.

Singapore's companies are looking at emerging markets for growth as the global economic recovery gets underway and business sentiment improves. Apart from the rapidly growing economies in their neighborhood, they are increasingly seeking business opportunities in Latin America.

" Temasek believes that the Latin American region holds great investment potential. We see Brazil as a very important part of our strategy of investing in emerging markets with long-term growth prospects," S. Dhanabalan, the chairman of the Singapore state investment firm Temasek Holdings Pte. Ltd. said at the event.

" The discovery and exploration of large deepwater oil and gas reserves off the Brazilian coast will pose many opportunities for Keppel to meet Brazil's oil and gas sector demands," he said in a speech.

Temasek, which owns a stake in Keppel, invested US$400 million in Brazil's Odebrecht Oil and Gas company, or OOG, according to a company announcement in October last year.