Singapore’s Keppel Offshore & Marine Secures Contracts worth US$218 million

February 4, 2019
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Keppel Offshore & Marine (Keppel O&M) is eyeing up an improved outlook as they explore wider horizons. Singapore’s Keppel are looking to take equity in oil and gas production infrastructure. A Keppel O&M spokesperson claimed they are “not aiming to be operators but are open to taking a stake in selective ventures (for example, our stake in the Hilli Episeyo FLNG), where we are guided by a variety of factors, including the risks and returns on the investment as well as the extent of our yard’s involvement in the project.”

 

Equity in Oil & Gas production Infrastructure

The move into holding equity in oil & gas production infrastructure shows Keppel’s commitment for capturing opportunities in the market, as well as exploring opportunities to re-purpose their technology in the offshore industry for other uses.

In 2018 Keppel Group made a net profit of S$944 million (US$698 million) – up 383% year-on-year. Keppel O&M was still in the red with a net loss of S$109 (US$81 million). However, this is a significant improvement from 2017 where Keppel O&M recorded a S$826 million (US$611 million) net loss. This massive loss included a penalty one-off payment of S$619 (US$458 million) from Keppel’s resolution with criminal authorities in Brazil, the US and Singapore related to the Car Wash corruption case in Brazil.

Keppel O&M’s improved 2018 performance were strongly linked to higher revenue, a write-back of provisions for claims and lower net interest expenses. The sale of jack-up rigs sold to Borr Drilling proved to be highly lucrative for Keppel O&M. In addition to higher revenues Keppel secured contracts worth more than S$1.7 billion (US$1.25 billion), bringing their net order book to S$4.3 billion, compared to S$3.9 billion the previous year. Contracts due for delivery from 2019 to 2022 are worth a combined S$10.775 billion or S$4.348 billion net to Keppel and the company has high hopes of adding to that tally.

Contract secured for 2019

Included in the contracts secured is work booked on an ice-class LNG bunker vessel, refurbishment of a floating production storage and offloading vessel (FPSO), and 65 scrubber retrofit projects.  

The ice-class LNG contract is by Keppel Singmarine with Shturman Koshelev for the design and construction of an ice-class LNG bunker vessel. The vessel is scheduled to be completed in the fourth quarter of 2020 and will be chartered to Russia’s Gazprom Neft for operations in the Baltic Sea.

The second contract is by Keppel Shipyard with “a leading global operator of floating production vessels” for the fabrication of a new aft hull for an FPSO. Keppel will be responsible for the design of the aft hull, procurement of equipment, as well as fabrication, outfitting, integration and commissioning work on board the existing FPSO. Included in the installation is a new accommodation block, which will be able to accommodate up to 140 personnel. The FPSO has already arrived at the Keppel shipyard for the upgrade which is scheduled to commence in the first quarter of 2019. Delivery of the vessel is expected by the fourth quarter of 2020.

Finally, Keppel Shipyard has also secured a grand total of 56 contracts from a variety of customers for exhaust gas scrubber retrofit projects involving project management, integration design engineering, installation and retrofitting, as well as testing and commissioning works.

Chris Ong, chief executive, Keppel O&M, said: “Keppel O&M also stands ready with a suite of advanced and cost-effective solutions such as scrubber retrofits and LNG-fuelled vessels, as the International Maritime Organisation implements the 0.5% global sulphur cap on marine fuel from January 2020.”

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