Keppel FELS Inks $1.2B Semisub Contract with Ukraine's Naftogaz

Keppel FELS, a wholly owned subsidiary of Keppel Offshore & Marine, said Tuesday that it has inked a contract – worth $1.2 billion – with Ukraine's state-backed energy firm Naftogaz to build two semisubmersible drilling rigs.

The rigs, Keppel FELS said in a statement, will be built based on the company's proprietary DSS 38U design which is customized for the harsh weather conditions of the Black Sea. Rig operators in the Black Sea, Keppel FELS noted, frequently have to grapple with challenging conditions such as freezing temperatures, strong winds and heavy seas.

"Having delivered two jackup rigs for the Black Sea, we understand the specifications necessary for rigs to work in such extreme conditions," Keppel FELS' Managing Director Wong Kok Seng said in the statement.

Maybank Kim Eng's investment analyst Yeak Chee Keong noted in a sector update in November that Keppel O&M will continue to enjoy pricing power in the current competitive offshore environment, given the tightening rig market and the company's reputation as a premium and reliable yard.

Ukraine noted in its official estimates last year that the country sits on proven energy reserves of around 1,200 billion cubic meters of natural gas and 220 million tonnes condensate.

"The addition of these rigs to our fleet is part of our extensive program to modernize our offshore exploration and production facilities. This will allow us to reach a new level of shelf development in the Black and Azov Seas, rapidly boost our oil and gas production and reduce our imports of natural gas," Naftogaz's Chairman Evgen Bauklin noted in the statement.

Keppel O&M disclosed in late November that it expects to deliver a new record of 20 rigs next year, exceeding its previous records of 13 rigs in 2009.