Jurong Shipyard Receives LOI for P-54 FPSO Turnkey Project

Jurong Shipyard, a subsidiary of SembCorp Marine, has secured a Letter of Intent from Petrobras Netherlands BV (PNBV) to convert the VLCC Barao De Mauá into a Floating Production Storage Offloading (FPSO), the P-54 for US$628 million (S$1.068 billion).

The FPSO EPC (Engineering, Procurement and Construction) turnkey conversion contract entails converting the 280,000 dwt very large crude carrier Bar # o De Mauá to an FPSO, to be renamed Petrobras 54. To be completed in 38 months, the P-54 FPSO EPC conversion turnkey project will be undertaken by Jurong Shipyard and Mauá Jurong, its shipyard in Brazil. Work on the FPSO conversion project is expected to commence in August 2004. On completion, the P-54 will be one of the largest converted FPSO units in the world, capable of full capacity oil production and treatment at 180,000 bpd, gas compression capability at 6,000,000 cubic meters per day and water injection capability at 39,000 cubic meters per day.

To be installed at water depth of 1,315 meters, the P-54 FPSO is expected to operate for 25 years without any dry docking in the Roncador Field, Campos Basin, offshore Brazil. Oil will be produced through 13 oil production wells and 8 water injection wells, all connected to the FPSO through flexible risers via an external portside balcony. The produced/treated gas will be exported to shore through a 10-inch flexible riser connected externally to the portside of the FPSO. The P-54 FPSO will be moored by a Spread Mooring System (DICAS) with 20 mooring lines, composed together by chain/polyester rope/chain segments.

Mr. Don Lee, General Manager in charge of Offshore Division in Jurong Shipyard said "Petrobras is the foremost innovator and a major producer in the offshore oil and gas deepwater oil field development. Jurong Shipyard is proud and privileged to be selected by Petrobras as the preferred EPC contractor for this project. The award of this prestigious P-54 contract is testimony to the confidence Petrobras has in the overall capabilities of Jurong Shipyard, which has successfully converted 6 floating units for Brazil since 1997.

"In terms of FPSO conversions, Jurong Shipyard has by far converted the most number of FPSOs for Petrobras worldwide. Jurong Shipyard will rely on its immense experience and its accumulated knowledge to positively and confidently execute the latest P-54 project within schedule and of high quality as demanded by Petrobras. The P-54 FPSO is a very similar project to the P-50 FPSOlc added Mr. Lee.

To-date, Jurong Shipyard has successfully delivered the P-37 FPSO, the P-38 FSO, the P-40 FPU and FPSO Fluminense. The P-43 FPSO marine conversion was completed in Jurong Shipyard in 2003. Mauá Jurong fabricated the topsides production modules in Brazil. The P-43 is currently undergoing topsides commissioning and testing in Mauá Jurong with delivery scheduled in the third quarter of 2004. FPSO P-50 is scheduled to leave Jurong Shipyard end June 2004 for topsides installation, integration and commissioning in Mauá Jurong in Brazil. Fabrication of the topsides production modules in Mauá Jurong is scheduled for completion in the second quarter of 2004.

Barring unforeseen circumstances, SembCorp Marine expects a positive contribution to its earnings from the contract. However, this contract is not expected to have any material impact on the net tangible assets and earnings per share of SembCorp Marine for the year ending December 31, 2004.

Revenue from the contract will be recognized according to SembCorp Marine's revenue recognition policy based on the percentage of completion method measured by reference to the value of work performed relative to the total contract value over the duration of the contract.

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