Keppel Lands First Drilling Rig Contract for Brazil at US$270 Million

Keppel Offshore & Marine Ltd, through Keppel FELS Limited, has secured a groundbreaking contract to design and build its first drilling rig for deployment in Brazilian waters.

The US$270 million contract from Brazilian drilling contractor Queiroz Galvao Perfuracoes (QGP) is to build a semisubmersible drilling rig, with the owner supplying the drilling and subsea equipment.

The rig will be built based on a fifth generation deepwater solution, the DSS 38.

The rig, which will be delivered in third quarter 2009, is expected to support Petrobras' aggressive plan to improve its hydrocarbons production and reserves in Brazil and elsewhere in the region. The national oil company of Brazil has just upped its capital expenditure by 66% to US$87 billion over a five-year ending 2011, with exploration and production (E&P) accounting for 56% of the expenditure.

Mr. Tong Chong Heong, Managing Director/Chief Operating Officer of Keppel O&M, said, "I am glad that QGP finds the DSS 38 rig design a suitable solution for Petrobras after due diligence studies. I am confident that this rig will deliver on its promise, and pave the way for more drilling rig orders from the region."

Keppel O&M's projects operating for Petrobras comprise floating production units that amount to around 700,000 barrels of oil per day for Brazil. The company is currently carrying out three other projects for Petrobras directly and indirectly, that will add up to another 540,000 barrels of oil per day by mid 2008.

Mr. Tong commented, "This is the first time Keppel is building a drilling rig for Brazil. The new contract represents a milestone in the deepening confidence of Brazilian contractors and operators in Keppel's ability to deliver quality products and services on time and on budget."

An innovative and highly cost-effective new design, the DSS 38 semisubmersible drilling rig has been developed to meet operational requirements in the deepwater "Golden Triangle" region, comprising Brazil, Africa and the Gulf of Mexico. The region accounts for 85% of the world's deepwater exploration and production (E&P) expenditure over the next five years, according to Douglas-Westwood.

Commenting on Keppel O&M's strategy in meeting rising demand for deepwater rig solutions, Mr. Tong said, "We expect deepwater E&P to continue unabated in this region as major oil companies push ahead with their plans to increase and replace capacities. Rigs required to support such deepwater searches have to be technically more sophisticated and cost-effective.

"As a shipyard with an in-depth understanding of the requirements, we have developed a series of rig solutions, with the DSS 38 being one of the latest designs created. The feedback received from the owners, operators and the building experience gained from the construction of the DSS 20, DSS 21 and DSS 51 submersible rigs have gone into the technology and design of the DSS 38."

The DSS 38 is rated to drill to depths of 30,000 feet below mud line in just over 9,000 feet water depth. It is 99.5 meters in overall length, with a main deck size of 69.5 meters wide by 69.5 meters breadth. Its maximum operational displacement is approximately 40,000 tons at a draft of 20.5 meters.

The maximum variable deck load of the DSS 38 is 5,500 tons, with accommodation facilities housing a crew of up to 130 men. It has both vertical and horizontal riser storage. The eight 3000kW Azimuthing thrusters configuration are designed to keep the vessel in position. All configurations comply with the American Bureau of Shipping Dynamic Positioned System (DPS-2) requirements.

DSS 20 rig, Maersk Explorer, is currently operating in the Caspian Sea for Maersk Contractors, and its performance has led the drilling operator to order two more rigs, the DSS 21. GlobalSantaFe picked the DSS 51 rig, presently under construction, for their requirements. The DSS 21and DSS 51 designs have Dynamic Positioning systems.

The DSS series of semisubmersbile rigs is jointly designed by Keppel O&M's Deepwater Technology Group (DTG) and Marine Structures Consultants of The Netherlands.

Queiroz Galvao Perfuracoes is one of the largest Brazilian private groups. The DSS 38 will be its fourth semisubmersible drilling rig, which has a seven year contract for Petrobras.

Keppel FELS is a wholly-owned subsidiary of Keppel Corporation Limited through Keppel O&M, which a leader in offshore rigs, shiprepair and conversion as well as specialised shipbuilding. Keppel O&M's near market, near customer strategy is bolstered by a global network of 17 yards in the Asia Pacific, Gulf of Mexico, Brazil, the Caspian Sea, Middle East and the North Sea regions. Integrating the experience and expertise of its yards worldwide, the group aims to be the provider of choice and partner in solutions for the offshore and marine industry.

The contract is not expected to have material impact on the NTA or the earnings per Keppel Corporation share for FY2006.

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