Pan-United Wins First FPSO Ship Conversion Contract

Pan-United Marine Limited (PUM) said that it has clinched its first conversion contract for a Floating Production and Storage Offloading (FPSO) tanker. This follows the company's receipt of seven shipbuilding contracts worth S$129 million from Bumi Armada Navigation Sdn Bhd, which lifted PUM's order book to a new high of over S$500m.

This contract of about S$11 million to convert the East Fortune, a 55,230 deadweight tonne tanker, into an FPSO, was awarded by Norwegian-owned Nortechs FPSO Pte Ltd (Nortechs), which recently announced its foray into the FPSO market with three vessels. Nortechs is actively developing readily redeployable and flexible floats production storage and offloading units for the buoyant oil & gas sector.

Said PUM's Executive Chairman Henry Ng: "The upturn in the oil & gas industry has brought us many different and exciting contracts which helped lift our capabilities and profile in shipbuilding as well as conversion/repair. This first FPSO conversion contract will strengthen our position and reputation as a reliable conversion specialist as Nortechs prides itself for its quick turnaround time for FPSO deployment.

"This contract will also give us the track record to undertake bigger and more complex FPSO conversions should we decide to expand our facilities in the future to accommodate bigger ships. Currently, Singapore's large shipyards have about 60% of the world's market share in FPSO conversions."

After the conversion, the East Fortune will have a production capacity of 30,000 barrels per day and a storage capacity of 360,000 barrels. FPSOs are particularly effective in remote or deepwater locations where seabed pipelines are not cost effective. They can also be used economically in smaller oil fields, which can be exhausted in a few years and do not justify the expense of installing a fixed oil platform.

The contract is not expected to have any material impact on the NTA or the EPS of the Group for the current financial year.

So far this year, PUM has reactivated one drill-ship, delivered five Anchor Handling, Towing and Supply Vessels and recognized 10 work-in-progress projects, including the reactivation of another drill ship. It recently announced a set of robust results where 3Q06 net attributable profit nearly doubled to S$10.7 million on 34% higher revenue of S$95.3 million.

PUM is a regional player with shipyard facilities. It operates an 11 ha Singapore yard, Pan-United Marine, and PT Pan-United Shipyard Indonesia, on a 28-ha yard in Tanjung Uncang, Batam. The yards lie close to the Straits of Malacca, one of the world's busiest shipping lanes. Both yards achieved ISO 9001:2000 certification in the quality management of the design, building, conversion, and repair of ships and offshore & onshore engineering structures. Over 83% of shiprepair revenue is from repeat clients in international shipowning, operating, and management.

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