Keppel to Build World's First Concrete Heavy Lifter

Keppel Offshore & Marine Limited (Keppel O&M) through its wholly owned subsidiary in The Netherlands, Keppel Verolme BV has secured a EUR140 million contract to build a floating heavy lifter for the decommissioning of offshore structures.

The contract caters for additional work on the vessel, which if awarded, may potentially increase the contract value by another EUR24 million.

This innovative first-in-the-world heavy lifter of its class was awarded by MPU Offshore Lift ASA (MPU), a subsidiary of the Norwegian design and development company MPU Enterprise AS.

This semisubmersible platform is expected to be completed by early 2009.

Keppel Verolme will execute the marine outfitting works and build the accommodation block as well as fabricate and carry out steelwork and install equipment for lifting topsides and jackets. It will also lease its facilities for the construction of the concrete substructure by the owner's appointed civil contractor.

Mr Harold Linssen, Managing Director of Keppel Verolme, said, "We are glad to be entrusted with the task of building this multi-purpose heavy lifter for MPU, primarily to support the decommissioning of redundant platforms in removing topsides and steel jackets.

"The project is the result of four years of partnership with them in developing an innovative, safer, robust and cost-efficient single lift solution for the lifting operations required to remove oil and gas platforms in the North Sea and globally."

Decommissioning is required when an operational rig reaches the end of its productive life or when a reservoir is depleted. With the design life of most of world's platforms reaching their retirement at 20 to 25 years, the market for decommissioning will only grow with time.

The process in decommissioning includes engineering and planning for the plugging and abandonment of wells, the removal of platforms and the cleaning out of hydrocarbons and other contaminants from lines, tanks and equipment.

One of the world's largest decommissioning projects is the Ekofisk project, which is located in the North Sea. Contracting work on this project has already started for the removal of more than 10 platforms, which according to the plan shall be removed by 2013.

Mr Linssen commented, "Decommissioning in the North Sea is a very new market. In this segment of the offshore market, one of the challenges has been to come up with new lifting techniques which can perform the tasks quicker, safer and at less cost."

Developed by MPU, the MPU (Multi Purpose Unit) Heavy Lifter distinguishes itself from other removal vessel designs by its use of concrete technology that gives the heavy lifter greater robustness and less motion on the sea. The other differentiating factors are the cost-effectiveness in the construction and operation of the platform, and as well as the additional functionalities. The heavy lifter may also be used for installing topsides and jackets.

"For MPU this concludes a long period, 8 years, of conceptual development, model tank testing, design and verifications, hence we are now very pleased to have raised the necessary funding to enter into a building contract with Keppel Verolme.

"The response from the market, potential clients and the investors, have been very enthusiastic, and we are now looking forward to see the vessel ready for operation in 2009 as there is a great demand for new lifting capacity in the offshore decommissioning and installation market.

"We are pleased to see that the vessel is going to be built at Keppel Verolme. The yard is a well reputed European yard with excellent track record and they have been a supporting partner in the process of developing this new technology," said Mr. Kolbjorn Hoyland, CEO of MPU Offshore Lift ASA. Keppel Verolme has made its mark in the North Sea region for on-time, on-budget services in the new construction and repair market. Presently, the yard is carrying out several major projects including the outfitting of the FPSO SSP Piranema, the major upgrading of the Blackford Dolphin semisubmersible and conversion of the pipelay vessel, Audacia.

A member of Keppel O&M, Keppel Verolme taps into the Group's global network of 17 yards to offer premier offshore and marine services.

Keppel O&M is a wholly owned subsidiary of Keppel Corporation Limited. It is a leader in offshore rigs, shiprepair and conversion and specialized 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 any material impact on the net tangible assets or earnings per share of Keppel Corporation for the financial year ending 31 Dec 2007.