This agreement signifies a landmark partnership between the world's leading transporter of liquefied natural gas (LNG), and the global leader in ship repair, ship conversion and construction of offshore drilling rigs.
The proposed shipyard will be part of the massive expansion of the Port of Ras Laffan, in the Arabian Gulf, and is expected to begin operation in 2010.
Mr. Muhammad A. Ghannam, Managing Director of NAKILAT, said: "In our negotiations and through visits to Keppel's shipyards in Singapore, we found the overall culture of Keppel, their best practices and business operations to be a good fit with our vision for the new shipyard. Keppel has very high standards of professionalism and commitment to service excellence which we appreciate.
"Our vision is for the new shipyard to become a center of excellence for the repair and maintenance of LNG carriers, thereby securing a strategically important link in the supply chain of natural gas from wellhead to consumer."
Mr. Tong Chong Heong, Managing Director/Chief Operating Officer of Keppel O&M, said: "This business venture is in line with our "Near Market, Near Customer" strategy to be close to our customers so that we can better serve them.
"We will replicate our proven management system in the new shipyard, and leverage the resources of our global network of 17 yards and commercial agents to ensure success of this joint venture with NAKILAT."
NAKILAT and KS Investments have agreed to form an 80/20 joint venture company (JVC) to manage the design, construction and operation of the 43-hectare shipyard, which will be built on reclaimed land. KS Investments will contribute US$23 million for its 20% interest in the joint venture.
The name of the JVC is Nakilat-Keppel Offshore & Marine Ltd.
The new facility will be designed and constructed in accordance with best international practice. It will be suitable for the repair and maintenance of very large LNG carriers and a wide range of other vessels, and the conversion of tankers to Floating Production Storage & Offloading systems (FPSO) and Floating Storage & Offloading (FSO) systems. The estimated cost of the shipyard is approximately US$450 million.
Qatar Petroleum (QP) will fund the reclamation of the land and construction of the yard's infrastructure, such as the two dry docks, the quays, buildings and utilities distribution networks. QP will lease the infrastructure to the JVC.
The JVC will fund the shipyard's mobile equipment, such as the floating dock, cranes and workshop machinery, and provide cash for operations.
The shipyard can be expanded for the construction of specialized small ships (such as offshore supply vessels), and the fabrication of structures for the offshore oil and gas industry (such as jack-up drilling rigs, process modules and decks, jackets, wellhead decks and flare booms), and the fabrication of components for land-based petrochemical and industrial plant. The facility will also provide life-cycle support in all the markets it serves.
This joint venture is not expected to have material impact on the net tangible asset and earnings per share of Keppel Corporation for the financial year ending 2007.
NAKILAT was formed in June 2004, and is a joint stock company owned 50% by its founding shareholders and 50% by the public, as a result of an IPO in early 2005. It is traded on the Doha Securities Market.
NAKILAT is set to become the world's leading owner and operator of vessels for the transportation of LNG and associated products. By 2010, NAKILAT will wholly own 25 LNGCs and partly own an additional 29 vessels.
In addition, NAKILAT is involved in a number of other marine-related ventures in the State of Qatar. These include the ownership of vessels to transport LPG, sulfur and condensate produced by gas projects offshore Qatar; the Nakilat Agency Company, which is the exclusive agent for all ships calling at the Port of Ras Laffan; and Nakilat Fuji, a ship chandlery business providing food, provisions and stores to vessels calling at Qatari ports.
Also, NAKILAT has been awarded a 22 year contract by QP for Harbour Towage and Mooring Services for the Port of Ras Laffan. In order to execute this contract, QGTC has entered into a long term joint venture agreement with Svitzer Middle East Ltd (a member of the A.P. Moller Group of Denmark).
A wholly owned subsidiary of Keppel Corporation Limited, Keppel O&M is a global leader in offshore rigs and ship conversion and repair as well as a specialized shipbuilder. With a network of 17 yards, its shiprepair and conversion operation is spearheaded by Keppel Shipyard, which has an impressive track record in the repair and maintenance of LNG carriers. In 2006, Keppel Shipyard signed a five-year term agreement for the repair and maintenance of a fleet of ten LNG carriers which are on charter to Qatargas.
Keppel O&M will also draw on its local knowledge of the Middle East to enhance the cost-efficiency and operational effectiveness for the Joint Venture with NAKILAT. The group has been operating in the region since 1991, following the establishment of its joint venture shipyard, Arab Heavy Industries in Ajman. Its sister company, Keppel Integrated Engineering, has recently secured a contract to design, build and operate an integrated solid waste management plant in Qatar for S $1.7 billion.
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