Keppel Scores Two FPSO Conversion Contracts

Keppel Offshore & Marine Ltd, through its subsidiaries, has secured contracts for FPSO conversion and shipbuilding projects amounting to S$160 million.

Keppel Shipyard Pte Ltd (Keppel Shipyard) has been awarded contracts for the conversion of two Floating Production Storage and Offloading (FPSO) units.

One is from SBM Holdings Inc SA (SBM), one of the world's largest owners and operators of FPSO and FSO facilities, and the other is from Emas Offshore Construction and Production Pte Ltd (Emas).

The conversion of the 268,865 dwt VLCC (previously FSO XV - DOMY) for SBM is expected to be completed and the FPSO will sail from the yard in the third quarter of 2008. Upon completion, the facility can produce up to 100,000 barrels of oil per day (bopd), and has a storage capacity of about 1.6 million barrels of oil.

The FPSO unit will be leased by a SBM/MISC JV to the BC-10 Consortium operated by Shell for the development of the BC-10 field in the Brazilian waters of the Campos Basin. This field is expected to be one of the key milestones in the commercialization of heavy oil in Brazil's deepwaters.

Mr. Nelson Yeo, Executive Director of Keppel Shipyard, said, ""This is our tenth conversion project for SBM since the year 2000. We wish to thank SBM for their continuing confidence in Keppel Shipyard's ability to perform and deliver quality services all the time."

The major scope of work for the conversion includes the accommodation upgrading, fabrication and installation of an internal turret mooring system, piperacks, modules supports, helideck and shipside sponson tanks as well as installation of the power generation system and topside process modules.

The second contract, which is awarded by Emas Offshore Construction and Production, a subsidiary of Mainboard listed Ezra Holdings Limited, is for the conversion of a 127,533MT shuttle tanker into LEWEK FPSO 1 for deployment in the Gulf of Thailand.

Keppel Shipyard will carry out the overall project management and completion of the FPSO including fabrication and installation of flare tower, installation and integration of the topside modules. Its sister yard, Subic Shipyard and Engineering Inc (Subic Shipyard), will undertake repair and refurbishment works and part of the conversion, including bow modification for a mooring system, fabrication and installation of the helideck, pipe racks and module supports.

The vessel is expected to be completed in mid 2008.

Meanwhile, Keppel Nantong Shipyard has received an order for the construction of three 65-ton bollard pull twin-screw Azimuth Stern Drive (ASD) tugboats from Keppel Smit Towage Pte Ltd. These vessels are of the proprietary MTD 3265ST design developed by Keppel Singmarine's technology unit, Marine Technology Development (MTD). They are expected to be delivered between third quarter of 2009 and first quarter of 2010.

Keppel Philippines Marine, Inc (KPMI) has also sold two units of 45-ton bollard pull tugboats to Keppel Smit Towage. These two boats are being built in Keppel Batangas Shipyard and Keppel Cebu Shipyard in the Philippines and are expected to be completed by the third quarter of this year. KPMI delivered two similar tugs to Maju Maritime Ltd, a sister company of Keppel Smit Towage, in 2006.

Keppel Smit Towage is 51% owned by KS Investments Pte Ltd, a wholly owned subsidiary of Keppel O&M.

Keppel Shipyard, Keppel Nantong Shipyard and Keppel Philippines Marine Inc are subsidiaries of Keppel Corporation Limited through Keppel O&M. Keppel O&M is a global leader in offshore rigs, shiprepair and conversion, and as well as specialised shipbuilding. Its "Near Market, Near Customer" strategy is bolstered by a global network of shipyards 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 a provider of choice and a partner in solutions for the offshore and marine industry.

The contracts are not expected to have material impact on the net tangible assets and earnings per share of Keppel Corporation for the financial year 2007.

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