Sembcorp Marine was awarded a longevity contract from the International Gas Transportation Company Limited (IGTC), the parent shipping company of the North West Shelf Venture, for the life extension of its vessel, the Northwest Sanderling, the first of six of their fleet of Moss Rosenberg design LNG (Liquefied Natural Gas ) carriers to reach its 20th year in service.
This breakthrough contract is a milestone agreement as it signifies the first time that a major LNG operator has committed itself to a long-term longevity program to extend its vessels' future trading life when the vessels progressively reach their 20th year in service. At a time when Singapore is preparing itself to be a major hub in the LNG sector, the selection of Sembcorp Marine as a longevity program partner of IGTC, is a great boost to Singapore's marine industry and its status as a major ship repair centre. It also reinforces Sembcorp Marine's global leadership position in this highly specialised LNG carriers' life extension work.
NWSSSC is equally owned by six venture partners; BHP Billiton Petroleum Pty Ltd, BP Australia Shipping Pty Ltd, Chevron Australia Transport Pty Ltd, Japan Australia LNG (MIMI) Downstream Services Pty Ltd, Shell Development (Australia) Pty Ltd and Woodside Petroleum Holdings Pty Ltd. It is the main shipping advisor to International Gas Transportation Company Limited. (IGTC), a company registered in Bermuda. NWSSSC provides advice and expertise to assist IGTC in managing its fleet of 9 LNG carriers and ensuring the safe, efficient and reliable transportation of liquefied natural gas (LNG) from Australia's North West Shelf to the project's customers in Japan and South Korea.
The signing of the longevity contract marks another milestone in the partnership between NWSSSC and Sembcorp Marine, committing both partners to co-operate in the areas of engineering, procurement and construction services for the structural and systems upgrades to extend the trading life of the LNG carriers with the same industry leading safety, integrity and reliability standards of NWSSSC. The life extension works include ballast tanks blasting and coating work, hull structural enhancement, integrated automation system renewal, HVAC and refrigeration system renewal, cargo and ballast valve actuator system replacement and boiler system renewal.
"IGTC has a strong and successful partnership with Sembcorp Marine since the first refit of one of our LNG carriers, Northwest Shearwater, in Sembawang Shipyard in 2001. Over the years, Sembcorp Marine's Jurong Shipyard and Sembawang Shipyard have demonstrated consistently high standards in its H.S.E., quality and work performance in the refits of our LNG carriers. Sembcorp Marine's willingness and ability to work in tandem with us from the initial phase of the longevity project, showed the Group's dedication and commitment to resolve challenges as a team.
"This is a very important contract for IGTC and our venture partners as we move forward to deliver a high quality service to our customers through the provision of world-class fleet performance and outstanding LNG shipping services. We look forward to working with Sembcorp Marine in achieving safe, high quality and on-time delivery targets for the first of our LNG carriers earmarked for life extension work," said John Charles, Commercial Manager of NWSSSC.
"This prestigious award marks another major milestone achievement for Sembcorp Marine as it is the first long-term longevity contract between a world renowned LNG ship owner and a Singapore shipyard group. As part of the Group's strategy to become the world leader in the repairs and life extension of LNG carriers, we have achieved an important step in getting into the big league of specialised LNG carriers' life extension work.
"We are thus honored to be chosen by IGTC as their partner for this important program. This successful partnership will be a springboard to more challenging projects to come and certainly, we are confident that our collaboration will bring about technology and knowledge transfers to assist both partners to be leaders in our respective fields," said Wong Lee-Lin, Executive Director of Sembawang Shipyard.
With the signing of this contract, Northwest Sanderling, the first of 6 Moss-Rosenberg type LNG carriers from IGTC, is scheduled to undergo life extension/longevity work and upgrading program in Sembcorp Marine's Sembawang Shipyard at an estimated cost of S$35 million in June 2009.
However, this contract is not expected to have any material impact on the net tangible assets and earnings per share of Sembcorp Marine for the year ending December 31, 2008.
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