Keppel Inks $684M Floating Liquefaction Facility Conversion Deal with Golar
Keppel Corp. Ltd. reported Wednesday that Keppel Shipyard Ltd., a wholly-owned subsidiary of its unit Keppel Offshore & Marine Ltd. (Keppel O&M), has signed a contract worth approximately $684 million with Golar Gandria N.V., a subsidiary of Golar LNG Ltd., to perform the conversion of a Moss type Liquefied Natural Gas (LNG) carrier, the GANDRIA, into a Golar Floating Liquefaction (GoFLNG) facility. The contract will become effective upon the parties fulfilling certain conditions precedent by Sept. 21.
The award of the conversion of the GANDRIA marks the exercise of the second of two options, which were part of a contract awarded by Golar to Keppel Shipyard for the conversion of the Moss LNG carrier, HILLI, into a GoFLNG facility. The first option was exercised in December 2014 for the conversion of the GIMI, also a Moss type LNG carrier.
Michael Chia, managing director (Marine & Technology), Keppel O&M, said, "We are extremely pleased to be executing a third GoFLNG conversion contract and thank Golar for entrusting us with this repeat contract and for their continued confidence in our capabilities. Together with Golar and our partner Black & Veatch, we are confident of delivering these projects within the budgeted time and cost.
"GoFLNG facilities are set to reduce the cost and time required to monetize and deliver offshore gas to market. Now a year underway, the Hilli conversion project is progressing to plan. This third GoFLNG contract re-validates our delivery timeframes and price levels, further demonstrating the technical and commercial competitiveness, and lower implementation risks inherent in our solution.
"Keppel Shipyard has recently set up a new design and technology arm, Gas Technology Development (GTD), to focus further efforts on solutions for LNG markets. With enhanced capabilities and more innovative solutions, we look forward to supporting our valued customers like Golar in commercializing mid-scale LNG offshore sources in relatively benign met-ocean conditions in a more timely and cost-efficient manner."
Gary Smith, CEO, Golar LNG, said, "We are happy to deepen our collaboration with Keppel whose impressive track record with innovative and sophisticated conversion projects will help Golar provide a fast-track and cost effective liquefaction solution to our clients looking to develop their natural gas assets. Keppel has successfully performed the conversions of three of our LNG carriers to Floating Storage and Regasification Units in the past. We are now on track to repeat that success in our floating liquefaction efforts as well."
The work scope for Keppel Shipyard in converting the GANDRIA is similar to that for the two earlier contracts. Keppel Shipyard will provide the design, detailed engineering and procurement of the marine systems and all of the conversion-related construction services. Keppel Shipyard will once again engage Black & Veatch to provide design, procurement and commissioning support services for the topsides, as well as the liquefaction process utilising its established PRICO technology.
Similar to the GIMI, full construction activities of the GANDRIA will only commence after Keppel Shipyard has received a notice to proceed, which is expected to be issued in 2016. The GoFLNG GANDRIA is expected to be delivered in approximately 31 months after receipt of such notice to proceed.
The above is not expected to have any material impact on the net tangible assets and earnings per share of Keppel Corporation, the parent company of Keppel O&M, for the current financial year.
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