Keppel to Divest Interest in Accommodation Platform

Keppel Offshore & Marine Ltd has entered into an agreement with Consafe Offshore to sell its entire 85% stake in the Special Purpose Company.

SPC was set up by Keppel O&M and JCE Group as the 85/15 joint venture company to own a semisubmersible accommodation vessel, Safe Concordia. JCE Group has since transferred its rights and obligations to Consafe Offshore.

As part of the agreement, Consafe Offshore has made a deposit payment of US$34.5 million on July 1, 2005 to Keppel O&M. It will pay the balance of US$50 million with interest thereon by September 30, 2005 in order to complete the share purchase.

If it fails to meet its full payment obligation, Consafe Offshore will purchase only 35% interest in SPC to bring its total shareholding in SPC to 50%. The US$34.5 million deposit payment made by Consafe Offshore will be applied towards the share purchase as provided for in the agreement.

Developed by Keppel O&M's technology division, Deepwater Technology Group, Safe Concordia was built on the proprietary KFELS SSAU 3600-GOM-C42 by Keppel FELS for US$ 95 million.

The vessel was completed and delivered to Consafe Offshore in March 2005 and was deployed by ConocoPhillips at the Bayu-Undan field in East Timor under a short bareboat charter.

Keppel O&M, a wholly owned subsidiary of Keppel Corporation Limited, is a global leader in offshore rigs and ship conversion and repair as well as a specialised shipbuilder. Its 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.

Consafe Offshore AB owns and operates a fleet of accommodation and construction service vessels for the international oil & gas offshore market.

The transaction is not expected to have any material impact on the net tangible assets and earnings per share of Keppel Corporation for the financial year ending 2005.