Keppel FELS Signs Contract Worth US$1.2 Billion

Keppel FELS Limited (Keppel FELS), a wholly owned subsidiary of Keppel Offshore & Marine Ltd (Keppel O&M), has signed a contract with Ukraine's National Joint-Stock Company "Naftogaz of Ukraine" (Naftogaz), to construct two semisubmersible drilling rigs worth about US$1.2 billion. The contract will be effective upon final corporate approvals.

This follows an earlier announcement made on 21 November 2012 in relation to Keppel FELS being selected as winner of the tender to construct the two semisubmersible drilling rigs.

The rigs will be built to Keppel FELS' proprietary DSSTM 38U design which is customised for the Black Sea environment. The harsh weather conditions of the Black Sea include extreme freezing temperatures, storms with strong winds and heavy seas.

Durable grades of steel with increased thickness will form the basis of the structural design of the hull and pontoons of the rigs. They will have winterisation features such as machinery cladding, advanced heating systems to prevent equipment and pipe freezing as well as enhanced air conditioning for the living quarters.

Mr Wong Kok Seng, Managing Director (Offshore) of Keppel O&M and Managing Director of Keppel FELS said, "We are pleased to be chosen by Naftogaz to work on these two complex projects for the Black Sea. Having delivered two jackup rigs for the Black Sea, we understand the specifications necessary for rigs to work in such extreme conditions. "We have a suite of proprietary semisubmersible designs capable of operating in all frontiers. Coupled with our experience in building harsh environment rigs and the strong partnership we have built up with Naftogaz, we are confident of delivering robust, high quality rigs that will excel in operations in the Black Sea."

According to Ukraine's official estimates in 2011, the country boasts proven reserves of natural gas (1200 billion cubic meters) and oil and gas condensate (220 million tons).

Mr Evgen Bakulin, Chairman of Naftogaz, added, "The addition of these rigs to our fleet is part of our extensive programme to modernise our offshore exploration and production facilities. This will allow us to reach a new level of shelf development in the Black and Azov Seas, rapidly boost our oil and gas production and reduce our imports of natural gas.

"We selected Keppel FELS because they best met our tender requirements and they are a proven partner, having delivered two world class jackup rigs to us. The DSSTM 38U design is for us a new generation and cost effective rig with high specifications. We look forward to continuing this win-win partnership with Keppel as we grow our offshore capabilities."

Jointly developed and owned by Keppel's Deepwater Technology Group and Marine Structure Consultants, the DSSTM 38U design features the latest safety and environmental features. It will have double-skin columns for additional protection to machinery spaces in the event of a ship collision.

In addition, to facilitate safe handling of equipment, the rigs will be equipped with a separate blow-out preventer and "Christmas Tree" (used to control the flow of oil or gas out of the well). A compact, fit-for-purpose pipe handling system capable of performing offline stand building will enable it to handle drill pipes efficiently while drilling. The rigs will be equipped with a 2000 kips drilling derrick suitable for 30,000 feet drilling depth.

 

The above contract is not expected to have any material impact on the net tangible assets and earnings per share of Keppel Corporation Limited for the current financial year.