June 6, 2008
J. Ray McDermott in JV agreement for China FPSO fab facility
McDermott International, Inc. (NYSE: MDR) announced today that a subsidiary of J. Ray McDermott, S.A. has entered into a joint venture with a subsidiary of state-owned China Shipbuilding Industry Corporation ("CSIC").
The joint venture company, Qingdao McDermott Wuchuan Offshore Engineering Company Ltd. ("McDermott Wuchuan"), plans to establish a new facility on over 111 acres in HaiXiWan, Qingdao, Shandong, China.
McDermott Wuchuan anticipates focusing its business on floating, production, storage, off-loading ("FPSO") vessel construction and integration.
The new facility is to be located adjacent to two new CSIC shipyards: Qingdao Wuchuan Heavy Industry Co. Ltd. (J. Ray's joint venture partner) and Qingdao Beihai Shipbuilding Heavy Industry Co. Ltd. CSIC has one floating dock in the area and five dry docks capable of accommodating vessels up to 500,000 deadweight tons.
"FPSOs represent one of the fastest growing offshore construction segments in our industry today," said Bob Deason, J. Ray's President and CEO. "China already commands a significant share of this market and has developed a proven project track record. Establishing this new joint venture focusing on FPSO's will add a critical component to J. Ray's comprehensive business strategy."
McDermott Wuchuan is planned to complement each partner's respective strengths. J. Ray's integrated engineering, procurement, construction and installation ("EPCI") capabilities and long international market experience will give the partnership consistency of methods, standards and procedures, and continuity of mature accredited project management systems, with a superior safety culture.
CSIC is a leading shipbuilder, with extensive market penetration, an ability to obtain hulls and access to a large, skilled workforce. McDermott says the joint venture will offer solid, competitive, integrated engineering and construction solutions to the worldwide FPSO market.
McDermott Wuchuan's new facility is initially expected to permit annual throughput of up to 33,000 tons, expending approximately six million man-hours, per year. The facility will include structural and pipe shops, blasting and painting facilities, module assembly buildings, covered warehousing and lay down areas.