APRIL 9, 2014 — Keppel Offshore & Marine Ltd (Keppel O&M), through its wholly owned subsidiary, FELS Offshore Pte Ltd, has signed a management services agreement with Titan Petrochemicals Group Limited (Titan) - a company in which commodities trading conglomerate Guangdong Zhenrong Energy Co. Ltd. (GDZR) is a major shareholder - and Titan Quanzhou Shipyard Co. Ltd (TQS), to manage the TQS shipyard in Fujian Province, China.
TQS is wholly-owned by Titan, which is undergoing financial restructuring, and the agreement with Keppel O&M is conditional on the completion of that restructuring and the resumption of trading of Titan's shares on the Hong Kong Stock Exchange.
TQS is one of the largest shipyards in China, occupying a total area of 110 hectares with 3,600 m length of coastline.
When completed, TQS will have four ultra-large and wide dry docks, including one of the largest modern-design docks in China, which will enable it to convert double hull vessels such as Floating Production Storage and Offloading (FPSO) units. Besides ship repair and conversion capabilities, the yard is also able to construct offshore rigs including jackups and semisubmersibles.
The agreement is for a 30-year period, renewable thereafter as mutually agreed. Under it, the yard, managed by Keppel O&M, will undertake projects using Keppel's proprietary designs.
Mr. Chow Yew Yuen, CEO of Keppel O&M said, "The offshore oil and gas market in China has been growing significantly, and there is increasing demand for high specification rigs and production vessels. At the same time, China is a market which has strong preference for China-made products. Having this yard is an extension of our near market, near customer strategy and enables us to service the Chinese market with our suite of proprietary solutions while meeting its requirement of building in-country. This is further complemented by our other shipyard in China, Keppel Nantong, which undertakes specialized shipbuilding and offshore fabrication.
"With 20 yards around the world, we have the experience in managing existing shipyards and optimizing their operations, just as we have done so in Brazil, the Netherlands, U.S.A. and the Philippines. Together with the strength of GDZR's extensive connections and experience in China, and our expertise and established track record in the global offshore and marine industry, we are confident that this is a win-win partnership that will enable Keppel and Titan to become a major offshore solutions provider for China."
Mr. Zhao Xu Guang, Chairman of Titan added, "We are looking to enhance our presence in the offshore and marine business, and partnering Keppel, the world's leading rig builder, is a significant step in this direction. I am confident that with Keppel managing this yard which has good development potential, we will be able to quickly build up the track record of the shipyard and deliver winning Keppel designs and products to Chinese oil and gas operators. Having studied the market, we believe there are a significant number of potential projects that this yard is capable of undertaking."