Marine Log

Icebreaker and icebreaking supply ship

July 7, 2006

Keppel wins icebreaker orders

Keppel Singmarine Pte Ltd has clinched contracts worth a total of S$260 million (about US$ 164.1 million) for two highly specialized vessels from LUKOIL--Kaliningradmorneft (LUKOIL), a subsidiary of Russia's LUKOIL Oil Company.

The contracts cover the construction of an auxiliary icebreaker vessel and a multi-purpose icebreaking supply vessel.

The 100-m long auxiliary icebreaker vessel will have equipment and system capabilities to work in temperatures down to 40oC and to proceed through 1.7 m of level ice with 20 cm snow cover.

The 81-m long multi-purpose icebreaking supply vessel can proceed through landfast ice having an unbroken thickness of up to 1.5 m with 20 cm snow cover.

Contracts for these highly specialised vessels were won amidst competition from European yards. They are the first such vessels to be built by an Asian yard--a testament to the growing expertise of Keppel Singmarine in offering high value-added services.

The vessels will be delivered between end 2007 and mid 2008. To be deployed to the Barents and Arctic Seas, these vessels are designed and will be built to the rules and standards of the Russian Maritime Register of Shipping (RMRS), and are customized in accordance with the owner's requirements and technical specifications.

Keppel Singmarine's parent Keppel Offshore & Marine Ltd has also signed an agreement with LUKOIL for further cooperation in potential newbuilding of offshore rigs, special purpose offshore facilities and vessels to service LUKOIL's offshore oil terminal vessels at Keppel O&M shipyards around the world.

The orders follow two from LUKOIL for construction of two 60-tonne bollard pull Ice-class Anchor Handling Tug/Supply (AHTS) vessels which Keppel Singmarine secured from LUKOIL in May 2005 and January 2006. The deliveries of these two vessels are due between end 2006 and mid 2007.

Charles Foo, Managing Director (Special Projects) of Keppel O&M and Chairman of Keppel Singmarine, said, "This partnership with LUKOIL represents a strategic milestone in the Keppel Offshore & Marine group's effort to enhance its services for the Russian energy and offshore-related market."

"We are pleased with LUKOIL's confidence in Keppel. As we work in partnership with LUKOIL, we also endeavour to renew and strengthen our ties with other Russian owners to offer them our comprehensive range of products and services in our global yard network to meet their needs."

Russia has always been an important market for Keppel O&M, with its huge reserves of oil and gas. According to the latest reports by the Energy Information Administration (EIA), the country has the world's largest proven gas reserves of 1,680 trillion cubic feet (Tcf), and its proven oil reserves at 60 billion barrels is the eighth in the world. Probable and possible oil reserves is even more at 67 billion barrels. It is currently also the world's largest producer and exporter of gas, and ranks second in terms of world crude oil production.

Keppel's relationship with Russia dates back to the '80s when Keppel Shipyard and Keppel FELS serviced various owners in shiprepair, ship conversion and offshore rig construction and repair respectively. Work from Russia tapered down following the dissolution of the USSR in 1991, as much of the country focused on developing a market economy. It is currently enjoying a renaissance of consistent economic growth.Keppel Singmarine Pte Ltd is the specialised shipbuilding arm of Keppel O&M. Since the early 1970s, Keppel Singmarine has designed and built more than 400 small to medium-sized vessels including AHTS, multi-purpose support vessels and cable ships for a worldwide clientele.

LUKOIL-Kaliningradmorneft is a subsidiary to LUKOIL Oil Company, a leading Russian oil company with main activities in oil & gas exploration and production, and production and sale of petroleum products. LUKOIL-Kaliningradmorneft is engaged in marine towing, handling of crude oil and petroleum products, fabrication of mobile drilling rigs, production of LPG, marketing of LUKOIL-produced fuels and lubricants.

The contracts are not expected to have material impact on the NTA or the earnings per Keppel Corporation Limited share for FY2006