Singapore’s Keppel Offshore & Marine is negotiating two floating production, storage and offloading vessel contracts with Brazil’s state-owned Petrobras which, if awarded, would add more than S$8 billion (US$5.8 billion) to the contractor’s order book.

The Singapore offshore and marine company was the only qualified bidder in Petrobras’ tender for its P-80 FPSO and it is currently in advanced discussions for this floater job, as well as for an option for a second FPSO. Both these FPSO projects will have milestone payments with a 10% deposit upfront from the client when the contracts are executed.

In the first half of 2022, Keppel O&M was profitable — achieving stronger results driven by the higher revenue, higher investment income and gains from its disposal of Keppel Smit Towage and Maju Maritime.

The outlook for the offshore and marine industry is expected to improve on the back of increased oil prices, noted the contractor.

Keppel O&M in the first half of this year secured S$256 million-worth of new orders including an FPSO module fabrication and integration, an FPSO topsides integration, and the jumboisation of a trailing suction hopper dredger, boosting its net order book to US$4.4 billion (S$11.49 billion gross) as of 30 June.

Against this backdrop, work to complete the contractor’s merger with compatriot Sembcorp Marine is “progressing well” for targeted completion by the end of the year, Keppel Corporation chief executive Loh Chin Hua said on Thursday.

“Anti-trust filings have been lodged in different markets and we are hopeful that approvals will be obtained within our expected timeline. Both Keppel and Sembcorp Marine are also concurrently working on submitting the relevant applications to SGX [Singapore Stock Exchange] for the respective shareholder meetings to approve the proposed combination,” said Loh.

Encouraging progress

Meanwhile, Keppel O&M is making encouraging progress with its legacy rigs that are being divested alongside the planned merger.

“The near-term shortage of modern rigs has led to an increase in enquiries, as well as utilisation and dayrates for benign environment jack-ups and floaters,” he said.

In May, Keppel O&M announced some S$255 million-worth of bareboat charter contracts for four of its legacy jack-ups, with charter periods of three to five years, and the contractor is also engaging potential buyers for some of its rig assets.

“Given the improved market sentiments and traction achieved thus far, we are confident the legacy rigs can be substantially monetised over the next three to five years,” added Loh.

Parent Keppel posted a S$498 million net profit for the first half of 2022, up 66% year-on-year.

The company is scaling up in renewables, clean energy and decarbonisation solutions.

“Climate action and the energy transition are expected to gather pace. At the same time, considerations related to energy security would become increasingly critical to governments, driving demand for sustainable energy infrastructure,” said Loh.

“With the global push towards net zero, sustainability-related products and services will be a major growth sector auguring well for Keppel’s energy efficiency, carbon abatement and clean energy solutions.

“These are very exciting times for Keppel as we prepare for a new phase in the company’s growth journey. Keppel is in the right space at the right time.”

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