6-July-2006

Keppel strengthens ties with LUKOIL with S$260m contracts for specialised ships

Keppel Singmarine Pte Ltd has clinched contracts worth a total of S$260 million for two highly specialised vessels from LUKOIL – Kaliningradmorneft (LUKOIL), a subsidiary of leading Russian oil company, LUKOIL Oil Company.

The parent company of Keppel Singmarine, Keppel Offshore & Marine Ltd (Keppel O&M), has also signed an agreement with LUKOIL for further co-operation 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.

Mr 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’s first projects in recent years for the Russian market are the 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.

The two new contracts, secured on the back of the AHTS, are turnkey projects. They are for the construction of an auxiliary icebreaker vessel and a multi-purpose icebreaking supply vessel.

Mr Foo added, “I am glad that LUKOIL is pleased with the services that we are providing, and I am confident we will be able to deliver these two icebreaking vessels according to the owner’s requirements.”

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, which is a testament to the growing expertise of Keppel Singmarine in offering high value-added services to its customers.

The vessels will be delivered to their owner 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 customised in accordance with the owner’s stringent requirements and superior technical specifications.

The 100-metre long auxiliary icebreaker vessel will have equipment and system capabilities to work in temperatures down to –40^oC and to proceed through 1.7 metres of level ice with 20cm snow cover. The 81-metre long multi-purpose icebreaking supply vessel can proceed through landfast ice having an unbroken thickness of up to 1.5 metres with 20cm snow cover.

A wholly-owned subsidiary of Keppel Corporation Limited, Keppel O&M is a global leader in offshore rigs and ship conversion and repair as well as a specialised shipbuilder. Its near market, near customer strategy is bolstered by a global network of 17 yards in the Asia Pacific, Gulf of Mexico, Brazil, the Caspian Sea, Middle East and the North Sea regions. Integrating the experience and expertise of its yards worldwide, the group aims to be the provider of choice and partner in solutions for the offshore and marine industry.

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.

For further information, please contact

Sarah Seah
Deputy General Manager
Keppel Group Corporate Communications
Tel: (65) 64136 420
Email: sarah.seah@kepcorp.com


This press release is also available at www.kepcorp.com and www.keppelom.com

This is an artist impression of the icebreaker and the ice breaking supply ship, which Keppel Singmarine is building for LUKOIL. The vessels are due for delivery between end 2007 & mid 2008.