14.8 billion! Two major shipbuilding companies team up to win the world's largest FPSO order

Keppel Offshore & Marine, in collaboration with South Korea's Hyundai Heavy Industries Group, has secured a major US$2.3 billion contract from Petrobras for the construction of its first FPSO. This marks the largest-ever FPSO order for Petrobras and the largest FPSO order globally this year.

Keppel Offshore & Marine and Hyundai Heavy Industries jointly win the first FPSO order.

On May 10, Keppel Corp announced that Keppel Offshore & Marine, together with Hyundai Heavy Industries Group, won Petrobras' international tender, securing a US$2.3 billion (approximately RMB 14.8 billion) contract for the engineering, procurement, and construction (EPC) of the FPSO P-78.

This EPC contract will be executed across multiple global locations and meets Petrobras' 25% local content requirement. Keppel Offshore & Marine will construct the 43,000-tonne topsides module at its shipyards in Singapore, China, and Brazil, and will also be responsible for the FPSO's integration and commissioning. Hyundai Heavy Industries Group will be responsible for constructing the 85,000-tonne hull and the living quarters accommodating 240 people. Upon completion, the FPSO will be transported to the Buzios oil field, where Keppel Offshore & Marine will conduct the final stages of offshore commissioning.

According to International Ship Network, Keppel Offshore & Marine has a subsidiary in China, Nantong Keppel Shipyard, capable of constructing 35,000-tonne offshore structures annually. Its Brazilian subsidiary, Keppel FELS Brasil, has become a leading offshore construction company in Latin America, providing a wide range of construction, modification, upgrade, and maintenance services.

According to an announcement released on May 11 by Korea Shipbuilding & Offshore Engineering (KSOE), Hyundai Heavy Industries Group's subsidiary responsible for shipbuilding, the contract value for the hull construction is approximately US$780 million, while Keppel Offshore & Marine's contract for the topsides module is approximately US$1.52 billion.

This is Hyundai Heavy Industries Group's second offshore equipment construction project this year, following a US$450 million contract for the design, procurement, construction, installation, and commissioning of a gas compression platform in January. After approximately 9 months of design, construction is expected to begin in the first quarter of next year.

The P-78 is scheduled for completion in 2024 and will be deployed at the Buzios oil field, 210 kilometers southeast of Rio de Janeiro, Brazil, becoming the seventh FPSO at the Buzios field. The FPSO will measure 345 meters in length, 60 meters in depth, and 34 meters in width, with a total weight of 128,000 tonnes. It will be capable of producing 180,000 barrels of crude oil and 720 cubic meters of natural gas per day, and will have a storage capacity of 2 million barrels of crude oil, making it one of the world's largest FPSOs.

Chris Ong, CEO of Keppel Offshore & Marine, said: "We are delighted to support Petrobras on this large-scale FPSO project, where we have undertaken a larger scope of work than before. This project leverages our recognized capabilities as a leading integrator of offshore energy and infrastructure assets, playing to our strengths in engineering and project management, focusing on higher value-added work."

This is also in line with our announced transformation plan, where not all work is done in our yards. We are pleased to collaborate with industry leaders such as Hyundai Heavy Industries Group and DORIS Engenharia in Brazil, leveraging our complementary strengths, enabling Keppel Offshore & Marine to expand our EPC services across the value chain. At the same time, we are able to leverage our global network to bring a significant amount of work to Brazil, creating thousands of jobs for the local ecosystem."

Petrobras plans to order 2 FPSOs, with two major South Korean shipbuilders as the final competitors.

Petrobras launched a tender last year for the construction of two FPSOs, P-78 and P-79, for the Buzios oil field, with a total value of US$4.6 billion. This is expected to be the largest single FPSO order in the history of the shipbuilding industry.

Previously, Hyundai Heavy Industries Group and Daewoo Shipbuilding & Marine Engineering successfully advanced to the final round of Petrobras' FPSO tender with relatively lower bids. With the P-78 contract awarded to Hyundai Heavy Industries Group and Keppel Offshore & Marine, attention now turns to which shipyard Petrobras will choose for the P-79 order.

South Korean industry insiders predict that considering the scale of the transaction, both Hyundai Heavy Industries Group and Daewoo Shipbuilding & Marine Engineering, which were shortlisted, are likely to each receive an FPSO order from Petrobras. These insiders point out that building an FPSO requires several years and significant human resources, and splitting the two FPSO orders between two shipyards is a way to ensure faster delivery.