Two FPSO orders worth a total of 40 billion yuan have been secured! The merger has proven to be a success.
2022-08-02 09:00
Keppel Offshore & Marine, a Singaporean offshore and marine giant, is about to officially sign two contracts with Petrobras, Brazil's national oil company, for the construction of Floating Production Storage and Offloading vessels (FPSOs). This "sky-high" order, valued at US$5.8 billion (approximately RMB 39.1 billion), is expected to set a new record for FPSO contract amounts in the offshore engineering market.
On July 28, Keppel Corp released its first-half financial report, confirming that its subsidiary, Keppel Offshore & Marine, is in advanced discussions with Petrobras regarding two new FPSO projects. If approved, Keppel Offshore & Marine's order backlog would increase by more than S$8 billion (approximately US$5.795 billion).
It is understood that these two FPSOs are the "P-80" and "P-82". Petrobras launched an international tender in late April last year, using an Engineering, Procurement, and Construction (EPC) turnkey model. However, in the previous year, Petrobras failed to attract companies to bid, forcing them to postpone the bid submission deadline to May of this year.
In early July this year, it was reported that Keppel Offshore & Marine had won Petrobras' international tender for the construction of these two FPSOs, with a bid of US$2.983 billion per vessel. Sembcorp Marine, another Singaporean offshore giant, also submitted a bid of US$3.660 billion per vessel. Notably, three of the six companies eligible to bid belonged to the Keppel Group, including Keppel Offshore & Marine's Brazilian shipyard, BrasFELS. BrasFELS and the other three companies ultimately withdrew their bids.
Sources revealed that the "P-80" and "P-82" FPSOs are expected to be put into operation in 2026, with a daily processing capacity of 225,000 barrels of oil and 12 million cubic meters of natural gas. This will be Petrobras' largest FPSO in terms of processing capacity and one of the largest in Brazil.
If this order is successfully signed, it will surpass the record price of US$2.3 billion per vessel set last year when Petrobras ordered the "P-78" and "P-79" FPSOs, setting a new "sky-high" price for FPSO orders. However, the "P-78" and "P-79" are relatively smaller in specifications, with a daily processing capacity of 180,000 barrels of oil and 7.2 million cubic meters of natural gas.
It is worth mentioning that Keppel Offshore & Marine will also participate in the construction of the "P-78", responsible for the construction of the topside modules and the integration and commissioning of the FPSO, with a contract value of approximately US$1.52 billion; its partner, the Hyundai Heavy Industries Group of South Korea, will undertake the hull construction, with a contract value of approximately US$780 million. In addition, the "P-79" FPSO will be jointly constructed by Daewoo Shipbuilding & Marine Engineering of South Korea and Saipem of Italy, with Daewoo's contract value at US$1 billion and Saipem's at approximately US$1.3 billion.
In the first half of this year, with the improvement of the offshore engineering market, Keppel Offshore & Marine finally returned to profitability. According to Keppel Corp's latest financial report, Keppel Offshore & Marine's net profit in the first half of this year was S$64 million, compared to a net loss of S$44 million in the same period last year.
According to International Ship Network, Keppel Offshore & Marine received S$256 million in new orders in the first half of the year, and its net order backlog increased to S$4.4 billion by the end of June. At the same time, Keppel Offshore & Marine has also made good progress in the disposal of its inventory of drilling rigs, securing bareboat charter contracts for four jack-up drilling rigs with a lease term of 3 to 5 years, with a contract value of approximately S$255 million.
In April this year, Keppel Corp and Sembcorp Marine reached a final agreement, and Keppel Offshore & Marine and Sembcorp Marine are expected to complete their merger by the end of this year, creating a world-leading company focused on clean solutions for the offshore renewable energy, new energy, and offshore engineering shipbuilding industries. Temasek Holdings, Singapore's sovereign wealth fund, will be the largest shareholder in the merged entity.
At the same time, Keppel Corp also resolved the issue of Keppel Offshore & Marine's inventory of drilling rigs and related receivables. Keppel Corp signed agreements with two external investors to sell Keppel Offshore & Marine's remaining completed and uncompleted drilling rigs and related receivables to an independent asset company. External investors will own 90% of the asset company, while Keppel Corp will hold the remaining 10%.
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