Keppel contracts third floating liquefaction facility conversion worth US$684m

Liquefied natural gas (LNG) carrier, the HILLI, sailing into Keppel Shipyard for the commencement of conversion works.
Liquefied natural gas (LNG) carrier, the HILLI, sailing into Keppel Shipyard for the commencement of conversion works.PHOTO: KEPPEL CORP
Image of the Golar Floating Liquefaction (GoFLNG) facility when the conversion is completed.
Image of the Golar Floating Liquefaction (GoFLNG) facility when the conversion is completed.PHOTO: KEPPEL CORP

SINGAPORE - Keppel Shipyard Ltd, a wholly-owned unit of Keppel Offshore & Marine Ltd, has signed a contract worth approximately US$684 million (S$884 million) with Golar Gandria N.V., a subsidiary of Golar LNG Ltd, to perform the conversion of a Moss type liquefied natural gas (LNG) carrier, the Gandria, into a Golar Floating Liquefaction (GoFLNG) facility.

The contract will become effective upon the parties fulfilling certain conditions by September 21, 2015, parent Keppel Corporation announced on Wednesday.

Keppel said the conversion deal marks the exercise of the second of two options, which were part of a contract awarded by Golar to Keppel Shipyard for the conversion of the Moss LNG carrier, HILLI, into a GoFLNG facility. The first option was exercised in December 2014 for the conversion of the Gimi, also a Moss type LNG carrier.

Mr Michael Chia, managing director (marine & technology), Keppel O&M, said, "GoFLNG facilities are set to reduce the cost and time required to monetise and deliver offshore gas to market. Now a year underway, the Hilli conversion project is progressing to plan."

"This third GoFLNG contract re-validates our delivery timeframes and price levels, further demonstrating the technical and commercial competitiveness, and lower implementation risks inherent in our solution."

He added that Keppel Shipyard has set up a new design and technology arm, Gas Technology Development (GTD), to focus further on solutions for LNG markets.

The work scope for Keppel Shipyard in converting the Gandria is similar to that for the two earlier contracts. Keppel Shipyard will provide the design, detailed engineering and procurement of the marine systems and all of the conversion-related construction services. Keppel Shipyard will once again engage Black & Veatch to provide design, procurement and commissioning support services for the topsides, as well as the liquefaction process.

Full construction activities for the Gandria is expected to begin in 2016, with the converted vessel expected to be delivered in approximately 31 months from then.

The contract is not expected to have any material impact on the net tangible assets and earnings per share of Keppel Corp for the current financial year.