Rig-builder Keppel Offshore & Marine has secured a US$800 million (S$1 billion) contract to build a semisubmersible drilling rig for Caspian Drilling Company, a subsidiary of the State Oil Company of Azerbaijan Republic (Socar).

Azerbaijan Republic is west of the Caspian Sea and north of Iran.

The deal includes owner furnished equipment and was inked via Keppel Offshore & Marine's subsidiaries Caspian Rigbuilders BV and Caspian Shipyard Company.

The rig is scheduled for delivery in the fourth quarter of 2016, and will be built to one of Keppel Fels' proprietary DSS 38M design which has been customised for the Caspian Sea's harsh environment condition.

The semisubmersible drilling rig has a drilling depth of about 40,000 ft and can operate in water to a depth of 1,000 metres.

Chief executive of Keppel Offshore & Marine Tong Chong Heong said: "Having operated in Azerbaijan since 1997 and developed a strong partnership with Socar, we understand the requirements for rigs to operate in the Caspian environment.

"This is an important market with great potential whcih is why we have added another yard, Baku Shipyard, to our capabilities here."

He added that the DSS 38M design is a cost-effective rig equipped with the latest safety and environmental features to operate efficiently in the Caspian Sea.

President of Socar Rovnag Abdullayev said: "We are keen to expand our offshore drilling programme to drill wells such as the Babak and Absheron fields in addition to the Shah Deniz field.

"We have ordered the first of our new next-generation rigs from Keppel...and are confident that the Keppel-designed rig is a robust and efficient rig that will increase our offshore drilling capabilities."

In its announcement on the Singapore Exchange, Keppel also said that the Caspian Sea holds a tremendous amount of untapped oil and gas reserves and Azerbaijan is the largest offshore producer in the region of both those commodities.

Keppel's shares closed up two cents at $10.57.