19 Mar 2010

Keppel in joint venture to build and operate new shipyard in Azerbaijan

President of Azerbaijan, HE Ilham Aliyev breaks ground for the new yard in the presence of Singapore’s Minister for Foreign Affairs, Mr George Yeo.

Fortifying its presence in the Caspian Region, Keppel Offshore & Marine Limited (Keppel O&M) joins hands with State Oil Company of Azerbaijan Republic (SOCAR) and Azerbaijan Investment Company (AIC) to develop and manage a new 52-ha shipbuilding and shiprepair facility in Baku, Azerbaijan.

The new SOCAR-Keppel Shipyard will be developed over a period of two to three years with an investment of US$386 million. The joint venture agreement will be signed with Keppel O&M taking a 10% share of the yard, and SOCAR and AIC the other 65% and 25% respectively.

Keppel O&M will be responsible for the management and operation of the yard, and will have the option to acquire another 10% stake in the next three years.

The new yard is designed to undertake construction of a variety of vessels ranging from offshore support vessels to tankers, as well as ship repair and conversion.

Speaking at the yard’s groundbreaking ceremony today, Singapore’s Minister for Foreign Affairs, Mr George Yeo, said, “A new chapter has opened in our bilateral relationship. There is great potential for the strengthening of economic and other ties.

“The oil and gas sector is an obvious area of greater cooperation. Although Singapore has no oil or gas, we have a strong chemicals and maritime support cluster, with many Singapore-based companies supporting the operation of large oil and gas companies. The development of this new SOCAR-Keppel shipyard supports the Oil Strategy promulgated by President Heydar Aliyev.”

Minister Yeo is the first Singaporean Minister to visit Azerbaijan since both countries established diplomatic relations 16 years ago.

Mr Rovnag Abdullayev, President of SOCAR, said, “We are deeply honoured to have the President of Azerbaijan HE Ilham Aliyev officiate the groundbreaking of our new shipyard, and Singapore’s Minister of Foreign Affairs Mr George Yeo witness this significant event.

“SOCAR and Keppel came together 13 years ago to form the Caspian Shipyard Company in Baku. Together, we delivered many landmark projects in the Caspian Sea, and brought Azerbaijan’s oil and gas sector to new heights.

“The new SOCAR-Keppel Shipyard is envisaged to be on par with the best shipbuilding facilities in the world. I am confident that with Keppel’s proven expertise and operational track record, we will continue to create new benchmarks for the oil and gas industry.”

Strategically located along the East-West energy corridor of the Caspian Sea region, the new yard will be critical in helping to meet the growing needs of the local oil industry. It will contribute towards the unlocking of Azerbaijan’s vast offshore hydrocarbon potential as part of the republic’s oil strategy, and support the renewal of SOCAR’s vessel fleet.

Mr Tong Chong Heong, CEO of Keppel O&M, said, “We are pleased to strengthen our win-win partnership with SOCAR through the development of the new SOCAR-Keppel Shipyard.

“This latest venture reinforces Keppel O&M’s Near Market, Near Customer strategy, and will place us in pole position to capture opportunities from the growth of the Caspian region. We are confident of replicating our success in developing and operating a first-class shipyard to service the unique requirements of this market.”

Spanning a 1,630-metre waterfront, the yard, when completed, will be able to undertake 80 to 100 repairs and conversions per annum and is estimated to achieve an average annual steel throughput of 25,000 tons when operating at full capacity.

“Through this new yard, we will be sharing our technology, know-how, and world-class operational standards in a sustainable way.

“In addition to provide local content to support the industry’s growth, we will also continue to support Azerbaijan through the offering of employment, training and skills development and apprenticeship schemes. When fully operational, our new yard will create employment opportunities for some 2,000 people,” Mr Tong added.

The above joint venture is not expected to have material impact on the net tangible assets or earnings per share of Keppel Corporation Limited for the current financial year.

About Keppel O&M

Keppel O&M, a wholly owned subsidiary of Keppel Corporation Limited, is a leader in offshore rig design, construction and repair, ship repair and conversion and specialised shipbuilding. Keppel Offshore & Marine’s near market, near customer strategy is bolstered by a global network of 20 yards and offices 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 for solutions for the offshore and marine industry.

Keppel O&M operates the Caspian Shipyard Company (CSC) in Azerbaijan, the first international rig construction, repair and conversion yard in the Caspian Sea region servicing the offshore oil and gas industry. The yard has completed many world class projects including jackup rigs, semisubmersibles, pipelay vessels, barges, and pipe rack structures.

About SOCAR

SOCAR is involved with the exploration of oil & gas and gas condensate in both onshore and offshore areas of the country. This includes production, processing and transportation to local and foreign markets. It also implements large-scale scientific research and engineering activities. SOCAR has the capacity to meet Azerbaijan’s domestic needs for oil and oil commodities, as well as export demand. It has the relevant production capacity, well-developed service sectors, substantial scientific and technical expertise. There are 21 structural units operating under SOCAR. 36 joint ventures and 4 alliances were established with its participation in the oil and gas industry, covering all areas.

SOCAR today represents the state of Azerbaijan, in onshore and offshore projects, in 14 countries around the world, working with 24 companies on 14 PSAs (Production Sharing Agreements). Growing its global reputation, SOCAR has established enterprises overseas with representative offices, through which it participates in large-scale projects and gains access to international markets. Currently, SOCAR has representative offices in Kazakhstan, Turkey, Georgia, Romania, Switzerland, Austria, Ukraine, Iran, Germany, UK and others.

To deliver its products to global energy markets without intermediaries, and to set up advantageous sales of these commodities, SOCAR has established SOCAR TRADING in Switzerland, and SOCAR TRADING SINGAPORE. SOCAR is also the owner of the marine oil terminal, KULEVI in Georgia and the Black Sea. SOCAR has established SOCAR PETROLEUM for the distribution of oil products and SOCAR GAS SUPPLY LIMITED for gas delivery. SOCAR is also implementing large investment programmes in Turkey. The largest petrochemical enterprise of Turkey PETKIN HOLDINGS is under the management of SOCAR TURCAS.

About AIC

Azerbaijan Investment Company OJSC (AIC) is a state-owned joint-stock company established by the Edict of the President of Azerbaijan in 2006. The purpose of the Company's investment activity is to ensure long term investment by acquiring shares in the charter capital of joint-stock companies and other commercial enterprises operating in the non-oil sector of the national economy. As a result of the activities of the investment company, new and advanced investment mechanisms, which are in line with modern investment principles, have been implemented.

From November 2009, AIC started to receive and review the applications of entrepreneurs for the financing of investment projects in line with priority areas. These projects include the creation of small and medium agricultural products processing and production enterprises, various packaging productions, and the creation of alternative energy sources (wind, solar, hydro & bio).

AIC acts as a shareholder in the funding process of the presented investment projects, and as a rule, it owns a share in the statutory capital of these enterprises.

For further information, please contact

Ivana Chua (Ms)
Manager
Keppel Group Corporate Communications
Tel: (65) 6413 6436
Email: ivana.chua@kepcorp.com

Attachments:

The new US$386 million SOCAR-Keppel Shipyard will be managed and operated by Keppel Offshore & Marine.

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President of SOCAR, Mr Rovnag Abdullayev (second from left) introduces the capabilities of the new SOCAR-Keppel Shipyard to Azerbaijani President, HE Ilham Aliyev (extreme left); Chairman of Keppel Corporation, Dr Lee Boon Yang (third from left); Singapore’s Minister for Foreign Affairs, Mr George Yeo; and Azerbaijan’s Minister of Economic Development, Mr Shahin Mustafayev (extreme right).

Azerbaijani President, HE Ilham Aliyev (extreme left) and Singapore’s Minister for Foreign Affairs, Mr George Yeo jointly activated the groundbreaking of the new SOCAR-Keppel Shipyard setting strong foundations for growing relations between Azerbaijan and Singapore.