Keppel to manage shipyard in China
MAYUKO TANI, Nikkei staff writer
SINGAPORE -- Singapore's Keppel Offshore & Marine, the world's leading builder of offshore rigs, sealed a deal to manage one of China's largest shipyards. The deal, Keppel O&M's first pure management contract to run a shipyard without any equity investment, is part of the company's goal of enlarging its customer base in China with minimum capital investment.
The company, through its wholly owned subsidiary FELS Offshore, signed a management service agreement with Titan Petrochemicals Group, a logistics service provider for petrochemical products, and its subsidiary Titan Quanzhou Shipyard. Keppel O&M will convert their shipyard, located in Quanzhou, Fujian Province, and introduce the technology and know-how to repair and build rigs used for exploring and developing offshore oil and gas fields.
Titan Petrochemicals is in the middle of financial restructuring under its new shareholder Guandong Zhenrong Energy, a state-owned commodities trading company. The company's entry into the offshore rig building business is part of its restructuring strategy, as this type of vessel is in high demand despite an overall downturn in the ship-building sector.
Using its own proprietary designs, Keppel O&M will repair, convert and build rigs under Titan's brand and receive yard management fee as well as a commission for each project. The shipyard, occupying an area of 1.1 sq. km, will boast four ultralarge dry docks once completed. The contract period is 30 years and renewable after expiry.
"The offshore oil and gas market in China has been growing significantly, and there is increasing demand for high-specification rigs and production vessels," Chow Yew Yuen, CEO of Keppel O&M said. Operating in China for Chinese customers, who have strong preference for China-made products, is in line with the company's "near market, near customer" strategy, he added.
Keppel O&M is a wholly owned subsidiary of Singaporean government-linked conglomerate Keppel Corp. In China, it owns a shipyard in Nantong, Jiangsu Province.