Keppel to perform the world’s first-of-its-type FLNG vessel conversion for Golar
Following the announcement of 25 June 2014, Keppel Shipyard Ltd (Keppel Shipyard), a wholly-owned subsidiary of Keppel Offshore & Marine Ltd (Keppel O&M), wishes to announce that the contract which it has entered into with Golar Hilli Corporation (Golar), a subsidiary of Golar LNG Ltd, to perform the world's first-of-its-type conversion of an existing Moss LNG carrier, the Hilli, into a Floating Liquefaction Vessel (FLNGV), has become effective. The contract is worth approximately US$735 million, the company said in its press release.
In carrying out the FLNGV conversion, Keppel Shipyard shall be responsible for the provision of the design, detailed engineering and procurement of the marine systems and all of the conversion-related construction services. Keppel Shipyard's scope also includes engaging Black & Veatch to provide design, procurement and commissioning support services for the topsides and liquefaction process. Black & Veatch's PRICO® technology has been selected for the liquefaction process because of its long-established record in the marketplace.
This contract, which includes options for another two similar units, follows the completion of a year-long Front-End Engineering and Design (FEED) study by Keppel Shipyard and Black & Veatch. The FEED study was conducted as part of the terms of a term sheet agreement with Golar to convert up to three LNG carriers into FLNG vessels.
The conversion has been approved in principle by DNV in accordance with their classification rules and international standards. The FLNGV will take about 31 months to convert and is expected to be completed in the first quarter of 2017.
Mr. Michael Chia, Managing Director (Marine & Technology), Keppel O&M, said, "The FEED study for Golar has come into fruition with the award of the world's first FLNG conversion project to Keppel Shipyard. We are excited to collaborate with trend-setting partners such as Golar and Black & Veatch. Keppel Shipyard had successfully delivered to Golar the world's first Floating Storage and Regasification Unit (FSRU) back in 2008, which was followed by two more similar units.
"It is an honour to be entrusted once again by Golar with this definitive FLNG vessel, which reaffirms Keppel's leadership in complex offshore conversion projects. We see this project as another excellent opportunity to offer innovative solutions to help address the growing midstream needs in bringing small and mid-scale LNG to market to meet the rising global demand for energy. Mid-sized FLNG solutions such as this one offer a faster and more cost effective liquefaction solution."
According to the Douglas-Westwood World FLNG Market Forecast, the global FLNG industry is expected to attract more than US$65 billion of investments through to 2020, driven by rising costs of onshore LNG terminals. Asia-Pacific, in particular, is expected to draw a majority of investments in the FLNG sector with its sizeable line-up of regasification and liquefaction projects.
Detailed design and engineering activities will commence shortly, and the Hilli will be delivered to Keppel Shipyard within 2014 to initiate renewal of key marine systems onboard the vessel while the manufacturing of topsides commences.
The above contract is not expected to have any material impact on the net tangible assets and earnings per share of Keppel Corporation Limited for the current financial year.