Keppel signs MOU with PEMEX
Keppel Offshore & Marine (Keppel O&M) has strengthened its foothold in the offshore and marine industry in Mexico with the signing of an MOU (Memorandum of Understanding) with PEMEX Exploracion y Produccion (PEP) and P.M.I. Norteamérica, S.A. de C.V. (PMI), both subsidiaries of Mexico's national oil company, Petroleos Mexicanos (PEMEX), the Company said in a press release.
The MOU is to jointly develop, own and operate a yard facility in Mexico, the first phase of which is to support the construction of six KFELS B class jackup drilling rigs for PEP.
The MOU was signed today by the General Director of PMI, Dr Jose Manuel Carrera Panizzo, and the Chief Operating Officer and CEO-Designate of Keppel O&M, Mr Chow Yew Yuen at the Ministry of Foreign Affairs in Singapore, and witnessed by Singapore's Minister for Foreign Affairs and Minister for Law, Mr K. Shanmugam and Mexico's Secretary for Foreign Affairs, Mr José Antonio Meade Kuribreña.
The MOU signifies a landmark partnership between PEMEX, the world's fifth-largest crude oil producer, and Keppel O&M, the global leader in the construction of offshore drilling rigs, ship repair and the conversion of Floating Production Storage and Offloading (FPSO) vessels.
In a congratulatory message, Mr Emilio Lozoya, CEO of PEMEX, said, "This MOU highlights PEMEX's commitment to increase oil and gas production in the long term by developing a sustainable offshore and marine industry in Mexico that can readily meet our needs. By partnering with the world's leading rig builder Keppel, we are confident that the shipyard will be a success and help to provide a wide array of solutions for the production of oil and gas. Mexico's proven reserves of oil and gas at the start of 2013 is almost 14 billion barrels of crude-oil equivalent and we believe that a significant number of shallow water and deepwater drilling rigs as well as FPSOs and FLNGs will be required to maximise production in the years to come."
Earlier this year, PEMEX unveiled investment plans of US$25.3 billion for 2013, of which US$20 billion will be targeted at upstream activities.
Mr Tong Chong Heong, CEO of Keppel O&M added, "We have been a strong supporter of PEMEX's oil and gas programme with some 19 projects delivered or on order for Mexico presently. This MOU reinforces Keppel O&M's Near Market, Near Customer strategy and places us in a strong position to capture opportunities from the continued growth of the Gulf of Mexico. Through our partnership with PEMEX, we will be able to tap each other's technological expertise and know-how to provide comprehensive world-class solutions for the Mexican market.
"The yard will not only provide local content to support the industry's growth in Mexico but also employment, training and skills development for the local workforce through Keppel O&M's training and development schemes."
PMI and Keppel O&M intend to establish a joint venture company (PMI-KOM JVC) to be the principal investment vehicle through which both parties would cooperate in various business opportunities that may be agreed upon. The first opportunity identified is the establishment of the yard to service the offshore oil & gas industry in Mexico.
To be located strategically in the modern Port of Altamira along the coast of the Gulf of Mexico, the proposed yard will help to further develop Mexico's offshore hydrocarbon potential, meeting both the growing needs of the local oil & gas industry and the international clientele operating in the Gulf.
Keppel O&M will leverage its proven expertise and operational track record in the management of the yard which will be able to service PEMEX's requirements in the offshore and marine construction and service sector, as well as independently pursue work from the private sector. To be developed in phases, the first phase will be to equip the yard to undertake certain portions of the work scope in the construction of six Keppel-designed KFELS B class jackup drilling rigs for PEP.
The total yard development cost will be around US$400 million, with the first phase estimated at about US$150 million.
Subsequent phases of the yard development would enable it to take in deep-draft semisubmersibles and drillships for repairs, undertake FPSO and Floating Liquefied Natural Gas (FLNG) vessel conversions, as well as fabricate topside modules and other offshore structures.
When all the phases are completed, the yard is expected to create up to 4,000 new direct jobs for the local community.
The abovementioned MOU 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.
