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Keppel targets LNG as offshore & marine business just breaks even in Q2

With Keppel Corp’s shipyard group Keppel Offshore & Marine (Keppel O&M) just breaking even it is targeting the LNG sector including co-investment in small-scale projects.

Hard hit by the downturn in the offshore market, in particular rigbuilding, Keppel O&M reported a second quarter net profit of SGD1m ($730,497), down from SGD61m in the same period a year earlier.

In response to the downturn Keppel O&M has already undertaken major lay-offs and has now re-organised its business into two divisions - newbuilds, covering offshore as well as gas and specialised vessels, and a conversions & repairs division with a greater ability to draw on resources and experience from across the yard group.

A focus of its new structure is the LNG sector where Keppel Shipyard is set to soon deliver the world’s first FLNG conversion the Golar Hilli to Golar LNG.

“For example, by combining Keppel FELS’ expertise from complex offshore projects with Keppel Shipyard’s capabilities in executing LNG-related EPC (engineering, procurement, construction) projects, Keppel O&M would be even better able to provide customers with reliable end-to-end solutions,” Loh Chin Hua, ceo of parent Keppel Corp said at its half year results briefing on Thursday.

“We have already benefitted from such collaboration recently, with Keppel FELS and Keppel Shipyard working together on the commissioning phase of the Golar Hilli FLNG vessel.”

Keppel is looking not just at FLNG, but across the LNG supply chain having been the first yard to carry out at FSRU conversion and is building small scale LNG carriers and LNG powered tugboats.

“Keppel’s value proposition extends beyond that of an EPC yard. We are pushing boundaries to meet growing demand for small-scale LNG in archipelagic markets across Southeast Asia, the Caribbean and the Mediterranean, in regions unserved by pipelines,” Loh explained.

It is looking at coming as an investor and co-owner in projects, much as it has with the Golar Hilli where it acquired a 10% stake.

“Our contribution in the gas value chain also extends to playing a role as a co-owner and co-developer. We can help source for funds to invest in these floating infrastructure assets which can generate long-term recurring income for Keppel and our co-investors,” Loh said.

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