Sponsored By

Keppel stops work on $4.9bn Sete Brasil rig orders, takes $160m provisionKeppel stops work on $4.9bn Sete Brasil rig orders, takes $160m provision

Keppel Corp has taken an SGD230m ($159.9m) provision on its $4.9bn rig orders from Sete Brasil and stopped all work on the six semi-submersible rig newbuildings for the rig contractor.

Marcus Hand, Editor

January 21, 2016

2 Min Read
Kalyakan - stock.adobe.com

Keppel has received no progress payments on the six semi-submersible newbuildings since November 2014, and numerous reports this year have pointed to Sete Brasil, its biggest customer, declaring bankruptcy after an extended period of failing to agree a financial restructuring.

Speaking at the company’s annual result briefing, Keppel Corp ceo Loh Chin Hua said: “As we await further clarity on the situation, we have stopped construction of Sete's projects by the end of 2015. We have also made a provision of about SGD230m for these projects in 4Q 2015, after assessing our construction progress, payment status and amounts due to our vendors amongst other areas.”

Loh said that work on the first four units had progressed by less than 4% each quarter since the start of 2015, and “minimal work” had been done on the last two.

In July last year Keppel said the first three of the SSTM 38E designed semi-submersibles drilling rigs was 90%, 63% and 36% completed, respectively. The first two rigs are in Keppel’s Brazilian yard Keppel BrasFELS.

According to Loh the company had received $1.3bn from Sete Brasil before payments stopped in November 2014

In an hour and half long briefing Keppel senior executives were faced with a barrage of questions over the provisions and what would happen if Sete Brasil declared bankruptcy.

On questions over the amount of the provision Loh said they had taken into possible account all possible scenarios and “we believe the amount is adequate”.

Faced with repeated questions as to what Keppel would do if Sete Brasil does declare bankruptcy the Loh was coy. “We have come-up with our plans, but these plans are to be kept to ourselves for now,” he said.

Keppel is not alone in its woes with Sete Brasil and compatriot shipyard group Sembcorp Marine has a $4.8bn seven drillship newbuild order which is facing similar difficulties.

Read more about:

Keppel

About the Author

Marcus Hand

Editor

Marcus Hand is the editor of Seatrade Maritime News and a dedicated maritime journalist with over two decades of experience covering the shipping industry in Asia.

Marcus is also an experienced industry commentator and has chaired many conferences and round tables. Before joining Seatrade at the beginning of 2010, Marcus worked for the shipping industry journal Lloyd's List for a decade and before that the Singapore Business Times covering shipping and aviation.

In November 2022, Marcus was announced as a member of the Board of Advisors to the Singapore Journal of Maritime Talent and Technology (SJMTT) to help bring together thought leadership around the key areas of talent and technology.

Marcus is the founder of the Seatrade Maritime Podcast that delivers commentary, opinions and conversations on shipping's most important topics.

Conferences & Webinars

Marcus Hand regularly moderates at international maritime events. Below you’ll find a list of selected past conferences and webinars.

Get the latest maritime news, analysis and more delivered to your inbox
Join 12,000+ members of the maritime community

You May Also Like