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SLIMMED-DOWN KEPPEL TO EXIT OIL RIG BUSINESS

SLIMMED-DOWN KEPPEL TO EXIT OIL RIG BUSINESS

Monday, February 1, 2021 

Keppel Corporation of Singapore is to carry out a comprehensive transformation of its wholly-owned subsidiary, Keppel Offshore & Marine (Keppel O&M), with the goal of creating a slimmer, and more competitive Keppel O&M that is well-placed to support the energy transition.

Under the plans, Keppel O&M will exit the offshore rig building business, after completing the existing rigs under construction, and will not undertake any new project requiring large upfront expenditure or without milestone payments. It will also exit the shiprepair business and related activities, to focus on higher value-adding work.

Loh Chin Hua, CEO of Keppel Corporation and Chairman of Keppel O&M said: “The share of renewables and new energy solutions in the global energy mix has been growing rapidly, driven by environmental concerns as well as technological advancements and the declining cost of renewables. Natural gas, as a transitional fuel, is also projected to overtake oil as the world’s largest energy source in the years to come. To seize opportunities in this fast-changing environment, we are making bold and decisive moves to transform Keppel O&M to ensure that it remains relevant and competitive, and fully aligned to Keppel’s Vision 2030. We are also exploring inorganic options for the O&M business, but there is no assurance that any transaction will materialise. In the meantime, we believe that our organic restructuring of Keppel O&M will not only enhance its competitiveness, but also its attractiveness, if we were to undertake any inorganic action.”

Keppel O&M’s business will be restructured into three parts. A Rig Company and a Development Company, which will be transient entities created to complete all current rig business and uncompleted rig assets, and when the oil market recovers, they will sell off owned rig assets and oil-related activities. An Operating Co, comprising the rest of Keppel O&M, will be transformed into a developer and integrator of offshore energy and infrastructure assets, concentrating on renewables and gas.

Loh Chin Hua added: “A key goal of the restructuring is to create a more competitive, asset-light and people-light Keppel O&M, focused on seizing opportunities with higher value capture as a developer and integrator of offshore energy and infrastructure assets. At the same time, the Rig Co and Dev Co will ring-fence Keppel O&M’s non-core rig assets, contain any further capital outflow beyond the initial funding, and work towards resolving this legacy issue. Through these changes, we aim to create a nimble industry leader that is well-positioned for the global energy transition and can be a strong contributor to Keppel’s target ROE of 15% as we progress towards Vision 2030.”

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