Malaysia's TH Heavy Engineering (THHE) has started work on the topside for its floating production, storage and offloading (FPSO) project for JX Nippon Oil & Gas Exploration, its first such contract.

The $900m contract, won in May last year, is for the provision of an FPSO to JX Nippon for the Layang field, offshore Sarawak.

The topside is being fabricated at THHE's yard in Pulau Indah, while conversion work on the hull is being done. Integration is expected to begin in Malaysia in the second quarter of 2016 with project completion due by the third quarter.

THHE ceo Nusral Danir said: “The FPSO, which is undergoing conversion works in Dubai, is expected to set sail to Malaysia and be ready for integration in the second quarter of next year."

The FPSO will then be leased to JX Nippon until November 2023, with an option to extend the lease for an annual one-year lease up to October 2033.

“The contract is a long-term contract that will bring in a steady stream of revenue for THHE by the third quarter of 2016,” said Nusral.