Will Chinese yards steal Keppel’s ship conversion deals?


Keppel Corporation faces stiff competition from Chinese shipyards when it comes to winning FLNG conversion contracts, according to a report by OCBC.

“China plans to pour almost US$7b into FLNG projects in Africa, aiming to become the lowest cost seller of the complex floating plants. It has lent or committed almost US$4b to three FLNG schemes off the African coast,” the report stated.

Despite this threat, Keppel has an edge because of its to go beyond the role of a traditional yard by bringing in key strategic players. Keppel also allows financial investors to participate in the vessel design early on, which is a big plus factor.

“Keppel has a headstart in this complex solution versus its competitors, and is able to go beyond the role of a traditional yard,” OCBC said.

Keppel Corporation (KEP) recently entered into a US$735m contract in 2014 with Golar LNG to convert an existing Moss LNG carrier into the FLNG, and this is the first in a series of FLNG vessels.

Compared to newbuilds, converted FLNGs are significantly more cost-effective and faster to market, without compromising safety and processing capabilities.

Source: Singapore Business Review

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