13 April 12 The Straits Times by Melissa Tan
KEPPEL Corp has signed a record-breaking US$4.12 billion (S$5.2 billion) deal to build five oil rigs in Brazil.
The world's biggest rig builder inked a letter of intent yesterday to construct five semi-submersible rigs for Sete Brasil.
They will be built in a Brazilian yard that Keppel set up in 2000.
Sete Brasil had already placed a separate US$809 million order for one Keppel rig last December.
A Keppel spokesman told Reuters: 'With six orders, the yard in Brazil will be busy, but we are looking at expanding (it).'
The deal comes as an increasing number of companies explore the waters off Brazil, which could become a major oil exporter.
The country's state-backed oil company, Petroleo Brasileiro (Petrobras), said last year that it plans to invest US$224.7 billion over the next four or five years to help tap a possible 50 billion barrels of oil under the Atlantic Ocean.
Keppel's recent contract wins include a US$205 million deal secured by its Keppel AmFels unit to build a jack-up rig for Mexican driller Perforadora Central.
Another subsidiary, Keppel Shipyard, said earlier this month that it has secured two floating production, storage and offloading projects from repeat customers SBM Offshore and Bumi Armada. These deals totalled $170 million.
Keppel's net order book stood at $9.4 billion at the end of last year, with deliveries extending to 2015.
Sete Brasil charters drilling rigs for pre-salt exploration and is owned by seven Brazilian investors, including Petrobras.
It said in February that it planned to spend US$27 billion by 2020 on drilling units.
Rig builders have seen heightened demand lately as oil companies ramp up exploration amid a backdrop of high oil prices.
Keppel's rival Sembcorp Marine, the world No. 2 rig builder, won a US$792.5 million drill-ship deal in February from Sete Brasil.
Maybank Kim Eng analyst Yeak Chee Keong told Reuters yesterday: 'The news should be positive for the share price tomorrow. We have been expecting this deal, but now it's confirmed and it's quite a big addition to the order book.'
Keppel chief executive Choo Chiau Beng said in January that demand for offshore units remained 'hot' this year, according to a Bloomberg report.
Keppel shares have risen 21 per cent this year. The counter rose by 2 per cent to close at $11.24 yesterday.