Sembawang Shipyard, a wholly-owned subsidiary of Sembcorp Marine, and Kakinada Seaports Limited (Kakinada Seaports), will sign an agreement to form a joint venture (JV) company,

Sembmarine Kakinada Ltd (SKL), to establish and operate a marine and
offshore facility catering to offshore drilling units and merchant
vessels trading or operating in Indian waters.

SKL is strategically
located in the East Coast of India between Vishakhapatnam and Chennai
Port. The East Coast of India is one of the world’s key oil and gas
exploration areas. The investment in this facility is a strategic fit
and is in line with Sembcorp Marine’s Indian hub strategy to cater to
the growing needs of customers operating in India. Well supported by
the Indian government and the oil and gas industry, SKL will boost the
business of Sembcorp Marine and further promote the Kakinada Port area.

Sembcorp
Marine through Sembawang Shipyard will hold 19.9% share of the JV’s
initial investment of US$50 million, with an option to increase to 40%.
The joint venture partner, Kakinada Seaports is the first private port
to operate in the East Coast of India and it is currently one of
India’s busiest ports. Kakinada Seaports serves more than 3,500
ship-calls annually and plays an important role in the efficient
turnaround of vessels requiring replenishment, bunkering and ancillary
services.

Stages of Development

SKL will operate this new marine
and offshore facility within the vicinity of Kakinada Seaports. SKL is
to be developed in stages. SKL will initially provide riser/equipment
repairs, afloat repairs and modules fabrication. Within 3 to 5 years,
SKL will become a one-stop integrated offshore service facility
catering to offshore vessels and merchant ships including the repairs
and servicing of offshore vessels and ships, new-building of offshore
vessels and ships, riser/equipment repairs and modules fabrication.

Sembmarine Kakinada will commence operations immediately by using the available pier at the Kakinada port.

Signing of Joint Venture Contract

The
joint venture contract will be signed by Mr. K.V. Rao, Chairman &
Managing Director of Kakinada Seaports and Mr. Ong Poh Kwee, Deputy
President of Sembcorp Marine and Managing Director of Sembawang
Shipyard, in a ceremony in New Delhi. The event which will also mark
the achievement of another milestone in the long-standing excellent
cooperation between Singapore and India, will be attended by more than
250 guests from all over the world, governmental dignitaries from India
and Singapore, and key representatives from major oil and offshore
companies such as ONGC, Oil India, Reliance, Aban Offshore, Transocean,
BG India, Essar, Cairn Energy, Jindal, etc.

Signing of Favoured Customer Contracts

Major
offshore companies operating in the East Coast of India are expected to
use the facilities of the newly established SKL to support their
growing offshore oil and gas activities in India’s East Coast. At
today’s ceremony held in New Delhi, Transocean Offshore International
Ventures Limited, India, subsidiary of Transocean Inc. USA, will sign a
“Favoured Customer Contract” with the newly established SKL to use its
facilities to support its ongoing offshore drilling units. At the same
ceremony, SKL will also sign a similar contract with Aban Offshore
Limited, Asia’s largest private drilling company to repair/upgrade its
drilling units and, with MARCAS, which includes V-Ships, the world’s
largest ship-management company, to repair its fleet of vessels trading
to India.

Barring unforeseen circumstances, Sembcorp Marine expects
positive contributions to its earnings from the Joint-Venture facility
in the future. However, the above investment is not expected to have a
material impact on Sembcorp Marine’s earnings and net tangible assets
per share for the current financial year ending 31 December 2009. The
investment will be funded from Sembcorp Marine’s own internal resources.

Sembawang
Shipyard, a wholly-owned shipyard of Sembcorp Marine Ltd, has one of
the largest integrated ship repair and conversion facilities in
Southeast Asia. With more than three decades of experience and proven
track record in ship repair and offshore conversions, the shipyard’s
world-class reputation is based on the company’s commitment to superior
customer service, innovative solutions, quality, and strict Health,
Safety, Security and Environment standards.

Besides the traditional
sectors of tankers and bulkers, Sembawang Shipyard is a recognised
specialist in the niche markets of FPSO/FSO conversions, offshore
vessels conversions and new buildings, complex lengthening conversions,
passenger ship conversions/refurbishment, chemical tankers, liquefied
gas carriers, offshore rigs and navy ship repairs.

Kakinada Seaports
Limited, a dynamic gateway port on East Coast of India, is
strategically situated between Visakhapatnam and Chennai Ports. With
naturally sheltered waters and tranquil bay conditions, the Kakinada
Deep Water Port is one of India’s busiest ports and plays an important
role in the efficient turnaround of vessels requiring replenishment,
bunkering and ancillary services.

Source: Sembcorp Marine

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