SHIPPING & MARINE | Staff Reporter, Singapore

Sembmarine could build US$1.36b Energean vessel

Energean awarded an FPSO contract to Technip which reportedly partnered with Sembmarine.

Sembcorp Marine has the potential to bag its first major contract for the year, DBS Equity Research said.

According to a report, Mediterranean firm Energean Oil & Gas (Energean) has handed out a contract worth US$1.36b for the floating production, storage and offloading (FPSO) unit for its proposed Karish gas field development off Israel to TechnipFMC. The news came on the back of Energean’s press release in relation to its US$1.275b bank facility agreement to finance the Karish project

DBS analyst Pei Hwa Ho noted that TechnipFMC is expected to release further information on the contract soon, which would include details on the partnering shipyard. “Sembmarine was said to be in pole position to secure contract to build the vessel according to Upstream in January 2018. If the deal materialises, this will be SMM’s first major contract for this year and confidence booster on order win momentum. TechnipFMC performed front-end engineering and design studies (FEED) on the deep-water gas project last year.”

Under the contract, TechnipFMC is expected to take on the development risk, as well as overseeing the appointed shipyard’s work on the FPSO. The unit is set to be 227 metres long and 50 metres wide. Along with the two gas trains, there will be one oil train of 14,000 barrels per day and a water train of 4000 barrels per day.

The last few years have been rough for Sembmarine and the industry, but in 2018, Singapore's rig builders are poised to bag more deals for rig production thanks to higher oil prices and reduced project costs. According to a report, higher oil prices are a "harbringer" for contract flows, which is a company's leading indicator of earnings growth. Oil prices are currently sustaining above US$60/bbl.

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