SembMarine inks contract with Teekay Offshore for FPSO repair job

U.S. five dollar currency notes bills; taken September 2018.U.S. five dollar currency notes bills; taken September 2018.

Sembcorp Marine said on Monday that it obtained an around US$166 million contract from Teekay Offshore Partners’ wholly owned subsidiary, Varg LLC, to work on the Petrojarl Vargo FPSO.

Under the contract, which is conditional, SembMarine will perform engineering, procurement and construction works to repair, modify and extend the life of the FPSO, or floating production storage and offloading, unit, it said in a filing to SGX before the market open on Monday.

FPSO vessels, which can remain in one location for as long as 20 years, are used in the oil and gas industry near offshore fields to store oil until it can be transferred for transport.

The contract is expected to be completed in July 2020, SembMarine said.

Alpha Petroleum Resources will operate the FPSO at the Cheviot field development and the Peel satellite accumulation, which are located in the North Sea, within U.K. continental shelf blocks 2/10B, 2/15A and 3/11B, the filing said.

The contract is conditional on Alpha Petroleum Resources conditions including finalizing its debt facilities with a consortium of lenders and authorities’ approval of the final field development plan for the Cheviot field, it said.

While SembMarine expects a positive earnings contribution overall, the contract isn’t expected to have a material impact on the net tangible assets and earnings per share for the current financial year ending 31 December, it said.

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