Sembcorp Marine Rigs & Floaters, a wholly-owned subsidiary of Sembcorp Marine, has signed an agreement with Varg L.L.C., a wholly-owned subsidiary of Teekay Offshore Partners L.P., for engineering, procurement and construction works related to the modification, repair and life extension of the Petrojarl Varg FPSO.
Scheduled for completion in July 2020, the work scope includes detailed engineering, fabrication, installation and integration of the topside process skid; overhauling of existing internal turret and power generation; and repair and life extension of the vessel’s hull, tanks and various systems onboard. Once finalised, the contract is estimated to be worth US$166 million.
The Petrojarl Varg FPSO will be operated by Alpha Petroleum Resources Limited for deployment at the Cheviot field development and the Peel satellite accumulation, both of which are located within the UK Continental Shelf Blocks 2/10B, 2/15A and 3/11B in the North Sea.
The effectiveness of the agreement remains subject to Alpha Petroleum Resources satisfying certain conditions precedent, including (i) Alpha Petroleum Resources finalising their debt facilities with a consortium of lenders and (ii) the approval by relevant authorities of Alpha Petroleum Resources’ final field development plan for the Cheviot Field.
Sembcorp Marine expects a positive contribution to its earnings from the contract. However, the contract is not expected to have any material impact on the net tangible assets and earnings per share of the Group for the year ending December 31, 2018.