Keppel's $1.2B Contract with Ukraine's Naftogaz Cancelled

Singapore-based Keppel FELS Ltd.'s previously announced $1.2 billion-contract to build two semisubmersibles for Ukrainian state energy firm Naftogaz has been terminated due to certain conditions within contract's timeline not being met.

Keppel, a subsidiary of Keppel Offshore & Marine, announced in December of last year that it would construct two rigs for Naftogaz based on Keppel's proprietary DSS 38D design, which is customized for the harsh weather conditions of the Black Sea.

"Keppel will continue to seek opportunities where we can support Naftogaz in their E&P activities," said Keppel FELS in a statement.

Keppel and Naftogaz did not immediately respond to Rigzone's request for comments.

In September of last year, Naftogaz announced an open contest for the construction of two semisubs, and invited four Ukrainian and 11 international companies to bid on the project. Five additional international companies also expressed interest in bidding on the project, Naftogaz said in a statement last year.

Besides Keppel FELS, Rigas Kugu Buvetava of Latvia, Belize-based Magic Worldwide LTD, and Aida Holding Ltd. of Belize submitted tenders, Naftogaz reported in a Dec. 3 statement.

Geological studies have identified the Pallas area, located in water depths of 1,476 feet to 2,788 feet (450 meters to 850 meters), as a primary target for development with semisubmersibles, Naftogaz said in a statement.

The Pallas area is estimated to hold non-associated gas reserves of approximately 4.2 trillion cubic feet (120 billion cubic meters (Bcm)), liquefied gas reserves of 303.7 Tcf (8.6 Bcm) and oil and gas condensate of 70 million tons. Ukraine's portion of these reserves is 3 Tcf (86 Bcm), 289.5 (8.2 Bcm) and 45 million tons respectively.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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