Strategic Positioning For The Future: Sembcorp Marine Unveils Plans For A Modern, Cost-effective And Integrated New Yard Facility

Singapore, Nov 04, 2009

Sembcorp Marine today unveils plans to develop a modern, cost-efficient and integrated New Yard Facility to position the Group for sustainable growth and expansion of its marine and offshore businesses.

To be situated at Tuas View Extension in the west of Singapore, the planned 206-hectare New Yard Facility will be strategically located along the major sea lanes in the Singapore Straits.

Rationale & Salient Features of the New Yard Facility

The New Yard will enable the Group to provide its customers with enhanced services, faster turnaround time and more cost-competitive solutions.

Featuring a revolutionary, work-effective and efficient concept and layout, it will provide a centralised and integrated “one-stop solutions” hub for ship repair & conversion, shipbuilding, rig building and offshore engineering & construction. The New Yard equipped with new technologies and optimised layout will be wellpositioned to face the challenges from shipyards in the region.

The custom built state of the art yard facility is designed to serve a wide range of vessels including VLCCs, new generations of mega containerships, LNG carriers and passenger ships. It will be geared to meet the requirements of vessels to comply with new regulatory and environmental standards.

Sembcorp Marine will benefit from resource optimisation and economies of scale through greater operational synergy, production efficiency and critical mass.

The salient features of the New Yard will include:

  • Optimised docking and berthing facilities, with an improved dock and quay ratio, to ensure effective utilisation and faster turnaround in repairs and upgrading of ships, rigs and floaters. Total dock capacity will increase by 62% from 1,897,500 dwt to 3,075,000 dwt with the number of docks remaining at 11 docks
  • Centralised and efficient layout to minimise logistical resource movement and redundancy through effective and efficient deployment of resources (including labour).
  • Integrated facilities and utilities together with state-of-the-art production technology to ensure lower production costs. They also increase the flexibility in the cross-deployment and multi-tasking of workers, leading to improved workforce productivity and quality of work.
  • Integrated capabilities to handle complex and sizable tasks efficiently through enhanced production systems and processes.

Market Outlook

Mr Wong Weng Sun, President and CEO of Sembcorp Marine said “We are optimistic about the long-term outlook of the marine and offshore industry. With the New Yard, Sembcorp Marine will be well-poised to respond to the anticipated growth in dock capacity demand and the increase in offshore oil and gas activities, spurred by the projected increase in seaborne and oil trades in Asia.”

“We are harnessing the Group’s 46 years of experience in managing and operating shipyards into the planning and development of this New Yard Facility. In designing and planning the layout of the New Yard Facility, we have taken into consideration work flow efficiency, resource optimisation, cost-structure, market potential and future competition. The integrated design and optimised capabilities of the New Yard will further enhance our capabilities in the delivery of value-added and cost competitive solutions to better meet the needs of our customers.”

"We congratulate Sembcorp Marine on this iconic project. This integrated New Yard Facility in Singapore is not only a key project for Sembcorp Marine but also a major milestone for Singapore. This leading-edge project, employing some of the industry's latest technology, will bring Singapore's marine and offshore industry to greater heights," said Mr Cedric Foo, JTC's Chairman.

"JTC is delighted to have played a role in realising this significant project. JTC is happy to be able to come up with innovative solutions for the New Yard Facility, and will continue to work closely with Sembcorp Marine and other industry players in providing a world-class infrastructure for the marine and offshore industry cluster," said Mr Manohar Khiatani, JTC's CEO.

"We warmly congratulate Sembcorp Marine on the development of Singapore's first purpose-designed integrated yard facility," said Mr Leo Yip, Chairman of the Singapore Economic Development Board (EDB). "Sembcorp Marine's new yard and the advanced concepts it embodies is a major step forward in the ongoing transformation of Singapore's marine and offshore industry. The state-of-the-art facility will sharpen our competitive edge and demonstrates how Singapore continues to stay at the forefront of the global marine and offshore industry through constant innovation and modernisation."

Phases of Construction

A 30 plus 30 years Lease Agreement for the Phase 1’s 73.3 hectares of land has been signed with JTC with site development scheduled to commence in December 2009.

The entire site is expected to be developed over a period of 16 years and in three phases. The construction of Phase 1, which comprises 73.3 hectares of land, will take approximately 4 years commencing December 2009. The remaining 2 phases is expected to be developed over a period of 12 years. Details will be announced separately at an appropriate time.

Upon achieving commercial operations for Phase 1, Sembcorp Marine’s operations in Pulau Samulun will be relocated to the New Yard.

Funding of Development & Financial Impact

The preliminary projection of the development costs of Phase 1 of the New Yard is estimated to be around S$750 million. It will be funded through a combination of debt and internal funds generated from operations of existing shipyards.

Sembcorp Marine Group has secured committed banking facilities amounting to S$700 million comprising S$300 million Term Loan and S$400 million Revolving Credit Facilities with various banks.

This is a long-term expansion project for the Sembcorp Marine Group, and barring unforeseen circumstances, the Company expects positive contributions to its earnings when the New Yard Facility (Phase 1) becomes operational.

For media and analysts’ enquiries, please contact:
Judy Han (Ms)
Senior Vice President
Investor Relations & Communications
Tel No: (65) 6262 7203
Fax No: (65) 6261 0738
Email: judy@sembcorpmarine.com.sg
Website: www.sembcorpmarine.com.sg

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