Defining Distinction
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REPORT TO STAKEHOLDERS 2010 Building Strengths Defi ning Distinction Perfecting Execution Advancing Innovation Empowering People Our vision is to be the provider of choice and partner for solutions in the global offshore and marine industry. Keppel Offshore & Marine is a global leader in offshore rig design, construction and repair, shiprepair and conversion, and specialised shipbuilding. We harness the synergy of 20 yards worldwide to be near our customers and their markets. Contents 1 Key Figures 2010 2 Chairman’s Statement 6 Key Messages 12 Group Financial Highlights 14 Group at a Glance 16 Board of Directors 20 Key Personnel 34 Operations Review & Outlook 52 Technology & Innovation 58 Sustainability Report Sustaining Growth 60 – Productivity & Innovation 62 – HSE Excellence 68 – Business Continuity Empowering Lives 70 – People Cultivation Nurturing Communities 78 – Community Development 86 Global Network 92 Corporate Structure Key Figures 2010 Major Deliveries Investments in Productivity 35 $142m The number of major projects The amount of investments delivered safely, on time and to improve facilities within budget worldwide. and productivity in our yards worldwide. Accident Frequency Rate Workforce Trained in Safety 0.29 8,322 The latest accident frequency The number of employees rate, down from 0.34 in 2009. and subcontractors who have been equipped at the Keppel Safety Training Centre as at end-December 2010. Training Hours Energy Savings 74.6 $8.9m The average number of hours Estimated annual savings each employee spent in from energy conservation training during the year. efforts and initiatives in our Singapore yards. Key Figures 2010 1 Chairman’s Statement Economic Value Added “Continuous investments to improve $947m work efficiencies over the years An increase of have enabled us to reap substantial 18% over 2009. productivity gains and sustain our solid operational track record.” DEAR STAKEHOLDERS, Against this backdrop, the Keppel 2010 showed tentative signs of Offshore & Marine (Keppel O&M) group improvement. While the recovery in the improved on its performance, securing US was chequered and Europe was still new contracts totalling $3.2 billion mired with fi scal problems, the Asian during the year. These included the economy was robust. P-61 Tension Leg Wellhead Platform project from Petrobras and Chevron, The offshore and marine industry and a series of jackup construction received some reprieve towards the and Floating Production Storage last quarter of the year with returning Offl oading (FPSO) conversion jobs from confi dence, stabilising freight rates various customers. At year end, our net and ship values, and improving orderbook amounted to $4.6 billion oil prices that have crossed US$100 with deliveries stretching into 2013. per barrel at the time of this report. SUSTAINING OPERATIONAL Notably, the year in review was marked EXCELLENCE by the worst offshore oil spill in history. Continuous investments to improve The Macondo well’s blowout in late work effi ciencies over the years April, the extensive period of rescue have enabled us to reap substantial work and a resulting ban on deepwater productivity gains and sustain our solid drilling activities in the Gulf of Mexico by operational track record. In 2010, the the US Administration overshadowed Keppel O&M group recorded revenues the industry for most of 2010. of $5.6 billion and a net profi t of $1 billion, as well as raised Economic Despite this setback, the industry has Value Added by 18% to $947.1 million. proven to be remarkably resilient. With the lifting of the drilling moratorium in We further entrenched our reputation October and greater clarity of the safety as the offshore and marine industry’s and regulatory implications from choice solutions partner with safe, the incident, market sentiments improved timely and on-budget deliveries. following a rebound in upstream capital Our Offshore Division delivered a total spending towards year-end. of 12 newbuild rigs, comprising seven Keppel Offshore & Marine Ltd 2 Report to Stakeholders 2010 Chairman’s Statement 3 Chairman’s Statement jackups and fi ve semisubmersibles, Meanwhile, several other pioneering for platform supply and offshore as well as executed eight major rig concepts that we have been support vessels in Brazil. repair and upgrading jobs with constructing came into fruition. Rowan sterling results. Our Marine and Viking, the fi rst KFELS N Class rig, was Over in the Philippines, we increased Specialised Shipbuilding Divisions successfully delivered to Rowan our effective stake in Subic Shipyard converted and upgraded fi ve major Companies. The KFELS N Class is one and Engineering from 44% to 83.9%. FPSO and fl oating storage regasifi cation of two rig designs in the market that can This strategic move will enhance the units, and delivered a record tally of fulfi l the exacting operating requirements synergy between our yards in Batangas 18 quality vessels. of the Norwegian sector of the North and Subic, and enable us to better Sea, with the dual-capability of drilling serve both the marine and offshore In enabling the group to attain and production. Rowan Viking has been markets there. higher productivity levels, strategic mobilised for a 19-month assignment in investments of $142 million were made the UK with Total. 2010 also saw the much-anticipated during the year to improve its global opening of Nakilat-Keppel Offshore & yard facilities and boost capabilities. We also delivered the fi rst North Sea Marine Ltd (N-KOM), Qatar’s world class These investments will position us accommodation rig to be built in over 43-ha shipyard facility in Ras Laffan strongly to capture opportunities 20 years to Floatel International 43 days Industrial City. This event was marked in the upturn, as we continue to ahead of schedule, safely and within by the signing of service arrangements respond to market changes and budget. The DSSTM 20NS Floatel with eight major fl eet owners operating deliver on our promises. Superior is a new-generation in the region. accommodation semisubmersible PUSHING NORTH WITH evolved from our proven DSSTM As a whole, these signifi cant INNOVATION Series of deepwater rigs jointly developments will allow us to harness Keppel O&M continued to push the designed and owned with Marine the synergies of our global network envelope for robust and sustainable Structure Consultants. The unit has to better serve our customers, as we solutions to support a wide variety of since completed a three-month charter explore new opportunities in markets offshore applications and fi eld for ConocoPhillips in Australia, and is such as West Africa, Mexico and China. conditions. In particular, the being prepared for work in Norway North Sea-compliant concepts that with Talisman Energy Norge AS in the MAKING SAFETY OUR BUSINESS we have been developing over the last Yme fi eld and Statoil Petroleum AS Safety is a Keppel core value and few years are gaining traction quickly in the Oseberg fi eld. we will spare no effort to develop a in the harsh environment market. pervasive culture with zero tolerance EXPANDING GLOBAL REACH for incidents. In 2010, Keppel O&M’s During the year, Keppel FELS Several important moves were made accident frequency rate was reduced to commercialised its new wind turbine in 2010 to bolster Keppel O&M’s 0.29 reportable cases for every million installation vessel concept with the Near Market, Near Customer strategy. man-hours worked, compared to Seafox Group for offshore wind We entrenched our presence in the 0.34 in 2009. During the year however, farms in the North Sea. The KFELS Caspian Sea and Brazil with the setting we had two fatalities, which raised the Multi-Purpose Self-Elevating Platform up of two new shipyards, and increased accident severity rate to 105 man-days (MPSEP) rises above the limitations of our stake in a facility in the Philippines. lost per million man-hours worked, from existing vessels in terms of functional 83 in 2009. We are deeply saddened water depth, carrying capacity, To be developed over three years, our by the tragic loss of lives, and these operational window and safety features. new 52-ha joint venture shipyard with accidents have spurred in us an the State Oil Company of Azerbaijan even stronger resolve to eradicate all The KFELS MPSEP is a product of Republic (SOCAR) and Azerbaijan potential workplace incidents. our jackup technology and years of Investment Company will fortify experience in constructing rigs for Keppel’s shipbuilding and repair Making strides forward, we launched the North Sea. This innovative rig capabilities in Baku and the Caspian the Keppel WSH 2018 Initiative to concept can also be used to support Sea region. We are also in the process align the Group’s safety efforts accommodation, well intervention, of modernising a newly acquired 7.6-ha with national goals, and to steer maintenance, construction, shipbuilding yard in Navegantes, Santa our collective efforts in creating decommissioning and a wide range Catarina, to complement our BrasFELS an incident-free workplace. The of other offshore oil & gas activities. yard, and to serve construction needs Keppel Safety Training Centre was Keppel Offshore & Marine Ltd 4 Report to Stakeholders 2010 also opened to bring everyone in across production, engineering, on its promises well into the future. our workforce up to par on safety commercial and project management. We are constantly on the lookout for competencies and best practices. Many of them had also been seconded good opportunities to strategically overseas previously. acquire or co-invest with like-minded FORTIFYING OUR LEADERSHIP partners and customers to strengthen AND TALENTS In energising our workforce, we focus our core businesses and develop new As part of continual efforts by the on long-term skills training, mentorship, capabilities for the group. Keppel O&M Group to build up its career planning and job redesign.