Keppel in joint venture to build and operate new shipyard in Azerbaijan

President of Azerbaijan, HE Ilham Aliyev breaks ground for the new yard in

the presence of Singapore’s Minister of Foreign Affairs, Mr George Yeo.

19 March 2010, Baku, Azerbaijan

Region, Keppel Offshore & Marine Limited (Keppel O&M) joins hands with

State Oil Company of Azerbaijan Republic (SOCAR) and Azerbaijan

Investment Company (AIC) to develop and manage a new 52-ha shipbuilding

and shiprepair facility in Baku, Azerbaijan.

The new SOCAR-Keppel Shipyard will be developed over a period of two to

three years with an investment of US$386 million. The joint venture

agreement will be signed with Keppel O&M taking a 10% share of the yard,

and SOCAR and AIC the other 65% and 25% respectively.

Keppel O&M will be responsible for the management and operation of the

yard, and will have the option to acquire another 10% stake in the next three

years.

The new yard is designed to undertake construction of a variety of vessels

ranging from offshore support vessels to tankers, as well as ship repair and

conversion.

Speaking at the yard’s groundbreaking ceremony today, Singapore’s Minister

of Foreign Affairs, Mr George Yeo, said, “A new chapter has opened in our

bilateral relationship. There is great potential for the strengthening of

economic and other ties.

“The oil and gas sector is an obvious area of greater cooperation. Although

Singapore has no oil or gas, we have a strong chemicals and maritime

support cluster, with many Singapore-based companies supporting the

operation of large oil and gas companies. The development of this new

SOCAR-Keppel shipyard supports the Oil Strategy promulgated by President

Heydar Aliyev.”

Minister Yeo is the first Singaporean Minister to visit Azerbaijan since both

countries established diplomatic relations 16 years ago.

Mr Rovnag Abdullayev, President of SOCAR, said, “We are deeply honoured

to have the President of Azerbaijan HE Ilham Aliyev officiate the– Fortifying its presence in the Caspian

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groundbreaking of our new shipyard, and Singapore’s Minister of Foreign

Affairs Mr George Yeo witness this significant event.

“SOCAR and Keppel came together 13 years ago to form the Caspian

Shipyard Company in Baku. Together, we delivered many landmark projects

in the Caspian Sea, and brought Azerbaijan’s oil and gas sector to new

heights.

“The new SOCAR-Keppel Shipyard is envisaged to be on par with the best

shipbuilding facilities in the world. I am confident that with Keppel’s proven

expertise and operational track record, we will continue to create new

benchmarks for the oil and gas industry.”

Strategically located along the East-West energy corridor of the Caspian Sea

region, the new yard will be critical in helping to meet the growing needs of

the local oil industry. It will contribute towards the unlocking of Azerbaijan’s

vast offshore hydrocarbon potential as part of the republic’s oil strategy, and

support the renewal of SOCAR’s vessel fleet.

Mr Tong Chong Heong, CEO of Keppel O&M, said, “We are pleased to

strengthen our win-win partnership with SOCAR through the development of

the new SOCAR-Keppel Shipyard.

“This latest venture reinforces Keppel O&M’s Near Market, Near Customer

strategy, and will place us in pole position to capture opportunities from the

growth of the Caspian region. We are confident of replicating our success in

developing and operating a first-class shipyard to service the unique

requirements of this market.”

Spanning a 1,630-metre waterfront, the yard, when completed, will be able to

undertake 80 to 100 repairs and conversions per annum and is estimated to

achieve an average annual steel throughput of 25,000 tons when operating at

full capacity.

“Through this new yard, we will be sharing our technology, know-how, and

world-class operational standards in a sustainable way.

“In addition to provide local content to support the industry’s growth, we will

also continue to support Azerbaijan through the offering of employment,

training and skills development and apprenticeship schemes. When fully

operational, our new yard will create employment opportunities for some

2,000 people,” Mr Tong added.

The above joint venture is not expected to have material impact on the net

tangible assets or earnings per share of Keppel Corporation Limited for the

current financial year.

– End –

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About Keppel O&M

Keppel O&M, a wholly owned subsidiary of Keppel Corporation Limited, is a

leader in offshore rig design, construction and repair, ship repair and

conversion and specialised shipbuilding. Keppel Offshore & Marine’s near

market, near customer strategy is bolstered by a global network of 20 yards

and offices in the Asia Pacific, Gulf of Mexico, Brazil, the Caspian Sea, Middle

East and the North Sea regions. Integrating the experience and expertise of

its yards worldwide, the group aims to be the provider of choice and partner

for solutions for the offshore and marine industry.

Keppel O&M operates the Caspian Shipyard Company (CSC) in Azerbaijan,

the first international rig construction, repair and conversion yard in the

Caspian Sea region servicing the offshore oil and gas industry. The yard has

completed many world class projects including jackup rigs, semisubmersibles,

pipelay vessels, barges, and pipe rack structures.

About SOCAR

SOCAR is involved with the exploration of oil & gas and gas condensate in

both onshore and offshore areas of the country. This includes production,

processing and transportation to local and foreign markets. It also implements

large-scale scientific research and engineering activities. SOCAR has the

capacity to meet Azerbaijan’s domestic needs for oil and oil commodities, as

well as export demand. It has the relevant production capacity, welldeveloped

service sectors, substantial scientific and technical expertise.

There are 21 structural units operating under SOCAR. 36 joint ventures and 4

alliances were established with its participation in the oil and gas industry,

covering all areas.

SOCAR today represents the state of Azerbaijan, in onshore and offshore

projects, in 14 countries around the world, working with 24 companies on 14

PSAs (Production Sharing Agreements). Growing its global reputation,

SOCAR has established enterprises overseas with representative offices,

through which it participates in large-scale projects and gains access to

international markets. Currently, SOCAR has representative offices in

Kazakhstan, Turkey, Georgia, Romania, Switzerland, Austria, Ukraine, Iran,

Germany, UK and others.

To deliver its products to global energy markets without intermediaries, and to

set up advantageous sales of these commodities, SOCAR has established

SOCAR TRADING in Switzerland, and SOCAR TRADING SINGAPORE.

SOCAR is also the owner of the marine oil terminal, KULEVI in Georgia and

the Black Sea. SOCAR has established SOCAR PETROLEUM for the

distribution of oil products and SOCAR GAS SUPPLY LIMITED for gas

delivery. SOCAR is also implementing large investment programmes in

Turkey. The largest petrochemical enterprise of Turkey PETKIN HOLDINGS

is under the management of SOCAR TURCAS.

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About AIC

Azerbaijan Investment Company OJSC (AIC) is a state-owned joint-stock

company established by the Edict of the President of Azerbaijan in 2006. The

purpose of the Company's investment activity is to ensure long term

investment by acquiring shares in the charter capital of joint-stock companies

and other commercial enterprises operating in the non-oil sector of the

national economy. As a result of the activities of the investment company,

new and advanced investment mechanisms, which are in line with modern

investment principles, have been implemented.

From November 2009, AIC started to receive and review the applications of

entrepreneurs for the financing of investment projects in line with priority

areas. These projects include the creation of small and medium agricultural

products processing and production enterprises, various packaging

productions, and the creation of alternative energy sources (wind, solar, hydro

& bio).

AIC acts as a shareholder in the funding process of the presented investment

projects, and as a rule, it owns a share in the statutory capital of these

enterprises.