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Mon 1 Jan 2007 10:00 AM

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Rig work arrives in UAE

Trio of orders adds up to US $84.5 million success for Lamprell as jack-up rig market gets hotter

UAE-based fabricator, Lamprell has secured US $84.5 million in new contracts for jack-up upgrades and floating production, storage and offloading modules from three customers.

According to a statement from the company, the contracts cover rehabilitation of the Nabors 660 jack-up rig (formerly the Ocean Warwick) damaged by Hurricane Katrina, the refurbishment of four Global Sante Fe jack-ups and, from new customer Akers FP, a contract for the fabrication of a Floating Production, Storage and Offloading (FPSO) vessel.

Lamprell said all three jobs will be completed in 2007 and will not be affected by the recent sinking of Dockwise vessel,
Mighty Servant III

.

“One of the Dockwise vessels, which was engaged by Global Sante Fe to move some of those assets to the Middle East region, was sunk off Angola,” said Stephen Smith, Lamprell’s marketing manager. “This heavy-lift vessel was scheduled to go back to the US to collect these jack-ups, and so a delay would be anticipated. However, we understand that Dockwise, in line with its contract with Global Sante Fe, have engaged another heavy-lift vessel to replace the one that sank, so there will be no significant delay to the mobilisation of those rigs to Lamprell in the coming year.”

The initial contract awarded by Nabors Drilling International (NDIL) is said to be worth US $43 million and an additional work scope, with an anticipated value of US $25 million, is under development.

The rig operated in the Gulf of Mexico, on Main Pass block 299, until it was severely damaged by the hurricane in 2005. During the storm the rig moved 66 miles northeast of its operational position, onto the shores of Dauphin Island, close to the Alabama coastline.

The rig was subsequently acquired by NDIL and arrived at Hamriyah on November 11 2006.

The US $36.4 million contract awarded to Lamprell by Global Santa Fe for the refurbishment of four jack-up drilling rigs are the
Main Pass One

and
Main Pass Four

and
High Island Two

and
High Island Four

. On completion, all four units will be deployed to Saudi Arabia on long-term charter for Saudi Aramco.

The final project is a US $5.1 million fabrication contract awarded by Aker Floating Production (Aker FP) to build the topside modules for the
Smart 1

FPSO vessel, which will be maintained and operated by Aker FP.

This is the first time Lamprell has been awarded FPSO work by Aker FP and will involve the fabrication of the main process module, two riser balconies and the knock out drum skid.

“The client has acquired four tankers and has secured four slots in the Far East for those tankers to be converted to FPSOs,” said Smith.

Work on the project will take place at Lamprell’s offshore construction facility located in the Jebel Ali Free Zone in Dubai, and may be extended to build the topsides for Aker FP’s
Smart 2

FPSO vessel. All components are due for completion in November 2007.

“These contracts are significant because we don’t have jack-ups available in the same way as the 1980s when the market collapsed,” said Smith. “The average age of the jack-up fleet today is 24 years. The reality is that all the oil companies are now in fast track. Oil price is high and oil companies need to produce to build a production cushion. Worldwide demand is now set at 120 million bpd.”

The reality is, at the upstream end, there are simply not enough jack-ups in the world to supply the current level of demand. That includes new-build jack-ups coming out of the Far East and the Middle East, and also the existing fleet.

“Saudi Aramco, one of the main drivers for the activity in this region, is trying to increase its oil production from 11.3 to 12.3 million barrels per day by the end of 2009. When you consider US $5 billion of its US $20 billion investment is set aside for onshore and offshore drilling, you get some perspective of this immense demand,” said Smith.

Lamprell has recently announced a US $50 million investment in a 325 000 square metre undeveloped plot in Hamriyah. The development will be able to accommodate up to 12 rigs on its keyside, as well as the facility to build new construction in addition to rehabilitation. This is due for completion in 2008.

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