Malaysia: Nam Cheong Sells Accommodation Work Barge to CNN Capital

Nam Cheong Limited, global Offshore Support Vessel (OSV) shipbuilder that focuses on the construction and engineering of complex, sophisticated and environmentally-friendly OSVs, announced that it has, through its wholly-owned subsidiary Nam Cheong International Ltd, sold a RM84 million (approximately S$34.3 million) 300 men Accommodation Work Barge (AWB) to CNN Capital Bhd, a new Malaysian customer. The vessel will be operated by CNN Capital Bhd’s sister company, Saujana Marine Sdn Bhd, a Malaysian marine support services group.

The contract further boosted Nam Cheong’s order wins in 2011 to 13 vessels at a total value of RM757 million (approximately S$309 million), which surpassed the order win of 10 vessels recorded in 2010 at a total value of RM505 million (approximately S$206 million). The latest vessel sale has also expanded Nam Cheong’s already strong customer base.

Saujana Marine provides integrated marine support services to oil and gas players such as Petronas Carigali Sdn Bhd, Talisman Malaysia Ltd and Kencana Petroleum Bhd. Saujana Marine is also looking to expand its fleet size over three years and to significantly increase its order book by aggressively bidding for overseas projects in Thailand, Vietnam, Indonesia and the Caspian Sea region.

“We are grateful that our position as Malaysia’s largest OSV shipbuilder allows us the opportunity to benefit from the country’s robust oil and gas industry. Despite the current market volatility and global economic uncertainty, we are still able to clinch new deals with new customers,” said Datuk Tiong Su Kouk, CEO and Executive Chairman of Nam Cheong.

The AWB is being built as part of the Group’s built-to-stock series in one of Nam Cheong’s subcontracted yards in China. The 100 meter-long vessel will have the capacity to accommodate 300 men and will be equipped with an 8-point mooring system and a 68-tonne crane. It is an ABS Class vessel.

The vessel, scheduled for delivery in the second quarter of 2012, will be deployed to serve the top side maintenance, hook up and commission an existing oil platform within the Malay basin in the shallow water region. The oil platform is one of many operated by Petronas, the country’s national oil company.

Nam Cheong has made a total of 10 vessel sales in the second half of 2011. In late September, it sold two Platform Supply Vessels (PSVs) to Bumi Armada and one AHTS vessel to Gulf Glory Marine. In mid-September, Nam Cheong formed a joint venture with three major oil and gas service providers in the region that resulted in the sale of a multi-purpose support vessel. In late August, the Group secured a contract for a 5,220bhp AHTS vessel and in late July, it nabbed contracts in an en-bloc sale for three 5,150bhp AHTS vessels.

“The last two quarters have seen Nam Cheong benefiting from high oil prices and continual investment by the oil majors in exploration and production (E&P) activities in the region, especially in shallow waters in Malaysia. Going forward we expect to continue to benefit from such developments,” said Mr. Leong Seng Keat, Nam Cheong’s Executive Director.

“Once again, our built-to-stock vessels, or ‘ready-built’ vessels, are meeting demands of the industry. We foresee that financing for new builds available to our customers will tighten in the next year even as oil majors continue to invest in projects, which will create ample opportunities for our built-to-stock vessels to fill the demand,” Mr. Leong added.

These contracts are expected to contribute positively to the earnings of the Group for the financial years ending 2011 and 2012.