SINGAPORE: Keppel Corp on Tuesday (Mar 8) agreed to let a customer delay payment for five jackup rigs, as low oil prices continue to hit exploration and production activities.
Keppel will also hold back delivery of the rigs, which were ordered at a cost of US$1.1 billion (S$1.5 billion) in 2013.
Confirming the delay in a statement, Keppel said it will now deliver the five rigs to Transocean starting from 2020, instead of from 2018. Transocean, which provides offshore contract drilling services to energy companies, will compensate Keppel for the delay.
Oil prices have fallen sharply in the past two years, prompting oil companies to delay or scrap projects. This has hit Singapore rigbuilders Keppel and Sembcorp Marine, which have seen their share prices plunge in the past year.
Keppel shares dropped 6.9 per cent on Tuesday, while Sembcorp Marine shed 6.7 per cent.
Said a Keppel Spokesperson: "We can confirm that we have reached a mutually acceptable agreement with Transocean to delay the delivery of their five rigs to 2020 and we will be compensated by Transocean accordingly."
This is the second delay for this order. Ordered in November 2013, the first rig had been scheduled for delivery during the first quarter of 2016, with the other four units thereafter at four-month intervals. However in February 2015, delivery was delayed to start from 2018 to 2020.
A jackup rig is a type of mobile platform with a buoyant hull and adjustable legs which can raise its hull up off the sea.