Singapore’s oil and gas company KrisEnergy has entered into a cooperation agreement with subsidiaries of compatriot Keppel Corporation, Keppel FELS and Keppel Shipyard.
The agreement sets out a framework for the cooperation arrangement between KrisEnergy and Keppel, under which contracts for any work may be awarded to Keppel on normal or better overall commercial terms so long as this is in the best interests of the group, KrisEnergy said on Monday.
Explaining the rationale behind the agreement, KrisEnergy said it will benefit the company through access to Keppel’s experience, facilities and equipment at a competitive price. This will, in turn, give the company a competitive edge in specialized areas where Keppel is able to provide services.
Pursuant to the agreement, KrisEnergy will appoint Keppel Corporation and/or its affiliates as its preferred contractor for any work related to products and services related to newbuilding, repair, conversion and upgrading of a range of marine assets and/or vessels and the use of Keppel’s yard and associated yard services for the construction and refurbishment of facilities, including but not limited to mobile offshore production units (MOPU), mobile offshore drilling units (MODU), production barges, floating production and storage units (FPSO) and floating storage offloading (FSO).
In addition, KrisEnergy will appoint Keppel for the lease, chartering and the use of, or the provision of services by, Keppel’s marine assets and/or vessels, including but not limited to MOPU, MODU, FPSO, FSO, floating cranes, barges and tugs.
As the preferred contractor under the agreement, Keppel will be able to offer KrisEnergy a comprehensive suite of offshore oil and gas solutions as the oil company enhances its assets in Asia, Keppel said in a separate statement on Monday.
Terms of the agreement
The agreement is set to last for a period of 12 months, and will be automatically renewed after every 12 months.
For any work that is subject to a competitive bid, KrisEnergy will give Keppel the right to bid for such work, provided that Keppel has met all the applicable pre-qualification criteria.
For any work that is not subject to a competitive bid, the company will give Keppel the right to quote for such work, provided that Keppel has met all the applicable pre-qualification criteria, with all quotes to be on the basis of acceptance of the company’s usual terms and conditions for similar work or such other terms and conditions as may be mutually negotiated and agreed by the parties.
If a third-party bid/quote for any work is the best bid/quote, Keppel will have the right to perform such work at a discounted price equal to 99% of the price of such lower bid/quote (including on all line items of costs) and on the same or substantially the same conditions as the lower bid/quote. If Keppel does not exercise its right to match the third-party bid/quote, then the company will be free to utilize the third-party service provider for such work.
The bid/quote from Keppel will be assessed on the same basis as all others.
For any master turn-key arrangement that the company subjects to a competitive bid, the company will require the potential master contractors to give Keppel the right to bid/quote for the work or any part of the work, provided that Keppel has met all the potential master contractor’s relevant pre-qualification criteria.
KrisEnergy has scheduled an extraordinary general meeting to seek shareholders’ approval for the adoption of a general mandate for interested person transactions in respect of the cooperation agreement and each contract awarded pursuant to the agreement.