Brazil : Keppel eyes $3bn in orders.

Byline: pinto03

Keppel Offshore and Marine, the world's largest offshore oil rig builder, is aiming to secure S$2 billion (US$3 billion) worth of new orders in 2010, as oil prices return to levels that it sees sustaining exploration projects.

Keppel's order book has more than halved in the past year but it is aiming to secure "a fair share" of contracts from Petrobras , as the Brazilian state-run oil company plans to order 28 oil rigs to be delivered between 2013 and 2018.

Tong Chong Heong, chief executive of Keppel Offshore and Marine, a unit of Keppel Corporation, told Reuters that the company is looking to expand through acquisitions of troubled assets in areas such as Brazil, Mexico and the Caspian.

"We are looking at opportunities where we can spend the cash such as meaningful acquisitions to add value to our business... We are in various stages of interests and negotiations," Tong said in an interview today.

"We set our eyes all over the world. Brazil is one, Mexico is another, Caspian is another," he added.

Tong said the company, which has a market cap of $9.2 billion and competes with Singapore's Sembcorp Marine, is in talks with various partners to expand its operation in Brazil should the company manage to secure contracts from Petrobras.

Keppel enjoyed a strong series of orders when oil prices rose to nearly $150 a barrel last year, but Tong said since the global financial crisis broke out, the company has not been able to secure a sizeable contract.

Its order book dropped from S$13 billion at the end of September 2008 to S$6 billion at the end of September this year.

But business conditions may be on the up as oil prices have climbed to near $80, which is leading FloaTEC, Keppel's joint venture subsidiary with Jay McDermott, to expect to sign a contract from Petrobras this year worth nearly $1 billion.

"As long as prices of oil remain within a band of above $70 I think most oil companies will continue with the projects and that is good news for all of us. We also don't like oil prices shooting to the sky and then falling."

Some analysts are still cautious on prospects for the company on doubts about the global economic recovery.

"I think it is possible but it all depends on the broader market conditions...They will need orders from other customers as well and so far we haven't seen that," said Rohan Suppiah, analyst at Kim Eng in Singapore.

"Banks are still quite tight with their credit," added Suppiah, who has a "hold" rating on Keppel Corporation.

Keppel reported a lower than expected 17.1% rise in its third quarter net profit.

Analysts polled by Thomson Reuters expect Keppel to post a net profit of S$1.4 billion this year but see profits falling to S$949.3 million in 2010.

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