Drydocks to Build Largest Jack-Up Rig for $730 Million

Drydocks World LLC, the Middle East’s biggest shipyard, agreed to build a $730 million “mega” oil rig for use in the North Sea as energy producers extend the search for reserves into harder-to-reach and more hostile areas.

Drydocks signed an accord with Drill One Capital to construct the Dubai Expo 2020 NS facility, which will be the world’s largest jack-up rig, Chairman Khamis Juma Buamim said today. The apparatus, to be delivered in 2017, will show “DDW’s capability to build world-first mega projects,” Drydocks said.

Oil and gas producers are looking for specialized equipment to tap more from dwindling North Sea resources, while moving into deeper and more remote exploration blocks to counter output declines. Statoil ASA, BP Plc and ConocoPhillips are among companies operating in the waters between Britain and Norway.

Drydocks expects to have at least $1.4 billion of projects by the end of the third quarter and is in “a lot of ongoing discussions,” Buamim said at a press briefing in Dubai, where the company is based. The shipyard also plans to expand in the renewable-energy industry as demand grows.

“The Middle East, Africa and also the European market is really becoming exceptional, especially in oil and renewables,” Buamim told reporters. “What we see is positive in Germany with regard to their future expansion in renewable energy, so we are in serious discussions over a lot of potentials.”

Germany, Europe’s biggest clean-power market, is raising investment in wind and solar to help lower emissions and counter a decline in power output as nuclear reactors are phased out.

Debt Program

Drydocks is pressing ahead with projects even as a debt-restructuring program continues. In 2012 a court in Dubai sanctioned the company’s $2.2 billion restructuring proposal. Drydocks remains compliant with the five-year plan, Buamim said.

The company, which previously held talks on partnerships in Turkey, is no longer pursuing tie-ups there, Buamim said, citing political and economic risks. Neighboring Iran has “a lot of potential,” according to the chairman, who said Drydocks would be that country’s first choice of supplier.

The company reported earnings before interest, taxes, depreciation and amortization of $110 million in 2013 and expects profit to increase this year. It earns $20 million to $30 million a month from its Dubai operations, Buamim said.

“We are going ahead with the future and we’re looking forward to magnificent potential projects,” he said. “There are a lot of new plans, they are on the drawing board.”

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