Petrofac says $700 million vessel vital for offshore growth

LONDON Thu Dec 5, 2013 12:32pm EST

LONDON Dec 5 (Reuters) - Oil engineering firm Petrofac sought to reassure investors on Thursday that its plans to spend more than a year's earnings diversifying into offshore pipe-laying services are worthwhile.

The British company is investing $700 million in a vessel for installing oil and gas infrastructure which it says it needs to tap growth in offshore projects.

However, some investors and analysts regard the offshore market as crowded and risky, with subsea specialists like Saipem , Aker and Subsea 7 hit by project delays and profit warnings this year.

Shares in Petrofac, which specialises in onshore projects, especially in the Middle East, are down 29 percent so far this year, due to investor concern about the move into offshore as well as a cautious company outlook for the next two years.

"If this capability was available to rent in the market, believe me we would do that ... This investment represents the minimum to access this high-end market," Chief Executive Ayman Asfari told analysts at a strategy day in London.

The new vessel, called the Petrofac 6,000, will be available by early 2017 and will help the company get work from national and international oil companies in places like West Africa and Mexico, he said.

Asfari said the vessel would not be rented out at a day-rate price, but would be used to enable the company to execute bigger and more challenging engineering, procurement and construction (EPC) offshore projects.

The vessel will have a 5,000 tonne crane on board for installing and decommissioning oil and gas infrastructure and will also be able to lay pipelines.

It is the main part of a $1 billion investment in Petrofac's offshore division over the next five years.

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