SINGAPORE - Catalist-listed offshore and marine specialist Kim Heng beefed up its order book with a new floating production storage and offloading (FPSO) deal potentially worth tens of millions of dollars.

This comes after marine services contractor Dyna-Mac signed a memorandum of understanding (MOU) appointing Kim Heng as its preferred partner to carry out various FPSO fabrication projects at the latter’s two shipyards in Tuas, which have a combined waterfront of 205m.

The FPSO module fabrication sector refers to a specialised segment within the oil and gas industry that focuses on the construction, assembly and integration of modules intended for use on FPSO vessels. FPSOs are offshore facilities that combine the functions of production, storage and offloading of oil and gas.

Under the terms of the preferred partnership arrangement, mainboard-listed Dyna-Mac can secure the use of Kim Heng’s yard facilities at agreed tariff rates for the entire term of the MOU. The MOU, signed this week, runs for two years and will automatically be renewed at the end of each term.

No numbers were released, but The Straits Times understands that the deal flows could amount to over $20 million a year.

Kim Heng executive chairman and chief executive Thomas Tan said the deal paves the way for his company to engage in more substantial, intricate and high-value projects, marking a significant step forward in Kim Heng’s pursuit of sustainable long-term revenue growth in the industry.

“We are excited about our strategic collaboration with Dyna-Mac, which has a net order book of $542.7 million, as this enables us to tap not only Dyna-Mac’s wealth of expertise, but also its extensive client network in the FPSO module fabrication sector,” he said.

With more than five decades of operations, Kim Heng has developed a wide range of capabilities in the offshore renewable, marine, as well as oil and gas industries, specialising in engineering, procurement, construction and installation support for these sectors.

The partnership is also a win-win deal for Dyna-Mac, which is facing capacity constraints after securing huge fabrication orders over the last 12 months. It offers the company greater flexibility to address the spikes in FPSO vessel module fabrication demand, and enables it to further entrench its presence in the business by growing its production capacity.

Dyna-Mac executive chairman and chief executive Lim Ah Cheng said the partnership was a mutually advantageous tie-up between Dyna-Mac and Kim Heng, aligning the vision of both companies.

“We continue to be on the lookout for relevant opportunities to collaborate with suitable, like-minded partners to expand our business operations, leveraging their expertise and resources to achieve sustainable long-term growth for the Dyna-Mac Group,” he added.