Sembcorp Marine, the world’s second-largest oil-rig builder, agreed to set up a venture with Kakinada Seaports to tap into growing demand for oil exploration in India.

 

Singapore-based Sembcorp Marine will, through its Sembawang Shipyard unit, own 19.9% of the venture and has an option to increase its stake to 40%, the company said today in an e-mailed statement.

 

Oil companies including Petroleo Brasileiro SA are exploring for fuel in deeper waters as reserves at existing fields are depleting. That could bring more orders to shipyards as demand for offshore equipment rises.

 

India has said it wants to explore for oil and gas in deep waters in the Krishna-Godavari river basin in the Bay of Bengal and off the shores of the Andaman and Nicobar islands to meet demand in the world’s second-fastest growing major economy. The country received offers for 36 of the 70 oil and gas areas, D.N. Narasimha Raju, a joint secretary in the oil ministry, said on Oct. 12.

 

The venture company, Sembmarine Kakinada, will have an initial investment of US$50 million ($69 million) and will be based on the east coast of India. It will initially provide equipment repairs and module fabrications, and will build offshore vessels at a later date, Sembcorp Marine said.

 

Sembmarine Kakinada has won a contract to provide support to offshore drilling units for a subsidiary of Transocean Inc. of the U.S., Sembcorp Marine said. The venture will also sign similar contracts with Aban Offshore of India and MARCAS, it added.

 

Sembcorp Marine earlier this month said it plans to build a new yard in Singapore in expectation that higher oil consumption will spur demand for new offshore units. The initial investment in the yard is expected to be about $750 million.