Sembcorp Marine’s subsidiary Jurong Shipyard has started construction on the $550m Estaleiro Jurong Aracruz shipyard in Brazil, the group’s first overseas integrated shipyard.

The Estaleiro Jurong Aracruz shipyard is being built on a 82.5ha site with 1.6km of coastline in Aracruz, Espirito Santo, Brazil.

The project will be constructed over three years with full completion scheduled for the end of 2014.

Sembcorp Marine CEO Wong Weng Sun said: " The ground-breaking for the development of Estaleiro Jurong Aracruz will provide a clear signal to the Brazilian oil and gas market that Sembcorp Marine is completely committed to continue its services to them in their country."

"With our two decades of experience servicing the Brazilian oil and gas industries, Estaleiro Jurong Aracruz will substantially strengthen our ability to meet major clients’ needs, especially in developing the recently discovered giant pre-salt oil and gas reservoirs," Sun said.

The yard facilities will include a 120m x 380m drydock, a 1km berthing quay, as well as ancillary piping facilities and steel fabrication workshops.

Estaleiro Jurong Aracruz will be capable of building drillships, semi-submersible and jack-up rigs, platforms, supply vessels, topsides modules and integrating floating production, storage and offloading vessels.

The yard will also carry out traditional activities such as drilling rig repairs, ship repairs and modification works.

The investment for the yard, which is in line with Sembcorp Marine’s global hub strategy to strengthen and partner Brazil in its long-term sustainable growth, will be funded through a combination of debt and internal funds generated from operations of existing shipyards.

It will also cater to the oil and gas centres of the Atlantic, Gulf of Mexico and West African regions.

The investment is not expected to have any material impact on the net tangible assets and earnings per share of the company for the year ending 31 December 2011.

The company has already constructed 18 exploration, production and storage platforms for Brazilian oilfields, which currently contribute about half of the country’s daily output.

"The extensive experience of operating in Brazil will provide the market with strong confidence in Estaleiro Jurong Aracruz’s ability to continue our tradition in the construction of drilling rigs, FPSO integration, topside modules fabrication, and the repair and upgrading of ships and rigs," Sun added.