A subsidiary of Houston-based J. Ray McDermott, S.A. (“J. Ray”), whose parent company is McDermott International, Inc. (NYSE: MDR), has entered into a joint venture with a subsidiary of state-owned China Shipbuilding Industry Corporation (“CSIC”).

The joint venture company called Qingdao McDermott Wuchuan Offshore Engineering Company Ltd. (“McDermott Wuchuan”) plans to establish a new 111-acre fabrication facility in HaiXiWan, Qingdao, Shandong, China. 

This facility is anticipated to be strategically located adjacent to two new CSIC shipyards: Qingdao Wuchuan Heavy Industry Co. Ltd. (J. Ray’s joint venture partner) and Qingdao Beihai Shipbuilding Heavy Industry Co. Ltd.  In this developing area, CSIC has one floating dock and five dry docks capable of accommodating vessels up to 500,000 deadweight tons. McDermott Wuchuan anticipates focusing its business on Floating, Production, Storage, Off-Loading (FPSO) construction and integration.

“FPSOs represent one of the fastest growing offshore construction segments in our industry today,” said Bob Deason, J. Ray’s President and Chief Executive Officer. “China already commands a significant share of the FPSO market and has developed a proven project track record. Establishing this new joint venture focusing on FPSOs will add a critical component to J. Ray’s comprehensive business strategy – seafloor to shore.”

McDermott Wuchuan is planned to complement each partner’s respective strengths. J. Ray’s integrated Engineering, Procurement, Construction and Installation (“EPCI”) capabilities and more than 60 years of international market experience, will bring to the partnership consistency of methods, standards and procedures, and continuity of mature accredited project management systems, with a superior safety culture.

Combined with CSIC‘s solid reputation as a leading shipbuilder, its extensive market penetration, ability to obtain hulls and access to a large, skilled workforce, McDermott Wuchuan offers solid, competitive, integrated engineering and construction solutions to the FPSO market worldwide.

“The primary focus of McDermott Wuchuan will be on FPSO projects, from concept to commissioning,” said Asan Sofian, General Manager, McDermott Wuchuan. “Our initial pursuit will be FPSO topside-module fabrication, and as we develop the infrastructure at the yard we will be able to carry out topsides to hull integration and commissioning at the quayside. Our secondary focus will be on constructing integrated decks, jackets, Spar hulls, and modules for the onshore and offshore energy industry.”

McDermott Wuchuan’s new facility is initially expected to permit annual throughput of approximately 33,000 tons, expending approximately six million man-hours per year. The facility will include structural and pipe shops, blasting and painting facilities, module assembly buildings, covered warehousing, and lay down areas.

J. Ray McDermott, S.A., a subsidiary of McDermott International, Inc. (NYSE:MDR), and its subsidiaries provide engineering, construction, procurement, installation and project management services to offshore oil and gas developments worldwide.

McDermott is an engineering and construction company, with specialty manufacturing and service capabilities, focused on energy infrastructure. McDermott’s customers are predominantly utilities and other power generators, major and national oil companies, and the United States Government. With its global operations, McDermott operates in over 20 countries with more than 20,000 employees, and can be found on the internet at www.mcdermott.com.

In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, McDermott International, Inc., cautions that statements in this press release which are forward-looking and which provide other than historical information, involve risks and uncertainties that may impact actual results.  The forward-looking statements in this press release include statements regarding the formation, focus and expected throughput of McDermott Wuchuan’s operations.  Although McDermott's management believes that the expectations reflected in those forward-looking statements are reasonable, McDermott can give no assurance that those expectations will prove to have been correct.  Those statements are made by using various underlying assumptions and are subject to numerous uncertainties and risks, including, but not limited to, adverse changes in the FPSO or other markets in which McDermott Wuchuan expects to operate, management’s inability to commence operations, and execute plans and objectives for the expected operations.  If one or more of these risks materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those expected.  For a more complete discussion of these and other risk factors, please see McDermott's annual report on Form 10-K for the year ended December 31, 2007.