<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549
                          ___________________________

                                    FORM T-1

                            STATEMENT OF ELIGIBILITY
                   UNDER THE TRUST INDENTURE ACT OF 1939 OF A
                    CORPORATION DESIGNATED TO ACT AS TRUSTEE

         Check if an application to determine eligibility of a Trustee
                      pursuant to Section 305 (b)(2) ____

                            ________________________

                                 CITIBANK, N.A.
              (Exact name of trustee as specified in its charter)

                                             13-5266470
                                             (I.R.S. employer
                                             identification no.)

399 Park Avenue, New York, New York          10043
(Address of principal executive office)      (Zip Code)

                            _______________________

                             J. RAY MCDERMOTT, S.A.
              (Exact name of obligor as specified in its charter)

Republic of Panama                           72-1278896
(State or other jurisdiction of              (I.R.S. employer
incorporation or organization)               identification no.)

1450 Poydras Street
New Orleans, LA                              70112
(Address of principal executive offices)     (Zip Code)

                           _________________________

                          Subordinated Debt Securities
                      (Title of the indenture securities)

                                       1
<PAGE>
 
Item 1.  General Information.

     Furnish the following information as to the trustee:

     (a)  Name and address of each examining or supervising authority to which
          it is subject.

          Name                                   Address
          ----                                   -------
          Comptroller of the Currency            Washington, D.C.

          Federal Reserve Bank of New York       33 Liberty Street 
                                                 New York, NY 

          Federal Deposit Insurance Corporation  Washington, D.C.

     (b)  Whether it is authorized to exercise corporate trust powers.

          Yes.

Item 2.  Affiliations with Obligor.

         If the obligor is an affiliate of the trustee, describe each such
         affiliation.

            None.

Item 16. List of Exhibits.

         List below all exhibits filed as a part of this Statement of
         Eligibility.

         Exhibits identified in parentheses below, on file with the Commission,
         are incorporated herein by reference as exhibits hereto.

         Exhibit 1 - Copy of Articles of Association of the Trustee, as now in
         effect.  (Exhibit 1 to T-1 to Registration Statement No. 2-79983)

         Exhibit 2 - Copy of certificate of authority of the Trustee to commence
         business.  (Exhibit 2 to T-1 to Registration Statement No. 2-29577).

         Exhibit 3 - Copy of authorization of the Trustee to exercise corporate
         trust powers.  (Exhibit 3 to T-1 to Registration Statement No. 2-
         55519)

         Exhibit 4 - Copy of existing By-Laws of the Trustee.  (Exhibit 4 to
         T-1 to Registration Statement No. 33-34988)

         Exhibit 5 - Not applicable.

                                       2
<PAGE>
 
          Exhibit 6 - The consent of the Trustee required by Section 321(b) of
          the Trust Indenture Act of 1939. (Exhibit 6 to T-1 to Registration
          Statement No. 33-19227.)

          Exhibit 7 - Copy of the latest Report of Condition of Citibank, N.A.
          (as of December 31, 1995 - attached)

          Exhibit 8 -  Not applicable.

          Exhibit 9 -  Not applicable.

                               __________________


                                   SIGNATURE

     Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Citibank, N.A., a national banking association organized and existing
under the laws of the United States of America, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York and State of New York, on the 20th day
of March, 1996.



                                                CITIBANK, N.A.

                                                By   /s/Anja Dahlberg
                                                     -----------------
                                                     Anja Dahlberg
                                                     Senior Trust Officer

                                       3
<PAGE>
 
                               Charter No. 1461
                          Comptroller of the Currency
                             Northeastern District
                              REPORT OF CONDITION
                                 CONSOLIDATING
                             DOMESTIC AND FOREIGN
                                SUBSIDIARIES OF

                                Citibank, N.A.
of New York in the State of New York, at the close of business on December 31, 
1995, published in response to call made by Comptroller of the Currency, under 
Title 12, United State Code, Section 161, Charter Number 1461 Comptroller of the
Currency Northeastern District.

                                    ASSETS

<TABLE> 
<CAPTION> 
                                                             THOUSANDS
                                                            OF DOLLARS
<S>                                                         <C> 
Cash and balances due from depository institutions:     
  Noninterest-bearing balances and currency and coin...     $  7,451,000
  Interest-bearing balances............................        9,256,000
Held-to-maturity securities............................                0
Available-for-sale securities..........................       15,587,000
Federal funds sold and securities purchased under       
 agreements to resell in domestic offices of the        
 bank and of its Edge and Agreement subsidiaries, and   
 in IBFs:                                               
  Federal funds sold...................................        3,981,000
  Securities purchased under agreements to resell......          423,000
Loans and lease financing receivables:
 Loans and Leases, net of unearned income..$145,221,000
 LESS: Allowance for loan and lease
  losses...................................   4,403,000
                                           ------------
Loans and Leases, net of unearned income,
 allowance, and reserve................................      140,818,000
Trading assets.........................................       28,407,000
Premises and fixed assets (including capitalized        
 leases)...............................................        3,454,000
Other real estate owned................................          849,000
Investments in unconsolidated subsidiaries and          
 associated companies..................................        1,181,000
Customers' liability to this bank on acceptances        
 outstanding...........................................        1,542,000
Intangible assets......................................           14,000
Other assets...........................................        7,147,000
                                                            ------------
TOTAL ASSETS...........................................     $220,110,000
                                                            ============
                                  LIABILITIES           
Deposits:                                               
  In domestic offices..................................     $ 35,377,000
  Noninterest-bearing..................... $ 13,214,000 
  Interest-bearing........................   22,163,000 
                                           ------------ 
In foreign offices, Edge and Agreement subsidiaries,    
 and IBFs..............................................      121,599,000 
  Noninterest-bearing.....................    8,014,000 
  Interest-bearing........................  113,585,000 
                                           ------------ 
Federal funds purchased and securities sold under       
 agreements to repurchase in domestic offices of the    
 bank and of its Edge and Agreement subsidiaries, and   
 in IBFs:                                               
  Federal funds purchased..............................        1,852,000
  Securities sold under agreements to repurchase.......          556,000
Trading liabilities....................................       17,544,000
Other borrowed money:                                   
  With original maturity of one year or less...........        7,740,000
  With original maturity of more than one year.........        5,788,000
Mortgage indebtedness and obligations under capitalized 
 leases................................................           95,000
Bank's liability on acceptances executed and            
 outstanding...........................................        1,559,000
Subordinated notes and debentures......................        4,700,000
Other liabilities......................................        8,483,000
                                                            ------------
TOTAL LIABILITIES......................................     $205,293,000
                                                            ============
                                EQUITY CAPITAL          
Common stock...........................................     $    751,000
Surplus................................................        6,744,000
Undivided profits and capital reserves.................        7,816,000
Net unrealized holding gains (losses) on available-for- 
 sale securities.......................................           62,000
Cumulative foreign currency translation adjustments....         (556,000)
                                                            ------------
TOTAL EQUITY CAPITAL...................................     $ 14,817,000
                                                            ------------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK, AND    
 EQUITY CAPITAL........................................     $220,110,000
                                                            ============
</TABLE> 

I, Roger W. Trupin, Controller of the above-named bank do hereby declare that 
this Report of Condition is true and correct to the best of my knowledge and 
belief.  
                                                                 ROGER W. TRUPIN

We, the undersigned directors, attest to the correctness of this Report of 
Condition. We declare that it has been examined by us, and to the best of 
our knowledge and belief has been prepared in conformance with the instructions 
and is true and correct.
                                                                   PEI-YUAN CHIA
                                                               WILLIAM R. RHODES
                                                                 PAUL J. COLLINS
                                                                       DIRECTORS