SINGAPORE (Sept 11): Most offshore and marine (O&M) industry observers expect shipyard orders to start surfacing in 2H17, says UOB Kay Hian.
However, due to highly aggressive pricing from China and Korea, Singapore shipyards are not likely to secure much for these orders.
Year to date, Keppel Corporation and Sembcorp Marine have reported orders of $800 million and $75 million respectively.
With UOB Kay Hian’s assumption for contract wins of up to $1 billion and $1.5 billion respectively, Keppel seems to be the only one on track to meet expectations.
Shell has short-listed China’s Offshore Oil Engineering Company (COOEC) and Korea’s Samsung Heavy Industries to fabricate yards for its multi-billion Vito semi-submersible platform project.
However, sources close to the project says Keppel and Sembcorp are still in the running for the job and while there is no certainty yet, they are less favoured at this stage.
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Despite that, Keppel Offshore and Marine has signed a Heads of Agreement (HOA) with Pavilion Energy and Indonesia’s state-owned Perusahaan Listrik Negara (PLN) to explore opportunities in small-scale LNG development in West Indonesia.
The group also announced last Wednesday that Baku Shipyard, a joint venture between Keppel O&M, State Oil Company of Azerbaijian Republic (SOCAR) and Azerbaijan Investment Company (AIC), has completed the vessel – Kahnkendi – which will be deployed to the Shah Deniz field to perform subsea installation and construction work over the next 11 years.
On the other hand, the odds are looking slim for SembMarine to hit the high contract win rate priced in by the market.
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With Seadrill’s restructuring cutoff date on Sept 12, the market is expected to remain cautious given any potential knock-on effect Seadrill’s Chapter 11 proceedings may have on SembMarine, which is exposed through its contract with North Atlantic Drilling order for the West Rigel semisub.
Apart from being forced out from the Shell project, Chinese shipyard CIMC Raffles seems to be also edging out SembMarine as well as China’s COSCO Shipping Heavy Industry for a major contract from Brazil’s Petrobras to build up to three hulls for FPSO vessels to be deployed in the Santos basin.
On the sector outlook, Iran’s crude output over the past year has averaged about 3.6mbpd, around 10% below early-2018 target and below the level set for it by OPEC under a quota agreed last year.
According to Upstream, field upgrades and new fields are scheduled to increase Iran’s capacity to 4.7mbpd by 2021, as Iran’s oil ministry has targeted to raise production capacity to at least 4mbpd by early 2018.
Shares in Keppel and Sembcorp are trading at $6.27 and $2.95 respectively as at 3.22pm.
