Record-breaking sales at Malaysian OSV builder

The Singapore-listed offshore support construction specialist Nam Cheong ended the year 2012 on a high note securing contracts for two anchor-handling tug/supply (AHTS) vessels and a platform supply vessel (PSV) for a total of US$56.4 million.

The two 5,150 bhp anchor handlers were sold to Icon Offshore Berhad, one of Malaysia’s leading offshore support vessel companies, with a portfolio of approximately 30 vessels. The 5,000 dwt PSV was sold to a new customer, whose identity has not been revealed. Nam Cheong would only say that the buyer is a “major marine service provider to the offshore oil and gas industry in the Asia-Pacific region”.

The latest sales raised the total number of vessels sold by the yard in 2012 to a record 21. The vessels are due to be delivered in the course of the next six months. The total value of the vessels on Nam Cheong’s orderbook is RM1.4 billion (US$467 million).

“Our ability to capture demand and secure wins in a booming offshore and marine market, both domestically and globally, is a testament to our competitive strengths and unique business model,” said the company’s executive chairman and CEO, Datuk Tiong Su Kouk.

Nam Cheong’s business model is based on what executive director Leong Seng Keat described as “asset light”, preferring to outsource most of the yard’s functions. “This model has helped us to weather the last four decades, providing enough cover during bad times and the ability to outsource jobs to partners to help capture growing demand in good times,” Mr Leong told OSJ.

Outsourcing is done judiciously with what he called “more mass market products” being built in state-owned Chinese yards whilst the construction of sophisticated, customised vessels is undertaken in facilities in Malaysia or Singapore, Mr Leong explained.

He cited as an example a diesel-electric, multipurpose PSV – said to be a first of its kind built in Malaysia – which was built at Nam Cheong’s Miri yard in the eastern Malaysian state of Sarawak. The multipurpose PSV was commissioned in December by Bumi Armada, Malaysia’s offshore oilfield services company.

Armada Tuah 300, as the vessel was named, is also the largest built by Nam Cheong in Malaysia. It will be deployed on behalf of Sarawak Shell Berhad and Sabah Shell Petroleum Company in the deepwater Gumusut field, off the coast of Sabah in eastern Malaysia. The vessel will perform a variety of services such as transport of chemicals, safety and standby support, operating remotely operated vehicles, and subsea light intervention work, along with oil spill control and general supply functions. The vessel is equipped with a remotely operated vehicle mezzanine deck, and a crane, and has large deck areas (some 800m²).

Bumi Armada has been a longstanding customer for Nam Cheong, taking delivery of its first Malaysian-built dynamically positioned vessel five years ago.

“Bumi continues to push the envelope with us to build more advanced vessels,” the yard’s chairman observed during the launch of the NC800 design in December. The co-operation between the two Malaysian players has spanned more than seven years and has included 36 newbuild offshore supply vessels.

“Together we have built Malaysia’s first DP2 vessels, the first 9,000 bhp vessels, and now, the first Malaysian-built diesel-electric MPSV,” said Hassan Basma, executive director and CEO of Bumi Armada Berhad, which operates more than 40 OSVs and is the largest OSV owner-operator in Malaysia.

Bumi Armada has on order another three multipurpose PSVs (with an option for four more vessels), under the company’s ‘Steel on Water 2’ expansion programme. The fuel-efficient, diesel-electric multipurpose PSV was built because of the growing emphasis that vessel owners and charterers are placing on a vessel’s environmental footprint. “Having a green agenda is no longer ‘nice to have’, something to gloss annual reports,” said Mr Basma. “It has become a way of life for companies like ours.”

Yards in Southeast Asia such as Nam Cheong, who have ambitions to move up the value chain, have seized the opportunity to forge long-term relationships with leading players, and collaboration with companies such as Bumi Armada has benefited Nam Cheong beyond providing a stable orderbook. It has also helped the yard to build technological expertise and, in the process, open up new markets. “Our market previously was purely Malaysian. Today more than 50 per cent of our business is international,” Mr Leong told OSJ.

Nam Cheong also prefers to build most of its vessels for stock, or speculation, rather than on firm orders, and Mr Leong said he expects the strong uptrend in demand to continue as exploration and production activity increases.OSJ