Singapore’s shipyards are well-positioned to capitalise on retrofit demand and the pickup in the offshore oil and gas industry
The global oil and gas market’s revival is evident when looking at Keppel’s orderbook over the past year or so – as is the impact of preparations for IMO’s 2020 sulphur cap coming into force on 1 January 2020.
Financial results released in January 2019 showed contracts secured by the offshore and marine division in FY2018 totalled S$1.7Bn (US$1.2Bn), of which more than S$600M (US$443M) was made up of LNG and scrubber projects. The net orderbook at the end of 2018 stood at S$4.3Bn (US$3.2Bn), compared to S$3.9Bn (US$2.9Bn) at end-2017.
Commenting on the results, Keppel’s chief executive Loh Chin Hua said “2018 was a transformational year for Keppel, as we continued to reinvent and position ourselves for long-term growth.”
Focusing on the company’s offshore and marine arm, he added “Notwithstanding the recent volatility in oil prices, there is growing optimism in the [offshore and marine] sector, with more projects sanctioned at oil prices of between US$55 and US$65 a barrel.
“With the gradually declining rig supply overhang, as well as increased tendering activity, there are signs of improvements in the offshore rig sector, though we do not envisage a V-shaped recovery.”
The company is positioning itself to take advantage of growing demand for solutions such as floating storage, production and offloading vessels (FPSOs) in the oil market and floating storage and regasification units (FSRUs) in the gas market.
Mr Loh said "We see opportunities in FPSOs, especially conversions, with several projects approaching final investment decisions (FID) in 2019 and 2020.
“Global demand for gas, led by Asia, continues to grow, with a few FSRU projects also targeting FID later this year.”
He also noted that Keppel’s shiprepair business has seen a pick-up in workflow, boosted by exhaust gas scrubber retrofits, with 65 contracts secured in 2018. Keppel installed the first scrubber retrofit in Singapore on a very large crude carrier in July 2018, with a turnaround time of less than 30 days. The company undertakes 3D scanning and detailed engineering as well as fitting the scrubber and supporting systems in a prefabricated module, allowing for a quick turnaround when the vessel comes in for the retrofit.
The company announced on 26 December, confirmation of several contracts with a combined value of around S$300M (US$221M), including designing and constructing an ice-class LNG bunker vessel, refurbishing an FPSO and the previously mentioned scrubber installations.
The bunker vessel contract is with Shturman Koshelev LLC, and is scheduled for completion in Q4 2020. Built to Keppel’s proprietary MTD 5800V LNG design, the vessel will have an Ice Class Arc 4 notation and a cargo capacity of 5,800 m3. Upon delivery the vessel will be chartered to Gazpromneft Marine Bunker Ltd for operations in the Baltic Sea.
The project combines Keppel’s skills in the areas of both LNG and ice-class vessels. Keppel has so far delivered 11 ice-class vessels and is currently constructing several LNG-fuelled vessels.
The FPSO contract is with an undisclosed vessel operator and is set to commence in Q1 2019, with delivery due by the end of 2020.
Keppel will be responsible for designing the aft hull, equipment procurement, fabrication, outfitting, integration and commissioning work on the vessel. A new accommodation block will be installed with capacity for up to 140 personnel.