Shipyards in Singapore benefited from the boom in the offshore industry, gaining many contracts for the construction or conversion of rigs, floating structures and offshore support vessels. The slump in the oil price has severely curtailed investment in the offshore oil and gas sector and that has had a knock on effect on yards involved in building, converting or repairing these vessels.
The two main shipyard groups in Singapore, Keppel Offshore & Marine (Keppel O&M) and Sembcorp Marine, still have a backlog of offshore related contracts, though there have been some cancellations and postponements. But having invested heavily in new facilities they are searching for other work to supplement the offshore contracts until that market recovers. They are also seeking greater productivity and efficiency to reduce costs. The smaller, more specialised shipyard operators in Singapore face similar challenges. They are all hoping to ride out this storm, but if it is prolonged more radical measures may be necessary, including possible consolidation – though there are no current plans for any mergers.
One option being rumoured to inject more funds into Sembcorp Marine is that its parent Sembcorp Industries, which owns 61 per cent, could sell Sembcorp Marine to rival Keppel, to consolidate the two rig builders, enabling the combined entity to compete more effectively with rivals in South Korea and China. Alternatively Sembcorp Industries could take full control of Sembcorp Marine. Currently, both Keppel and Sembcorp Industries have minority but substantial stakes held by Temasek Holdings.
Sembcorp Marine has been involved in cruise ship maintenance and repair work for many years. The current growth in the Asian cruise market is prompting cruise lines to base more ships in Asia and that, in turn, means an increased requirement for routine drydocking and other maintenance work as well as upgrade projects. Sembcorp is keen to gain more of this business, and in 2015 it completed several major contracts involving cruise ships.
A recent project involved upgrading two vessels for P&O Cruises (Australia), Pacific Eden (formerly Holland America Line’s Statendam) and Pacific Aria (formerly Holland America Line’s Ryndam). The completion of these projects brought to 12 the number of cruise ships repaired, upgraded and refurbished by Sembcorp Marine in 2015, its busiest year for cruise ship business to date.
Earlier in the year it carried out work on another P&O Cruises (Australia) vessel, Pacific Jewel, three cruise ships from another Carnival brand, Princess Cruises – Dawn Princess, Sapphire Princess and Sea Princess – and Carnival Cruise Line ship Carnival Spirit. Other projects in 2015 included four ships for Star Cruises and one for SkySea Cruises.
Wong Lee Lin, executive vice president and head of repairs and upgrades, said: “2015 has been a busy year for Sembcorp Marine in the area of cruise ship refits and upgrading. Our successful completion of these very challenging projects reinforces Sembcorp Marine’s reputation as a leader in the cruise refit market. This in turn boosts the status of Singapore as a major global cruise hub.”
Cruise ship projects are normally carried out at Sembcorp Marine’s Admiralty yard. In addition to cruise ships this facility specialises in liquefied natural gas (LNG) vessels, tanker conversions to floating production storage and offloading (FPSO) units, and offshore rigs as well as more routine repair and maintenance work.
Current projects at Sembawang Shipyard include converting the very large crude carrier Antarctica to FPSO Kaombo Sul for Saipem, the second of two such conversions that will be used for oil major Total’s Kaombo project offshore Angola.
Sembcorp has other ship construction and repair facilities in Singapore, which are mainly used by tankers and offshore vessels. It recently opened a new steel fabrication workshop at its Tuas Boulevard Yard, which is the largest of its kind in Southeast Asia. The 120,000m3 facility comprises five bays for pre-treatment, cutting and assembly and the workshop is ergonomically designed to facilitate a seamless workflow. It operates with a suite of computerised systems, mechanised steel cutting and welding equipment, high capacity cranes, and a streamlined process that not only optimises production efficiency, but also reduces man-hours and production time to half those of previous process requirements for every tonne of steel fabricated.
Features of the new facility include a fully automated panel production line that delivers high quality welding precision and efficiency, and capabilities for producing steel components of customised shapes and sizes.
Sembcorp Marine president and chief executive Wong Weng Sun said: “This new facility will integrate with all other capabilities in our flagship Tuas Boulevard Yard and allow us to more effectively offer customers a one stop shop for offshore and marine engineering solutions. It is also a key feature of our ongoing development to turn the Tuas Boulevard Yard into a high-tech production hub that underpins Sembcorp Marine’s ability to compete on value and scale.”
The first phase of the Tuas Boulevard Yard has four large drydocks of 350m to 410m in length and related quays and other facilities. The second phase includes the new steel fabrication facility, with marine works there due for completion in early 2017. This will include two more drydocks each of 255m long.
In July 2015 Sembcorp Marine re-organised its structure, integrating its various business units under the single brand Sembcorp Marine as part of its long-term growth strategy. It is focusing on four key capabilities: rigs, repairs and upgrades, offshore platforms and specialised shipbuilding.
Despite the downturn in the offshore sector Sembcorp Marine has been successful in securing some significant contracts. Sembcorp Marine division Sembcorp Marine Rigs & Floaters secured a contract to design and build a new floating, storage and offloading (FSO) vessel for Modec Offshore Production Systems (Singapore), a subsidiary of Modec Inc. It will be built at Tuas Boulevard Yard and is intended for operation in the UK sector of the North Sea, in Maersk Oil’s new Culzean field.
The FSO is scheduled for delivery in the first quarter of 2018 and will be Sembcorp Marine’s first FSO newbuilding secured on a full turnkey project basis including engineering, procurement, construction and commissioning.
Sateesh Dev, president of Modec Offshore Production Systems (Singapore), said: “We have been long-time partners with Sembcorp Marine for our conversion projects and we have seen its strong track record in delivering quality vessels and rigs.”
In July 2015 Sembcorp Marine subsidiary Jurong Shipyard confirmed a contact to build a DP3 semi-submersible crane vessel (SSCV) for Heerema Offshore Services. It will be 220m long and 102m wide, and equipped with two heavy lift cranes, each with a 10,000 tonnes lifting capacity and a heavily reinforced work deck area. This will make it the largest crane vessel in the world. It is due for delivery in the fourth quarter of 2018. The contract is worth about US$1 billion. The SSCV will be built at the Tuas Boulevard Yard.
Sembcorp Marine’s Mr Wong said: “We are very pleased that Heerema has chosen Sembcorp Marine as its strategic partner to build the new semi-submersible crane vessel. With our proven track record in building a broad range of semi-submersible vessels for drilling, well intervention and accommodation purposes, we are confident of building the best vessel to meet Heerema’s exacting requirements.”
William Gu Wei Guang, head of Sembcorp Marine Rigs & Floaters, said: “With our new facilities at Tuas that boast deeper quayside draught and wider dock space, we are confident we will be able to meet our customer’s expectations. This is also in alignment with our strategic vision to penetrate the deepwater market segment.”
However, the downturn in the offshore market has caused some problems for operators who seek to cancel or delay deliveries. Sembcorp Marine subsidiary PPL Shipyard is involved in an ongoing dispute Marco Polo Drilling over a contract for a rig. This was due to be delivered on 30 November, but Marco Polo has sought to cancel. In December Sembcorp Marine also confirmed what it described as a standstill agreement with another rig customer, North Atlantic Drilling, for a rig built at Jurong Shipyard.
© 2023 Riviera Maritime Media Ltd.