Sembcorp Marine readies for market upturn

Singaporean shipyards have been in business for decades so are no strangers to market volatility. They face a prolonged downturn, but remain confident that business will improve in the medium to long term.

Sembcorp Marine president and chief executive Wong Weng Sun believes that oil prices will eventually stabilise at a range that can support the growth of offshore projects. He points out that demand for energy is expected to grow steadily while at the same time existing oil reserves will continue to be depleted.

“With increasing enquiries for non-drilling solutions, we foresee an earlier recovery in demand for fixed platforms, FPSO [floating production storage and production unit] and FSO [floating storage and offloading unit] conversions and newbuilds in the next few years. Rising global demand for gas also augers well for our broad-based LNG solutions and capabilities,” he said.

Sembcorp Marine chief operating officer Ong Poh Kwee also expects shiprepair volumes will continue to grow. “Going forward, if a job gets deferred today, it won’t go away. It will have to be done eventually,” he said.

Incoming International Maritime Organization ballast water regulations are likely to provide a near-term bonus for yards and Ong revealed that Sembcorp Marine, like other shiprepairers, is already starting to receive enquiries from shipowners.

“I expect that the peak will come in 2018,” said Ong, who pointed out that the cost of installing ballast water systems can range from a few hundred thousand dollars to a couple of million, depending on size and complexity, with the cost of the equipment an extra expense.