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Indonesian offshore players still eyeing expansion but see challenges ahead

Indonesian offshore players still eyeing expansion but see challenges ahead
Indonesian offshore companies are maintaining expansion plans this year, but these will be tempered by a number of challenges that may lead to slowing business, including falling oil prices and the country’s inability to meet targets for oil and gas lifting, local reports said.

Offshore supply vessel (OSV) player Logindo Samudramakmur is reportedly planning to spend up to $80m to buy four new ships this year, although final plans will depend on the company’s bidding process this year.

“We aim to spend $80m this year, but the plan will depend on market conditions as oil prices remain low,” Logindo president director Eddy Logam was quoted as saying.

“We are planning to purchase four new vessels this year, the type of which we have yet to disclose, but the ship procurement will only be certain after our tender-bidding process becomes clear.”He revealed that Logindo was aiming for several projects worth up to SGD100m ($79.9m) to SGD150m, up from its contract realisation last year of $70m, but added that all these projects are still going through the bidding process.

Eddie noted that last year, Logindo managed to meet only half its expenditure target amid dwindling oil prices as well as investment uncertainty during an election year.

Another charterer, Wintermar Marine Offshore, has also reportedly set aside $50m in capex for four new vessels

.“Three of them have been confirmed and will come in the second and third quarter of the year,” Wintermar head of corporate planning Pek Swan Layanto said. Last year, her company bought three new vessels.Both Eddy and Layanto said the offshore shipping business may encounter several difficulties this year, including weak oil prices, low oil lifting and exploration realization, as well as the government’s plan to raise income tax from shipping activities.The finance minister’s plan to revise a 1996 law stipulating a 1.2% income tax rate on the shipping industry in a bid to boost tax collection from the sector was especially singled out for concern, and was envisaged to take a chunk out of profits.