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Sembmarine expects low production activity amid improving market

Singapore’s shipyard group Sembcorp Marine is expecting its production activity to remain low amid an improving offshore market due to stiff competition and potentially lengthy time needed to secure new orders.

Global capex spend for offshore exploration and production (E&P) continues to improve especially for the offshore production segment. Offshore drilling activities saw some improvement in day rates and utilisation levels for some drilling segments, according to Wong Weng Sun, president and ceo of Sembmarine.

“The offshore and marine sector continued to improve. Despite the improving industry fundamentals, time and effort are required for co-development with prospective customers prior to securing new orders. Competition remains intense,” Wong observed.

Wong added that Sembmarine has been responding to increasing enquiries and tenders for offshore production units, innovative engineering solutions and projects related to the gas value chain.

Net contracts secured in the first quarter by Sembmarine totaled about SGD175m ($128.4m), for projects comprising the design and construction of a 12,000-cu m LNG bunker tanker as well as repair and modernization works on 13 cruise ships.

Read more: Sembmarine clinches first ever deal to construct LNG bunker tanker

To-date the group’s net orderbook stands at SGD5.77bn including the Sete Brasil drillships. Sembmarine said it continues to closely monitor the developments of Sete Brasil’s judicial recovery plan.

“Based on media reports, the current plan includes the sale of four drilling rigs being built at two Singapore yards,” Wong said.

Last month, Keppel Corp mentioned during its first quarter results announcement that Sete Brasil had called a tender on two semi-submersible rigs under construction at BrasFELS in Brazil, as well as two drillships being built at Sembmarine.

Read more: Resolution in sight for some Sete Brasil rig orders at Keppel O&M and Sembmarine

“We remain focused on building our orderbook and are actively pursuing opportunities across key segments, including rigs and floaters, production platforms, gas and renewable energy solutions, as well as specialized shipbuilding,” Wong said.

“We continue to progress in our diversification into new product segments and commercialisation of our proprietary Gravifloat technologies for diverse nearshore LNG terminal and gas infrastructure applications,” he added.

Amid a competitive business environment and improving market fundamentals, Sembmarine saw its first quarter profit attributable to owners of the company plunged to SGD1.71m compared to SGD5.32m in the year-ago period.

Revenue for the first three months was recorded at SGD810.58m, down 31.3% year-on-year due mainly to lower contributions from rigs and floaters and offshore platform projects, partially mitigated by higher repair and upgrade income.

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