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Swiber expects more new offshore projects, but contract values have fallen

Swiber expects more new offshore projects, but contract values have fallen
Singapore-listed offshore construction and support services provider Swiber is expecting more new project tenders to emerge from various markets including India, Latin America and the West Africa, however, sees a drop in the value of new contracts.

Darren Yeo, deputy ceo of Swiber, believed that net importer of oil India, energy-starved Mexico and developing West Africa will continue to be busy grounds requiring Engineering, Procurement, Installation and Construction (EPIC) services.

“In 2015 we are looking at regions where there are activities such as Argentina in Latin America, and also looking forward to contracts in Mexico. India continues to have a quite few projects while projects in West Africa are also moving along,” Yeo said, adding that the Middle East is also a region with potential.

Yeo revealed that there are potentially three new contracts worth about $1bn from India’s Oil and Natural Gas Corporation (ONGC) up for grabs.

But Yeo also admitted that the value of new contracts has dropped by 10% or up to 30% in some cases due to competition, impacting the revenues of the group. To a certain extent offsetting lower contract values is the fall in raw material prices like steel and bunker bills of marine gas oil.

Swiber’s asset-based strategy also meant that it was able to optimise vessel usage and lower mobilisation costs, allowing it to be able to deploy vessels and streamline its processes more efficiently.

The decrease in crude oil prices over the last five months has impacted the offshore oil and gas market in terms of oil majors cutting back on E&P expenditures and lower charter rates for oil rigs and OSVs. But Yeo observed that the impact on shallow water oil and gas field development and production operations has been minimal, compared to deepwater activities and projects in the exploration stage.

Swiber’s main business in EPIC focuses on the field development stage, which is post exploration and appraisal stages when customers have decided to commence development activities.

“A lot of major oil companies have already done a lot of exploration and they know which field to start, but part of these projects are currently on hold. But projects under national oil companies are mostly still going ahead,” Yeo told Seatrade Asia Week.

To-date, Swiber boasts a record orderbook of over $1.8bn, following recent contract wins from India and West Africa. In his personal opinion, Yeo would like to see Swiber achieve an orderbook of $3bn by the end of this year.