Chinese offshore yards have cost advantage amid downturn, CSSC claims

Chen Weimin, chief specialist at CSSC’s offshore marine division, told reporters that Chinese offshore yards can make use of the current industry recession to reform and expand their international market share.

“Low oil prices have forced oil companies and drilling contractors to pay more attention to cost, and Chinese companies continue to see opportunities from having that cost advantage,” Chen was quoted saying.

He pointed out that even as Chinese firms should aggressively compete for new orders, they have to carry out strict due dilligence so as to avert the risk of contract defaults.

In addition, the shipyards need to protect themselves from losses by carefully weighing the cost of production and the value of the contract, in view of the low price environment, Chen said.

“Some oil companies will go for more competitively priced offshore equipment as a means to lower their operational costs. Consequently, we have seen more enquiries from foreign buyers,” he said.

Meanwhile, China’s ministry of industry and information technology has recently called on offshore yards to submit applications for a so-called ‘white list’, where the listed firms can expect to receive prioritise financial support from the local banks.