Regional realignment of offshore EPC landscape

‘Singapore has traditionally been regarded as the clear leader in the construction of jack-up rigs, accounting for 55% of global deliveries between 2000 and 2010,’ according to Douglas-Westwood analyst Michelle Gomez. ‘However, in the past five years this position has faced increasing challenge from Chinese yards willing to offer highly attractive financing in order to secure market share – China currently accounts for 47% of the orderbook compared to Singapore’s 33%. With this trend expected to continue, Singaporean yards have been aggressively pursuing higher value EPC markets, signalled by Keppel’s “CAN DO” drillship project, which when completed will be arguably the most technically advanced asset of its kind. Both Keppel and Sembcorp have also made major investment in their FLNG capability.’

Gomez does not expect Singapore to completely retreat from the jack-up market. However, she notes: ‘This focus on frontier EPC segments is both a clear reaction to the inevitable rise of China (in what was considered “their” business) and a warning shot to South Korean dominance in both drillships and FLNG. The South Korean big three of Samsung, Hyundai and DSME have all struggled in recent years with balancing their traditional efficiency in light of a tighter price environment and a shift away from heavy construction seems likely as suggested by SHI’s recently announced merger with Samsung Engineering.’

‘The offshore EPC landscape is undoubtedly going through some regional realignment,’ she concludes.