Keppel Offshore & Marine (O&M) said it believed the floating LNG (FLNG) sector will be a new growth area, even as low oil prices have slashed rig orders.
The Singapore-based rig builder made this announcement on 23 July as parent company Keppel Corporation posted its second quarter 2015 results.
Net profit for the period was down 2% year-on-year to SGD397 million (USD291 million).
Keppel Corporation CEO Loh Chin Hua said, “The global FLNG industry is expected to attract more than USD65 billion of investments from now through to 2020, driven by the rising costs of onshore LNG terminals. Asia-Pacific, in particular, is expected to draw a majority of investments in the FLNG sector with its sizeable line-up of regasification and liquefaction projects. Our gas strategy and suite of products for the offshore gas industry will provide some cushion to the current weak demand for drilling rigs.”
Related news: Keppel wins third FLNG conversion from Golar LNG
Loh indicated that Keppel’s experience in converting ships into FPSOs (floating production storage and offloading), FSOs (floating storage and offloading), and FSRUs (floating storage regasification) and now FLNGs, would put it in good stead as it has been estimated that some 238 projects would require a floating production and storage system.
“Our established track record of having completed over a hundred complex FPSO, FSO, and FSRU conversion projects, coupled with a growing pool of in-house FLNG expertise, puts us in good stead to offer quality solutions to some of the challenges faced by the offshore LNG industry,” said Loh.
Keppel also said that its orderbook will keep its yards busy through 2020; Keppel O&M’s orderbook has SGD11 billion worth of orders.
Loh said, “We continue to focus on executing our projects well, ensuring safe, on-time, and on-budget deliveries to our customers.”
Among the 12 major projects completed in the first half of 2015 were five jack-up rigs, a fourth high-specification accommodation semisubmersible for Floatel International, and a depletion compression platform (DCP) to Shell.
The third floating LNG vessel conversion that Keppel won from Golar LNG on 22 July takes the value of its year-to-date orders to SGD1.5 billion.
Of the 10 jackup rigs due for delivery in the second half of 2015, five KFELS B Class jackup rigs will be handed over to a Mexican customer, Grupo R.
Loh said, “We have reaped synergies working on five rigs at one time, optimising resources and improving efficiencies in the process.”
He also sought to assuage concerns that Keppel’s rig orders could be affected by the Petrobras corruption scandal.
He said, “BrasFELS continues to make good progress on the DSSTM 38E drilling semisubmersibles for Sete Brasil. The first three units are 90%, 63%, and 36% completed. Besides the six semisubmersibles, BrasFELS is also working on the module fabrication and integration for two FPSO units P-66 and P-69 for Petrobras, as well as the repair of the drilling semi-submersible ENSCO 6002.”
Citing the potential lifting of sanctions against Iran and the growth in shale oil production, Loh believes the days when oil prices topped USD100 per barrel will not be seen for some time, a situation that would limit the growth of exploration activities.
However, there could be demand to replace old rigs, as 94 jackups and 27 floaters around the world are more than 30 years old, he said.
“The scrapping of old rigs will hasten a rebalance of demand and supply in the offshore market and sow the seeds for the upturn,” Loh said.