National oil company Petrobras of Brazil hit Singapore offshore'rig building yards with a bang in 2012, as both Keppel Offshore and Marine and Sembcorp Marine bagged a combined US$11.4 billion in contracts for drillships, semi'submersible rigs and 'oating pla''orms bound for Brazil's deep waters.

"The interest for new jack'up orders is still there, and it's moving from drilling contractors to national oil companies (NOC)," said Aziz Amirali Merchant, executive director of Keppel Offshore and Marine Technology Centre, at a recent breakfast roundtable leading up to the Sea Asia 2013 conference.

Chow Yew Yuen, COO of Keppel Offshore and Marine added NOCs are increasingly likely to up their ownership of assets amid high oil prices and strong energy demand. "It enables them to have better control of rig deployment, customise rigs to their requirements and in some cases, place local content requirements to promote the industry in their country," he explained.

"Industry estimates are that 30'35 deepwater rigs would be ordered in 2013, with Singapore yards likely to dominate the jack'up sector. However, intense competition from Chinese yards eyeing the offshore space could lower the market share of the Singapore yards," said Neil Wiese, managing editor of IHS Fairplay.

Yangzijiang, a China'based but Singapore'listed shipbuilder, recently won its first jack'up rig order for US$170 million, showing that new entrants into the offshore market have enough appetite to undercut
market prices.

Even before the offshore party got more crowded with the entry of Yangzijiang, Sembmarine and Keppel had turned in disappointing offshore and marine operating margins, and analysts expect those concerns to spillover into 2013.

Source: AmFraser