Douglas-Westwood: 'Offshore EPC - All Change'

Douglas-Westwood, a UK-based headquartered provider of energy business strategy, research and commercial due-diligence services, discusses "Offshore EPC - all change" in the latest edition of DW Monday.

Singapore has traditionally been regarded as the clear leader in the construction of jackups, accounting for 55 percent of global deliveries between 2000 & 2010. 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 percent of the orderbook compared to Singapore’s 33 percent. With this trend expected to continue, Singaporean yards have been aggressively pursuing higher value EPC markets signalled by Keppel’s Can Do (UDW 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. 

We do not expect Singapore to completely retreat from the jackup market. However, 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 & DSME have all struggled in recent years with balancing their traditional efficiency in light of a tighter price environment (see the earlier DW Monday on Capex Compression) 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.


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