Asian Yards Adapt to Industry Downturn

MHB is bidding for $1.9 billion (MYR 7 billion) worth of projects, of which 60 percent are overseas, including the Middle East, Mozambique, Qatar and Canada. But MHB “shouldn’t expect much this year [due to low oil prices] and it shouldn’t expect the order book to be replenished like two to three years ago,” an analyst at Malaysia’s RHB Group told Rigzone.

The need to boost their order books has become more pressing for Asian yards as competition intensifies for the few potential contracts for bidding in the oil and gas sector. While some yards in the region capitalized on the opportunities presented in the floating production sector earlier this year, the outlook for the rest of 2015 appears rather uncertain.

Singapore-based offshore advisory firm Energy Maritime Associates Pte Ltd. (EMA) highlighted in an April 21 announcement that Asian shipyards secured contracts totaling over $2 billion for seven floating production units, comprising four FPSOs, 2 FSOs and one mobile offshore production unit in the first quarter of 2015. MHB received orders for three of these units.

Fewer orders for floating production units are expected in the second and third quarters of this year as oil firms continue to reduce development spending. While EMA expects four more FPSO orders to be placed for the rest of 2015, probably in the fourth quarter, only one additional FPSO order is likely if oil prices dipped below $60 a barrel.

“Without new orders in 2015 a few companies, particularly yards in China, will see an idle period with no floating production work. The downturn that already swept through the exploration sector is now just starting to hit the production market,” EMA’s Managing Director David Boggs explained.


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Mohammad Ezazul Haque  |  June 08, 2015
Very good