In South-east Asia, oilfield services minnows must acquire or expire

SINGAPORE, April 29 (Reuters) - Suppliers of offshore oilfield services in Singapore, the seat of South-east Asia's energy industry, are opening up to mergers and equity buy-ins as smaller players struggle to find the capital and scale to compete with the big boys.

Malaysia and Indonesia, the top oil and gas producing nations in the region, are planning to spend billions of dollars to unlock virgin reserves trapped in remote deepwater locations and boost extraction rates at existing but aging fields.

That promises more business for top offshore oilfield services firms like PACC Offshore Services Holdings and Swire Pacific Offshore, a unit of Hong Kong conglomerate Swire Pacific. But that does not mean more business for the smaller players, which have been clubbed by rising costs and keen competition in an overcrowded market.

People in the industry say the smaller players, which typically operate 20 to 30 offshore support vessels (OSVs), are not as cost-efficient as the big boys. And as expenses rise, they may have no choice but to seek outside capital or lease their equipment and ships to other operators.

"We have seen a fairly active market, and it will be a natural progression to see more M&As," said Joachim Skorge, the Asia head of investment banking at DNB Bank. "What we often see is when the market is improving, people looking for exit will be more open to sell."

Drawn by the promising Southeast Asia market, Australia's Mermaid Marine Australia bought Jaya Holdings for A$550 million (S$640.6 million) in February. The purchase of Jaya, which owns a fleet of 27 OSVs and operates a shipyard in Batam, Indonesia, was the biggest acquisition in the region's OSV space in at least a decade.

Singapore-based Ezion Holdings, which dominates the region's market for liftboats, bought stakes in a couple of small companies including AusGroup and JK Tech Holdings. Liftboats are self-propelling rigs that support offshore energy work such as platform maintenance.

Ezion is also selling shares to companies under Hong Leong Group, controlled by Malaysia's third-richest man, Quek Leng Chan, to expand its fleet.

OSVs carry out different tasks to support offshore oil and gas exploration and production, from hauling rigs across oceans and laying pipelines on the seabed to transporting provisions to rig workers.