A "deep-stress" test for the oil and gas sector here has found that the proportion of non-performing loans for Singapore banks in this area could go up to 33 per cent, given the prolonged weakness in crude prices, said Credit Suisse.

The scenario takes into account companies with a high net gearing and net debt, their ability to pay the interest charges on their debts as well as cash below their short-term financial liabilities.

Singapore's oil and gas sector has borrowed about $25 billion, with 74 per cent or $18.3 billion of that sourced from the banks.

The sharp decline in oil prices - down about 65 per cent since June 2014 - and sustained cash outflows have led to declining order books and rising balance sheet stress for firms, said the Credit Suisse report.

It estimates that aggregate net gearing in the offshore and marine sector rose sharply to 0.65 times in December last year, from less than 0.2 times in March 2014.

The report said oil and gas-related exposure likely poses the biggest concern for Singapore banks in the near term. But other risks related to their exposure to China, Asean and Singapore property could also "drive loan losses higher if macro conditions weaken further".

That said, the report noted that several offshore and marine firms have taken various approaches in strengthening their balance sheets to weather the downturn.

Ezra Holdings, for instance, had lowered its net gearing to 0.8 times as at Nov 30 following a rights issue, while Vallianz Holdings raised $24 million from a placement and completed a refinancing exercise.

Credit Suisse maintains an "underweight" call on the offshore and marine sector, which is "not (yet) out of the woods".

"We expect demand for new-build rigs to remain weak even in the event of a recovery of the oil price to US$50 per barrel. In addition, we believe there are risks of further provisions should customers continue to defer or cancel rig deliveries," it said.