The storm that hit the offshore and marine sector in Singapore - as well as around the world - when crude oil prices collapsed more than two years ago has continued to rage unabated.
Companies have sunk deeper into the red this year, with many cutting costs and staff in a bid to stay afloat amid still-depressed oil prices. Any recovery has been hampered by a market still brimming with excess capacity amid anaemic global demand.
The heaviest blow came when home-grown oil and gas contractor Swiber Holdings filed for judicial management in July - emerging as the biggest casualty in the industry amid the ongoing downturn.
But the oil price woes were hardly contained within the offshore and marine sector itself. They were a disruptive force for several other parts of the Singapore economy as well.
The Singapore bond market, for one thing, has been rocked by a spate of defaults as a number of companies ran out of cash, badly affecting investors, while local banks have been hit by non-performing loans to the sector.
While oil prices have rebounded somewhat in recent weeks, the troubles could well continue, given the uncertainties ahead for the offshore and marine sector.
OIL PRICES: A YEAR IN FLUX
Crude oil prices started the year on an abysmal note as supplies continued to pile up.
Global benchmark Brent fell to a 12-year low of under US$28 a barrel in mid-January, after the International Energy Agency warned that the oil market could "drown in oversupply" amid unfettered fears over the health of the global economy.
Months of unfruitful discussions among the major oil producers of Opec (the Organisation of Petroleum Exporting Countries) to curb output followed, which only led to more volatility in oil prices.
But last month, Opec finally made a momentous decision at its meeting in Vienna to cut production by 1.2 million barrels a day in the next six months to help ease the overhang and re-balance the market.
Days later, non-Opec producers, including Russia, also agreed to cut output by 600,000 barrels a day.
These moves sent oil prices higher to more than US$55 yesterday, on hopes that the glutted market will soon come to a balance - though this is still a far cry from the highs of US$115 in June 2014, before the oil price collapse.
And production cuts could spell huge implications for offshore and marine companies worldwide, including those in Singapore.
PAIN DEEPENS FOR LOCAL OFFSHORE MARINE FIRMS
With oil prices still under pressure for most of this year, offshore and marine companies here saw only further pain.
Even Keppel Offshore & Marine and Sembcorp Marine - the world's top two names in rig-building - have posted shrinking profits and announced further job cuts.
Swiber's liquidation bid in July, later replaced with an application to be placed under judicial management, was a sobering wake-up call.
Once an industry darling, the firm had faced mounting debt obligations it was unable to fulfil amid a dearth of new orders and work.
Swiber's troubles - never mind that poor management might also have been at play - are but symptomatic of the distress that has gripped the wider sector.
The Government is stepping in. Last month, the Ministry of Trade and Industry unveiled two measures to give the sector a financial shot in the arm.
One is a boost to trade agency IE Singapore's finance scheme for the sector, while the other is the reintroduction of Spring Singapore's bridging loan scheme.
Both schemes aim to help marine and offshore companies - from shipyards to offshore services providers, as well as oil and gas equipment and services companies and their suppliers - gain access to vital working capital and financing.
Meanwhile, Singapore's broader economy has not been spared.
The local bond market, in particular, has taken a massive hit as cash-strapped companies defaulted on high-yield bond payments, which left many investors burnt.
Swiber has defaulted on two payments, while Perisai Petroleum Teknologi has failed to deliver on $125 million worth of notes due in October, and Swissco Holdings on a $2.85 million coupon payment in the same month.
A whopping $625.2 million worth of bonds in the sector alone have been defaulted on so far this year, said Mr Benson Tay, fixed-income analyst at iFast Corporation.
These defaults and even debt restructuring exercises have led to messy disputes between issuers and bond holders.
Mr Tay noted that unlike in other markets, bond holders of Singapore companies are mostly individual investors instead of institutions. And as a fragmented group, they tend to have less negotiating power.
That said, Mr Tay believes the number of bond defaults from the offshore and marine sector could ease somewhat going into 2017, given that quite a few companies have done debt restructuring exercises.
Some, including Marco Polo Marine and AusGroup, have won consent from bond holders to extend the maturity of their bonds, while others have managed to loosen or waive possible breaches of debt covenants to avoid technical events of default, like Ezra Holdings.
But there will still be firms to watch out for, he added, especially those quickly running out of cash.
At the same time, the "Big Three" - DBS Group Holdings, OCBC Bank and United Overseas Bank (UOB) - have been grappling with the spillover from weak oil prices all year.
All three banks have reported a growing number of non-performing loans (NPLs) through the first three quarters of this year, due to their exposure to the cash-strapped offshore and marine sector.
This, in turn, led to higher provisions for "problem loans", which eroded the banks' earnings.
Ratings agency Moody's noted in a recent report that DBS - whose NPL ratio rose to 1.3 per cent in the three months ended Sept 30 from 0.9 per cent a year ago - had indicated in November that its remaining oil services exposures with potential asset quality weakness had increased to 20 per cent of its oil service portfolio, up from 13 per cent in the previous quarter.
Moody's also expects OCBC and UOB to see more NPLs next year. It has downgraded the baseline credit assessments for all three lenders from "aa3" to "a1" to reflect weakening asset quality and profitability.
Besides the banks, companies from other industries servicing the sector have also been affected.
"Offshore and marine firms are tightening their belts in general due to the downturn. We therefore run longer and further for every dollar earned," said Mr Jonathan Oon, director of the shipping department at law firm TSMP Law Corporation.
He noted that TSMP deals with more dispute resolution and restructuring work these days, compared with financing work previously.
"We certainly expect to see more disputes between companies next year, as is common in a down market. Amid challenging operating conditions, companies tend to worry about solvency issues with their business counterparts and are less likely to extend credit or allow deferment of payments," he said.
HOW LONG MORE TO GO?
The question remains - will the recent developments in oil spell a new chapter for the beaten-down offshore marine sector here?
Analysts agree that the oil market could see recovery, though only if global oil producers adhere to the production cuts, which could help lift offshore and marine companies.
If the production cuts are carried out as promised, oil prices could average at US$60 to US$65 a barrel next year, Mr Audun Martinsen, vice-president of oilfield service analysis at Rystad Energy, wrote in a recent report. Exploration and production spending, too, will react accordingly.
He said: "Opec production cuts will turn the needle on the FID (final investment decision) for many projects in shale and offshore, which will generate more transparency on activity and revenue."
That said, it will require time for any positive uptick in crude prices to trickle down the supply chain.
Mr Ang Ding Li, IHS Markit's Asia Pacific head of upstream cost research, believes the market will remain weak next year, as the issue of oversupply has yet to be resolved.
New orders for oil rigs, for example, which have come to a standstill amid excess supply, are set to be extremely low for the next five to 10 years, while the markets for offshore support vessels and platform supply vessels continue to be massively oversupplied.
"Although we may begin to see some projects being awarded in 2017, it will not be sufficient to propel the industry towards recovery. A recovery is likely to begin only sometime in 2018 or 2019," said Mr Ang.
Mr Mick Aw, senior partner at shipping advisory firm Moore Stephens, expects more job cuts across the sector, which accounts for up to 11 per cent of manu- facturing's contribution to Singa- pore's economy, and 20 per cent of manufacturing jobs.
Citing SembMarine as an example, Mr Aw noted that the group has retrenched more people since the start of the year, to 8,000. "Even after these cuts, it was still in the red. It is not impossible that further cost reduction may be carried out to return the group to profitability."
Other companies may similarly attempt to return to profitability through more efforts to streamline operations and reduce costs.
With a slew of uncertainties clouding the near-term outlook for the local offshore and marine sector, it remains to be seen whether the flow-on effects of the oil price troubles will let up any time soon.
•Additional reporting by Wong Wei Han