Singapore shipyards could turn the corner if Brazilian oil giant Petrobras ramps up spending for the first time since oil prices collapsed in 2014, said analysts.
Petrobras is reported to be planning to raise capital expenditure this year to build new production vessels for the deep waters of the Atlantic Ocean.
Mr Nelson Silva, its head of strategy, told Bloomberg yesterday that the state-owned firm expects capital spending to rise to US$19 billion (S$27 billion) this year. It is also building eight offshore oil production units that it plans to deploy in 2017 and 2018.
Petrobras invested about US$14.5 billion last year, according to estimates published in November, said Bloomberg.
This could be the first year the firm has raised investment since 2013, when oil prices rocketed past US$100 a barrel before crashing amid a supply glut and weak global demand. Prices of benchmark Brent stood at US$55.70 per barrel yesterday.
But Mr Silva also told Bloomberg that Petrobras has reduced its drilling rig fleet in recent years and is not planning any significant changes this year. "We will see production really growing in 2018 when we have all these production units," he said.
An increase in Petrobras spending could spell more orders for Singapore yards making floating production, storage and offloading units, which are used to produce and process oil, said Mr Ang Ding Li, IHS Markit's Asia-Pacific head of upstream cost research.
Keppel Offshore & Marine and Sembcorp Marine also have yards in Brazil, which means they are better positioned to carry out such work than firms without a presence in the country, he told The Straits Times.
But Mr Ang does not expect to see new rig orders from Brazil. Keppel and Sembcorp Marine still have outstanding orders from Petrobras's rig-building unit, Sete Brasil, now mired in a massive corruption probe.
Both yards have made provisions amounting to millions for their Brazilian contracts.
Said Mr Ang: "The possibility of delivering all the contracted rigs is still low at the moment, but an improvement in the exploration and production environment in Brazil may see more rigs from the existing order book being delivered."
DBS analyst Ho Pei Hwa said that if Petrobras can commit to charter contracts for Sete Brasil's rigs, this will help with the firm's restructuring and refinancing plans, and reactivate the construction process for the rigs, which have come to a standstill.
Mr Andrew Harwood, research director for Asia upstream oil and gas at Wood MacKenzie, said that global upstream investment in the oil and gas industry is expected to rise 11 per cent this year over 2016 - the first increase since the 2014 oil price plunge.
"This means better times ahead for the oil services industry, but margins might take longer to recover," added Mr Harwood.
"Lower levels of offshore exploration, a shift towards smaller development projects, and a continued oversupply of offshore rigs will mean the likes of Keppel and Sembcorp Marine may take longer to benefit from increased oil and gas investment."