It could be some time yet before the hard-pressed offshore and marine sector worldwide sees a turnaround, according to industry players at a forum yesterday.
Speaking at a panel discussion at Sea Asia's Offshore Marine Forum, Mr Michael Chia, managing director of Keppel Offshore & Marine, said the sector is still going through one of its worst downturns.
"We have been through such ups and downs before - this is the third or fourth downturn in this very cyclical business, but I feel this is probably the worst, because the downturn is very deep structurally," said Mr Chia.
He said United States shale production has been a "very big disrupter" for the industry. Investments in US shale have risen, but offshore investments, especially in drilling, were cut by over 30 per cent from 2015 to last year, "presenting a very difficult situation for suppliers and shipyards like ourselves".
Globally, the utilisation rate of rigs has slumped to about 56 per cent, while day rates have halved, Mr Chia noted. Some 120 offshore drilling contracts worth $19 billion have been cancelled as well. About 150 new rigs are on order or being built, with 80 coming from China.
"With the low utilisation rate and overhang of new buildings, the situation doesn't look very good," he said. "It is difficult... to see when the new orders will come in."
With the low utilisation rate and overhang of new buildings, the situation doesn't look very good. It is difficult... to see when the new orders will come in.
MR MICHAEL CHIA, managing director of Keppel Offshore & Marine.
Mr Matthew Tremblay, corporate vice-president for global marine at ABS, does not expect shipyards to land new orders, given the supply glut. Even if demand for emerging market activity such as offshore windfarms rises notably, he said, it may not be enough to offset the steep fall in the core offshore oil exploration and production activity.
At least one speaker was more upbeat. Mr Jarand Rystad, managing partner of Rystad Energy, believes the offshore marine market will pick up slightly from next year.
"With several high-profile oil-field development projects looking to gain pace this year, and with 20 new ones coming up, we expect offshore sanctioning to pick up in 2017 and go up further in 2018. Offshore exploration and production activities are also expected to grow to levels that we saw in 2010," he said.
The biennial Sea Asia at Marina Bay Sands - Asia's biggest maritime and offshore conference and exhibition - concluded yesterday. It was held in conjunction with the Singapore Maritime Week.