Singapore shipyards secured S$820m in new orders in 2016, down from S$4.9b in 2015

SINGAPORE shipyards secured some S$820 million in new orders last year, a sharp drop compared to the S$4.9 billion contracted in 2015, the Association of Singapore Marine Industries (ASMI) said.

ASMI's president, Chua San Lye, said the new orders secured in 2016 were mainly from non-drilling projects.

"The reduced exploration and production (E&P) and drilling activities have resulted in a dearth of new orders for drilling rigs given the weak utilisation of existing operating rig fleets, coupled with the supply overhang of newbuilds still under construction.

"Major shipyards had received requests for deferred delivery of projects or experienced customers undergoing major restructuring,'' he said in his report on the Singapore marine industry's performance for 2016.

By the end of 2016, the industry's total order book stood at some S$8 billion, with deliveries stretching to 2021. This was a decline of 57.9 per cent from the total order book of S$19 billion as at end 2015. The total order books included the backlog of orders clinched from earlier years and these projects have completion dates and delivery schedules stretching into 2021.

The total employment in the local offshore and marine industry was 85,600 in 2016, down by 10 per cent from 2015 when 95,500 workers were employed.

"The tightening of work permit quota, fewer recruitment, retrenchment and natural workforce attrition contributed to the drop in the industry's workforce in 2016. The number of workers employed in the industry has been decreasing since 2013,'' Mr Chua noted.

The Singapore offshore and marine industry generated a total turnover of S$13.06 billion, 11.3 per cent lower than the turnover of S$14.73 billion achieved in 2015.

The ship repair and conversion sector generated a total turnover of S$4.57 billion, accounting for 35 per cent of the industry's turnover. This was a decrease of 6 per cent, or S$290 million, less than the S$4.86 billion earned in 2015.

The shipbuilding sector contributed S$200 million to the industry's turnover in 2016. This was a decline of S$90 million, or 31 per cent, lower compared to the total turnover of S$290 million in 2015.

The offshore rigbuilding sector generated a turnover of S$8.29 billion in 2016. It remained the largest contributor to the industry's total turnover since 2008. There was a decline of S$1.28 billion, or 13.4 per cent, from turnover of S$9.57 billion achieved in 2015.

Looking ahead, Mr Chua said the upstream oil and gas industry remained challenging, even though prospects in the marine and offshore industry have improved following the agreement by OPEC and major non-OPEC countries to cut production.

"However, a more robust recovery will take a longer time,'' he said. "The challenging environment in the offshore business is expected to remain for some time."