Seatrium eyes S$28 billion in project opportunities amid global race for energy security
The company’s order book stands at S$15.5 billion as at end-March
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[SINGAPORE] Offshore and marine player Seatrium is eyeing more than S$28 billion in project opportunities over the next two years, as the Middle East conflict escalates the global race to secure energy supply.
Higher oil prices are providing “a supportive environment for offshore energy infrastructure investments”, said Seatrium CEO Chris Ong on Friday (May 29).
He sees growing demand for floating storage regasification unit (FSRU) conversion projects, with the company expecting more interest in the short to medium term.
These specialised vessels offer a quick and flexible means to convert liquefied natural gas (LNG) back into its gaseous form, for use in power generation.
“We’ve established our global leadership in complex conversion projects, which will position (us) well to capture these high-value projects,” said Ong during a virtual briefing on Seatrium’s first-quarter business update.
The company is also looking into oil and gas projects in South American markets – such as Brazil and Guyana – and has identified “emerging” opportunities for floating LNG projects in Africa and fixed platforms in the Middle East, he added.
On the clean energy front, it continues to pursue substation projects for offshore wind power in Europe and Asia.
Ong noted that the themes of energy security and the transition to clean power are increasingly “prominent”, with the distinction between them “blurred”.
“The ambition around renewables, especially (in) Europe, will probably be a lot more heightened – whether it’s an (energy) security question or a transition question, that’s beside the point,” he said.
Order book update
Seatrium’s net order book stood at S$15.5 billion across 24 projects as at Mar 31, with delivery dates until 2033.
More than 95 per cent of this net order book comprises “series-build” projects, which will help to improve margins progressively and lower execution risk, said Ong.
Projects secured in Q1 include Seatrium’s eighth FSRU conversion: the LNG tanker Karadeniz for energy giant Karpowership.
It is the first of three FSRU conversion projects under an earlier letter of intent, which also covers the integration of up to six new-generation power ships.
Seatrium delivered two legacy projects in Q1: the trailing suction hopper dredger Frederick Paup to Manson Construction, and the wind turbine installation vessel Maersk Viridis to Maersk Offshore Wind.
It also completed 46 vessel repairs and upgrades during the quarter, pertaining to one FSRU conversion, five LNG carriers, seven cruise vessels, 10 offshore vessels and four naval vessels.
The company noted that its gross margin has continued to strengthen “due to improved project mix (and) lower overheads partly contributed by the completed divestments”.
It also cited “lower general and administrative expenses resulting from rigorous risk management, productivity gains and cost control initiatives”.
“The improving metrics reflect stringent contract selectivity with a preference for series-build projects, with progressive milestone payments, pricing discipline and project governance,” it added.
Seatrium also said that its balance sheet remained strong, and that it has made progress in proactively managing its borrowings.
However, it also noted that any increase in project sanctions or order wins is expected to materialise progressively due to capital discipline among customers.
Shares of Seatrium closed S$0.05 or 2.3 per cent lower at S$2.12 on Friday.
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