SINGAPORE MARINE INDUSTRY ANNUAL REPORT 2006
2006 was an exceptionally busy, vibrant and rewarding year for the Singapore
marine and offshore industry. Riding on the wave of an unprecedented offshore oil and gas boom, the industry surfed in a remarkable performance during the year with total turnover exceeding its previous high to reach a new record and benchmark. In 2006, the marine and offshore industry achieved a total output of S$9.8 billion, up 32% from S$7.43 billion in 2005.
The outstanding performance in 2005 was carried through into 2006 with the successful completion and deliveries of several newbuilds and numerous repair and conversion projects. This spurred a continuous stream of new orders for the Singapore shipyards from both repeat and new customers.
The growth in total output in 2006 was achieved by all three key sectors of the industry - offshore, ship repair and conversion, and shipbuilding. New benchmarks in revenue were set in all sectors as they contributed higher revenue to the overall increase in total turnover.
The industry’s impressive performance in 2006 was driven by the offshore sector, which continues to see strong growth underpinned by high oil prices and increased level of oil and gas exploration and production activities. The last two years had seen an escalation of offshore projects coming to the local shipyards. This milestone achievement and strong growth in output further affirmed Singapore’s pole positions in the global offshore rig construction and FPSO conversion markets.
Output from the offshore sector grew by 36% to S$3.23 billion in 2006, constituting 33% of the industry’s total turnover. Revenue from ship repair and conversion sector was also strong, increasing by 29% in 2006 to S$4.9 billion, and accounting for half the industry’s total output. Shipbuilding revenue grew by 32% year-on-year to S$1.67 billion in 2006, making up 17% of the total industry turnover.
The high level of business activities also resulted in the need for more workers. Total employment in the marine industry reached 102,500 in 2006. This figure includes administrative and other non-production employees.
Ship Repair & Conversion Sector
The ship repair and conversion sector is the largest contributor to the total output. However, its share has declined in the last two years as industry players took advantage of the offshore upswing to focus on the more lucrative and higher value add offshore projects. More projects and higher earnings saw the sector’s revenue rising to S$4,900 million in 2006. This was 29% more than the S$3,789 million achieved in 2005. Its share of 50% to the total output was just 1% lower compared to 2005.
A total of 6,304 vessels called in Singapore for repairs in 2006, 180 more than the 6,124 vessel calls recorded the year before. Total gross tonnage of the vessels that called for repairs in 2006 was 37.15 million grt, lower than in 2005.
In 2006, the industry completed 16 FPSO and FSO projects. As at end 2006, Singapore shipyards have undertaken a total of 119 FPSO, FSO and FPU projects.
Turnover from the shipbuilding sector stood at S$1,666 million in 2006. This was an increase of 32% over the previous year’s output of S$1,263 million. In terms of contribution to the industry’s total, shipbuilding activities maintained its share at 17%.
A total of 127 vessels totalling a gross tonnage of 248,964 grt were launched in 2006, 43 more than in 2005. The combined gross tonnage of the vessels launched in 2006 was 18.2% higher than the gross tonnage of 210,597 grt in 2005. Majority of the vessels launched were barges and tugs, followed by offshore supply and support vessels. Other vessels launched included workboats, container ships, oil tankers, dredgers, passenger ferry boats, launches and yachts.
The offshore sector, which included the construction, repair, upgrading and conversion of all types of offshore drilling and platform units, saw an increase in its share of contribution to the industry’s turnover. Its output grew by 1% to constitute 33% of the total industry output in 2006. Since late 2004, the local shipyards have been inking contracts steadily for both new rig construction projects as well as for repair and upgrading of existing rigs.
The offshore sector registered the strongest growth as output soared to hit a new benchmark of S$3,234 million in 2006. Its output was a significant 36% more than the S$2,378 million recorded in 2005.
The outlook for the industry remains rosy as the offshore boom is likely to continue for the next few years. With oil and gas exploration and production activities moving into deeper waters, harsher environments and further frontiers, there is strong demand for more deepwater drilling rigs and floating production systems suitable for these conditions as well as for offshore support vessels.
As global exploration activities and offshore field development work continue unbated, new rigs orders are expected to stream in for the major shipyards. The industry has geared up its infrastructure and resources, and is well positioned to increase its market share for new semi-submersible orders. It is also well poised to meet the boost in demand for the conversion and reactivation of drillships. There have been strong orders for floating production solutions in recent years and the market for FPSO/FSO conversion remains strong.
The offshore boom has also benefited the medium and smaller shipyards as well as non-shipyard players in the industry. Demand has filtered down to companies in the marine and offshore supporting industries which supply equipment to the shipyards, and rig and ship owners. Shipyards repairing and building offshore supply tugs and support vessels have seen their order books swelling during the last few years.
Overall, the industry is expected to continue its robust performance given its full order books and the strong global market conditions. 2007 looks set to be yet another year of double-digit growth for the local marine and offshore industry.