SINGAPORE MARINE INDUSTRY ANNUAL REPORT 2007
2007 was a busy year throughout for the Singapore marine and offshore industry as shipyards strived to fulfil their order books to customers on time and within budget. It was also a rewarding year with many successful completions and deliveries of projects.
Still riding the waves from the global offshore oil and gas boom, the marine and offshore industry turned in a sterling performance in 2007 to cross the ten billion dollar mark. Total output soared to a new height with double-digit growth to reach S$13.05 billion.
The outstanding performance in 2007 saw a growth in total output of 33% as compared to the previous year’s total of S$9.8 billion. This growth was contributed by all three sectors of the industry - ship repair and conversion, shipbuilding, and offshore sectors.
The increase came mainly from the ship repair and conversion, and offshore sectors. The most significant was in the offshore sector as oil companies worldwide continue their search-and-drill activities in harsher environments and deeper waters in the rush to increase oil and gas supply. The continued strong growth in the industry re-affirmed Singapore’s prowess in the global offshore rig construction and FPSO conversion markets.
In recent years, there was escalation in the number of offshore rigbuilding projects in the shipyards, including many orders for the shipyards’ own proprietary designs. Singapore continues to secure a stream of FPSO and related projects, many from repeat customers, bearing testimony to her quality and execution reliability in this highly technical and complex work that requires strong project management skills, and good supply chain management.
Output from the offshore sector grew by leaps and bounds to S$4.957 million in 2007. The ship repair and conversion sector remained robust in 2007 despite fewer ship calls for repairs in 2007, bringing in S$6.264 million in total output. The shipbuilding sector also saw an increase in the volume of work and revenue growing by 9.7% year-on-year to hit S$1.827 million in 2007.
The higher volume of business activities in the industry resulted in an increase in its workforce. The industry is reliant on foreign manpower at all levels but primarily at the lower echelon to supplement and complement its local workforce.
Statistics from the Ministry of Manpower (MOM) showed the total employment for the marine industry in 2007 at 131,000 workers. This was 27.8% more than in 2006.
The industry’s focus on workplace safety and risk management implementation at the workplace saw better safety performance in 2007. Over the last decade, the industry has been relentless in its pursuit for a safer work environment in the shipyards. Statistics from the MOM’s Occupational Safety and Health Division showed fewer injuries and fatalities reported in the industry in 2007. The industry improved on both its Accident Frequency Rate (AFR) and Accident Severity Rate (ASR) in 2007.
A total of 490 workplace injuries were reported in 2007, 23.2% fewer compared to 638 injuries recorded in 2006. The AFR of 1.3 accidents per million man-hours worked in 2007 is a new record for the marine industry. The AFR attained in 2007 is a reduction of 40.9% as compared to the 2.2 accidents per million man-hours worked recorded in 2006. The ASR in 2007 was 180 man-days lost per million man-hours worked. This was 30% lower than the ASR of 257 man-days lost per million man-hours worked in 2006. There were nine fatalities in 2007 compared to ten the year before.
OVERALL SECTORAL PERFORMANCE
SHIP REPAIR & CONVERSION SECTOR
Traditionally, the ship repair and conversion sector has always been the largest contributor to the industry’s total output. This sector remains robust in 2007. Its contribution to total output declined from 50% to 48% in 2007 as industry players focus on the higher value add offshore projects.
However, higher earnings saw the sector’s revenue rising to S$6,264 million in 2007. This was S$1,364 million or 27.8% more than in 2006. The growth is attributed to the large number of FPSO/FSO projects and higher value added repairs.
Port statistics from the Maritime and Port Authority of Singapore showed a decrease in number of vessels calling in Singapore for ship repair in 2007. A total of 5,995 vessels called in Singapore for repairs in 2007. This was 309 vessels or 4.9% fewer than the 6,304 vessel calls recorded in 2006.
The total gross tonnage of the vessels that called here for repairs in 2007 was also lower. The total gross tonnage of 32.92 million grt was 11% lower than that of 37.15 million grt in 2006.
11 FPSO (Floating Production Storage and Offloading), FSO (Floating Storage and Offloading) and FPU (Floating Production Unit) projects were completed in 2007. A large number of such projects were at various stages of work-in-progress during the year with deliveries scheduled between 2008 and 2009.
Singapore shipyards enjoy a niche market position for the building of customised and specialised vessels. The main types of vessels built here included offshore supply vessels, anchor handling supply tugs, containerships, tankers, catamarans, patrol and pleasure crafts.
Output from shipbuilding activities rang in S1,829 million in 2007, an increase of S$163 million or 9.8% over the previous year’s output. In terms of contribution to the industry’s total, the sector dipped 3% to 14% in 2007 as against 17% in 2006.
102 vessels totalling a gross tonnage of 349,429 grt were launched in 2007. This was 25 vessels or 19.7% fewer than in 2006. The combined gross tonnage of the vessels launched in 2007 was 40.4% higher than the gross tonnage of 248,964 grt in 2006.
Majority of the vessels launched in 2007 were workboats, barges, tugs as well as offshore supply and support vessels. Other types of vessels launched included 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, registered the highest growth as output leaped by a significant 53.3% to reach a new revenue level of S$4,957 million in 2007.
Its output was some S$1,723 million more than in 2006. The sector’s contribution to the industry’s total turnover grew by 5% to constitute 38% in 2007.
Outlook for the industry remains good as the offshore boom is expected to continue over the next few years given its strong order books. Global oil demand has been growing annually in the last decade while the world’s oil production capacity has been diminishing as existing oil fields are depleted and threats posed by unstable political climate in some oil producing nations. The urgent need to find new sources of oil to increase supply and replenish reserves will see oil exploration and production activities increasing and moving further into unexplored areas and deeper waters.
With rig utilisation at its peak coupled with record high rig rates and ageing global rig fleet, orders for more deepwater drilling rigs and floating production systems suitable for deeper waters and harsher environments will continue to stream in. This will in turn fuel the demand for more and larger offshore support vessels to support offshore activities.
Despite the anticipated slowdown in global shipping demand, ship repair demand is expected to remain strong. The economic slowdown in the US is likely to be cushioned partially by the robust economic growth in China and India, which will continue to drive growth in the oil and bulk trades.
Over the years, Singapore shipyards have strengthened their capabilities and technologies such that resources could easily be re-deployed across the three sectors of ship repair & conversion, shipbuilding and rigbuilding, to take advantage of sectoral growth. Many companies in the marine supporting industries have expanded their range to include offshore projects to leverage on the growth in this market. This flexibility will see the industry through the various variations in the business cycles.
Overall, the industry is expected to continue its stellar performance over the next few years and 2008 will continue to be another year of growth for the marine and offshore industry.