Click here for the full annual report for 2019.
2019 continued to be yet another challenging year for the Singapore marine and offshore engineering (M&OE) industry but with early signs of recovery. As an indication of market recovery, sales of stranded assets could be seen to improve for some companies with acquisitions picking up pace as the global market continues to have confidence in Singapore’s products and services. By the end of 2019, the Singapore M&OE industry recorded a total turnover of S$11.1 billion, 7.8% higher than the turnover of S$10.3 billion achieved in 2018.
Major projects delivered in 2019 included a semi-submersible crane vessel, a well intervention semi-submersible, a newbuild dual-fuel bunker tanker, three newbuild Floating Production, Storage and Offloading (FPSO), three units of the world’s first European Union (EU) Stage V dredgers, a Floating Storage and Regasification Unit (FSRU) conversion, a Floating Liquefied Natural Gas (FLNG) conversion and four jack-up rigs.
While the industry was able to see gradual signs of recovery for the year, caution prevails about the outlook given the intense competition and uncertainty about the direction of oil prices and global economy; new orders were slow. The year concluded with Singapore shipyards clinching new orders totalling some S$4.49 billion, slightly more than the S$3.9 billion secured the year before. As at end 2019, the industry’s total orderbook stood at some S$7.84 billion with deliveries stretching to 2022. This was S$0.34 billion higher than the total orderbook of S$7.5 billion as at end 2018.
The new orders demonstrated the customers’ confidence in Singapore’s M&OE industry and the quality of our solutions and delivery.
The new orders secured were for offshore production, gas and renewable energy projects as well as specialised shipbuilding. The increase in gas and renewable energy projects secured is a clear indication of the industry transformation strategy beginning to bear fruit in these new growth areas.
There were 15 dry docks in Singapore in 2019, two less than the year before, giving a combined total docking capacity of 4,480,000 deadweight tonnes. The 15 floating docks and ship lifts remained the same as the year before, with a combined total lifting capacity of 297,450 tonnes. The ongoing efforts to renew the infrastructure facilities, which include the relocation of M&OE companies to JTC’s Offshore Marine Centre at Tuas South and Tuas West Coast, are adding larger and better equipped facilities that will future-proof Singapore’s M&OE industry.
The total employment for the industry in 2019 was 67,900 persons. The total workforce in the industry grew by 3.5% with 2,300 more workers compared to 65,600 persons employed in 2018.
The increase in employment was due, in part, to the increased number of orders, vessels launched and larger vessels called for repair in Singapore. Another reason for this slight increase was due to the industry gearing up for more jobs in view of early signs of the sector’s gradual recovery through increased new projects in the orderbooks, especially in new growth areas.
Workplace Safety & Health
Workplace Safety and Health (WSH) is a core value in the Singapore M&OE industry. The Association works closely with industry members and other stakeholders to embrace a Vision Zero incidence goal for the safety movement. By working with stakeholders such as employees, sub-contractors, vendor and customers, the goal is to build up a strong WSH culture across the industry. Through collective efforts such as multistakeholders’ engagements, enhancement of safety competencies and capabilities, and continued commitments from management, consistent improvements on the industry’s WSH can be seen throughout the years.
Since the WSH 2008 strategy was released, the M&OE industry has improved significantly in the last decade by halving the number of workplace accidents in the industry. The number of occupational diseases reported in the industry has also reduced by more than 90%.
Industry members received a total of 35 accolades across various categories at the National WSH Awards 2019. These awards were presented to companies and individuals in recognition of their outstanding performance in WSH and contributions towards making their workplaces safer and healthier.
However, the number of workplace accidents in the industry still increased by 30% from 271 to 353 as compared to 2018. While workplace fatal injury rate in the marine industry decreased from 6.2 to 6.0 per 100,000 workers in 2019, it was unfortunate that the industry still suffered the loss of four workers’ lives in the course of their work.
Efforts towards promoting the Vision Zero incidence goal must continue and we need to renew our approach and commitments. Hence, over a year-long of deliberations with 28 engagement sessions and close to 3,000 stakeholders involved, the year 2019 also saw the recommendations of the Tripartite Strategies Committee for Workplace Safety and Health (WSH 2028), to raise M&OE industry’s WSH performance further. The WSH 2028 Plan for Marine Industries will be rolled out later this year. Let us together ensure a safe and healthy work environment at all times and strive towards our zero incidence goal by strengthening WSH ownership, promoting technology enabled WSH and enhancing focus on workplace health.
Sectoral Performance Ship Repair & Conversion Sector
The number of vessels calling in Singapore specifically for repair has decreased steadily over the last 10 years. In 2019, the MPA recorded a total of 2,652 vessel calls for repairs, as compared to 2,784 in 2018. This was a decrease of 132 vessels or 4.7% year-on-year. The total gross tonnage (grt) of the vessels called for repair increased from 29.829 million grt in 2018 to 33.255 million grt in 2019. This was 3.426 million grt or 11.5% higher than the year before.
Singapore remains as a global ship repair centre for larger tonnages. While business volume remains relatively stable over some period, competition continues to be stiff from overseas, especially from the Chinese shipyards. Singapore shipyards leverage on its strong infrastructure, safety records and project management to secure a steady stream of almost 300 repair, upgrading and refurbishment projects on various sophisticated vessel types such as Liquefied Natural Gas (LNG) carriers, cruise ships, superyachts and specialised vessels.
The industry saw increased demand for environmental solutions. Singapore shipyards undertook some 400 marine scrubber installation and ballast water management system projects since 2018 with almost half of them, 176 projects, in 2019.
A total of some 95 LNG projects were secured and carried out for the year, which included the delivery of a FSRU conversion project, BW GDF Suez Paris for BW Gas. This was an increase of 33.8% or 24 more LNG projects as compared to the 71 carried out in 2018. This achievement further reaffirms Singapore’s role as a global hub for LNG related repairs, maintenance and other related engineering solutions.
New LNG related projects for the year included conversion of Moss LNG carrier to FLNG by Keppel Shipyard for Gimi MS Corporation, conversion of a FSRU from LNG tanker Dwiputra, conversion of a Floating Storage Unit (FSU) from gas carrier LNG Flora, upgrading of FSRU BW Magna from BW LNG and fabrication of the internal turret of Coral Sul FLNG from SOFEC.
Some 16 projects related to cruise ships were carried out in 2019. These were with leading cruise brands such as Carnival Cruise Line, Royal Caribbean Cruise Line, Star Cruises, Norwegian Cruise Line, Star Clippers Monaco and NYK Cruise Co.
While FPSOs Ngujima-Yin and Liza Destiny were successfully delivered in July 2019, well in the works during the year was FPSO Abigail-Joseph, the world’s fastest brownfield FPSO modification and upgrading project, that was expected to be delivered in early 2020. Four new FPSO projects were secured in 2019. These included the modification of FPSO Allan from Yinson Nepeta Production and conversion of Very Large Crude Carrier Ariake into a FPSO unit.
Maintenance of modified works for two Offshore Specialised Vessels (OSV) Berani and Geoholm were also completed in 2019 by ST Engineering Marine.
Specialised Shipbuilding Sector
A total of 64 vessels were launched in 2019 with a total gross tonnage of 36,943 grt. Although this was 20.8% higher or 11 vessels more than the year before, the total gross tonnage was 65.3% lower than the 106,484 grt for the 53 vessels launched in 2018.
Keppel Offshore & Marine delivered four trailing suction hopper dredgers to Jan De Nul in 2019, of which two were made in Singapore. ST Engineering Marine delivered their 6th and 7th Littoral Mission Vessels, Fortitude and Dauntless, for the Republic of Singapore Navy in the second half of 2019. Other projects delivered by the industry included crew boats, security boats, ferries, windfarm vessels, firefighting boats and patrol boats.
Ongoing major shipbuilding activities for the year included the Norled battery-powered roll-on/roll-off passenger (ROPAX) ferries and dual-fuelled dredgers.
New projects secured by the industry includes Sembcorp Marine’s design and construction of LNG bunker vessel with GTT Mark III flex systems for Indah Singa Maritime, subsidiary of Mitsui OSK Lines, and Keppel Offshore & Marine’s high specification trailing suction hopper dredger for Van Oord.
Offshore New Building Sector
The offshore market experienced a slight improvement in 2019. The total number of jack-ups, semi-submersibles, and drillships under contract grew by 16 units to 461 rigs from May to June and rig utilisation has seen an increase in the year 2019.
Some of the major offshore projects that were delivered in 2019 included Sleipnir, the world’s biggest and strongest semisubmersible crane vessel and first dual-fuel for Heerema Marine Contractors and the Q7000 well intervention semi-submersible rig to Helix Energy Solutions Group, both by Sembcorp Marine. Keppel Offshore & Marine successfully delivered five new jackup rigs for companies such as Valaris and Grupo R, with two jackup rigs equipped with Keppel’s proprietary RigCare solution, the industry’s first drilling rigs with Smart Notations.
Newbuild offshore rig and floater projects secured for the year included a mid-water semi-submersible drilling rig for harsh environment use, two well-head platforms for the NOC operated Al Shaheen oil field and topside, hull fabrication and integration of Shell’s Whale Floating Platform Unit (FPU) for the Gulf of Mexico. Some of the ongoing projects are Statoil’s Johan Castberg FPSO and FPSO Energean Power for the Karish and Tanin development offshore Israel.
On the offshore renewables front, Singapore’s M&OE industry has gained firm inroads over the past couple of years on offshore wind prospects. About S$1 billion of new projects were won in 2019. Collectively, offshore renewable projects contributed to about 22% of the 2019 orderbooks, which included projects in the North Sea, Taiwan and parts of Southeast Asia.
Ongoing works for offshore renewables include Floating Power Plant Estrella del Mar III, which will be deployed as a highly efficient power generation facility that brings clean and green energy to the Dominican Republic in 2021 and Ørsted Hornsea 2 offshore wind farm substation topsides, which is expected to be the largest of its kind worldwide and will be part of the Hornsea Zone of the North Sea in the United Kingdom.
Notable new offshore renewable contracts secured during the year included the fabrication of 15 jacket foundations with Jan De Nul for the Formosa 2 Offshore Wind in Taiwan, two offshore wind farm substations from Orsted to be deployed in greater Changhua offshore wind sites in Taiwan as well as a contract from TenneT Offshore for the design, engineering, procurement, construction, installation and commission of a 900MW offshore high voltage direct current converter station and an onshore converter station for DOLWIN5 converter stations in the North Sea. Other noteworthy projects include Kim Heng Marine & Offshore’s contract for Horizontal Directional Drilling at an offshore wind project in Southeast Asia and the delivery of Penguin International’s first Windfarm Crew Transfer Vessel for a Taiwanese operator.
Sustainability In The New Decade
It is evident that at the dawn of the new decade, the world has begun to move towards building a more sustainable future through a low-carbon economy with the growing demand by consumers and international regulations being ratified. These play a big part in shaping the nature of the businesses in the energy and transportation sector, which is vital to the M&OE industry.
Offshore Drilling and Production
Nevertheless, offshore rigs and platforms continue to be a major segment in the industry’s orderbooks in terms of newbuilds, maintenances and repairs. As 2019 wound down, the M&OE industry was prepared to welcome the new year with cautious optimism as oil prices showed nascent signs of stability at around USD60 per barrel. Clarkson Research also projected offshore oil production to rise by 3.3% in 2019 and 0.6% in 2020 to reach 26.3 million barrels per day (27% of oil production). According to IHS Markit, while the end of 2019 showed the total supply had dropped from 777 to 758, the marketed utilisation has actually increased from 77% to 83%, showing an increase in 45 rigs being contracted.
All these suggest that the market may have finally reached the bottom, through rebalancing and improved usage rates of assets to support the oil and gas or energy sector to provide maintenance, repair and upgrade works. Firmer oil prices will also enable businesses to have more confidence on deciding whether they should start purchasing or operating their assets to fulfil the global demands for energy. This will also motivate offshore production and storage vessel investments and hence, new offshore building prospects.
Gas Supply Chain
Rystad Energy’s report indicated that oil and gas firms discovered a fouryear high of 12.2 billion barrels of oil or the equivalent in 2019, a banner year for hydrocarbon discoveries, with new discoveries mostly on gas, which is the interim sustainable fuel. Going forward, the 2020 Outlook & Strategy research findings for the Offshore & Marine Sector by DBS Group had also projected shipbuilding recovery to be gradual but underway with LNG carriers as the brightest spot.
It was therefore no surprise that for 2019, a growing number of projects undertaken by the Singapore M&OE industry were LNG-related projects, such as FSRU, FSU and FLNG. Also, worthy to note that among them are newbuild projects such as the proprietary designed ice-class LNG bunker vessel by Keppel Singmarine, the designing of Singapore’s first LNG-powered bunker tanker by Seatech Solutions International, and a design and build contract for Singapore’s first membrane containment LNG bunker vessel by Sembcorp Marine. These were projects that reaffirmed Singapore’s role both as an LNG bunkering hub and leading provider of gas value chain solutions.
Offshore wind energy is gaining traction around the world and is expected to expand strongly in the coming two decades into a USD 1 trillion business, as the advancement of its technologies becomes more economical and affordable. Fixedbottom foundation for offshore wind is projected to grow four to six times up to 2030 with US$1.2 billion per annum worth of jacket orders expected in the next 3 years. There is also demand for high specification wind turbine installation vessels which Singapore shipyards can leverage on their offshore competencies to secure.
Offshore wind is also expected to play an increasingly important part of the revenue streams for OSV owners. Asia, as the epicentre of the next phase of global growth, is progressively looking into installing its own offshore wind farms in places such as China, India, Japan, Korea and Taiwan. The maintenance and operation services demand will benefit Singapore’s M&OE supporting industries.
LNG and sustainable energy related projects are expected to account for between 30% to 60% of the new orderbooks for Singapore’s major shipyards in the foreseeable future.
Green and Sustainable Solutions
As part of the increasing international efforts on reducing greenhouse gas emissions, the International Maritime Organisation (IMO)’s 2020 regulations on the mandatory capping of sulphur content on marine fuel at no more than 0.5% remained firmly on course and took effect in January 2020. In addition, the mandatory code for approval of Ballast Water Treatment System (BWTS) under the IMO’s Marine Environment Protection Committee also came into force in October 2019 to address the transfer of invasive aquatic species through shipping. These will continue to fuel the demand for scrubber and BWTS retrofitting orders.
Other new environmental regulations such as those on biofouling and ship recycling are expected to formalise soon, which will provide further business opportunities for the industry.
Resilient Growth Areas
The Impact and Response to COVID-19
Prior to the COVID-19 outbreak, the Singapore M&OE industry was beginning to see signs of a potential recovery after five years of offshore industry downturn. This hope was swept away by the COVID-19 wave which is putting the industry into a new spiral. The negative impact on the industry has been massive because of lowered demand for movement and goods due to measures implemented to prevent the spread of the virus by a number of ports and shipping companies and strict containment measures imposed by governments around the world such as Singapore’s “Circuit Breaker” which took place in April for eight weeks. These in turn resulted in contracting activities falling and deliveries of new vessels being delayed globally, significantly lowering the orderbook forecast for the next 12 to 24 months. This has served a double whammy on the M&OE industry and taken the plight of many M&OE companies to a new level.
To mediate these impacts, the Singapore government announced a series of support measures to help businesses overcome this unprecedented crisis. ASMI quickly responded to the needs of businesses by helping members to prioritise the various measures that would impact them and played the role as a conduit between companies in the sector and the Government. ASMI worked closely with the relevant authorities as they rolled out plans of financial support on salaries, rental reduction, digitalisation efforts and put in place health screening measures to help the industry overcome the infection spread, with the intention to help companies resume as soon as possible, safely.
At the time this report is written, Singapore has recently exited her Circuit Breaker period to what is known as the “New Normal”. Being uncharted waters, the Government is proceeding forward cautiously by working closely with various trade associations and chambers of commerce to explore ways to contain the spread of the infection, while trying to help businesses resume their operations as soon as possible. Businesses can expect new or revised measures to be put in place to cope with the everchanging development of the virus. This is not likely to stop given that a vaccine is expected to take up to at least a year to be developed.
Resilient Growth Areas
Sustainability is still looked upon as the true north in the New Normal. In fact, there are a few things that the industry can look forward to amidst the crisis in this area, as identified under the M&OE Industry Transformation Map. They are the two identified growth areas, LNG and offshore renewables, and digitalisation. We will continue to pursue these tracks to pivot our industry into these new growth areas to make us future ready for the global energy transition.
ASMI is working with the Infocomm Media Development Authority and Enterprise Singapore to develop a realistic Industry Digital Plan (IDP) that includes resources needed to help our small and medium-sized enterprises go digital to ensure the M&OE industry’s business continuity and better productivity in a post COVID-19 reality and norm. Companies can expect the IDP to be ready before the year ends.