Keppel eyes shipyard purchase in Asia

Singapore?s Keppel Corp said it may look to snap up Asian shipbuilding yards in several years time when it expects a glut in capacity to depress asset prices.

Choo Chiau Beng, Chief Executive of Keppel Corp’s rig-building unit Keppel Offshore and Marine, was cautious on current expansion prospects and “paranoid” about growing competition, but said excess capacity will hit the industry when many yards finish their current construction backlog. “There will be a surplus of shipyards in China and Vietnam and, after the building boom is over, there’ll be a lot of yards to buy cheap,” Choo said.

Keppel and its compatriot SembCorp Marine, has seen a flood of orders for new offshore drilling rigs in the past three years, aided by record-high oil prices. Their main competition is major shipyards such as South Korea’s Daewoo Shipbuilding and Hyundai Heavy Industries Co, but a host of smaller yards in Singapore and North Asia have also recently won orders.

“Anyone can build rigs but the question is can you build competitively for the world market,” Choo said, adding he thought Singapore’s open economy, thriving port and technology access still gave it an edge. Together Keppel and SembMarine are building over 70% of all under construction offshore rigs globally.

Choo said while its yards were building more rigs than ever before, it still has the capacity to take in more orders and would expand capacity at its 17 yards or acquire new ones if needed, picking out deepwater rigs as a key growth area.