Chinese yards making strong market gains
Mainland companies facing rising demand from operators to build floating, production, storage and offloading vessels
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Mainland companies facing rising demand from operators to build floating, production, storage and offloading vessels
Keith Wallis in Singapore
26 April 2012
Chinese shipyards were set to take an increasing share of the burgeoning offshore vessel construction market, shipping experts said at an offshore marine conference yesterday.
Their comments come at a time when charter rates for specialist offshore ships and drilling rigs are set to soar on the back of resurgence in exploration and development activity in Asia and other markets such as Brazil and Africa.
Philip Williams, the head of business development in Southeast Asia for Larsen & Toubro, said: “A lot of yards in China are getting into floating, production, storage and offloading (FPSO) ships.”
These vessels are either converted supertankers or specially built ships that are moored close to offshore oil and gas fields, and store and partly refine the hydrocarbons.
Larsen & Toubro, which specialises in engineering and related offshore development work, recently opened an office in Shanghai to focus on the mainland market.
Williams said shipyards “can make a lot of money from FPSOs” and “there is a lot of bidding activity in Asia” as owners and operators expanded their fleets.
Converting a tanker, which can take 12 to 18 months to complete, can cost about US$100 million while building a new ship capable of processing oil and gas can cost up to US$2.3 billion, depending on the size and sophistication of the vessel.
Abhishek Pandey, the South and Southeast Asia head of shipping finance at Standard Chartered, said there was increasing demand by operators for Chinese shipyards to build offshore vessels ranging in size from offshore support vessels to drilling rigs. “Yes, demand has increased,” he said. “From January to now, there has been a stark increase in activity in the FPSO, platform supply and rig market.”
Chris Hayman, the chairman of Seatrade, said: “[Beijing] is building on China’s maritime heritage to seize new industry opportunities. It is exciting to see major investments such as China’s first ocean economic zone in Shandong province worth US$38 billion and the development of Nantong as a hub that has already attracted foreign investment from offshore construction giants such as Keppel.”
He added: “This should help China compete against more experienced offshore marine players such as South Korea and Singapore to seize the potential within marine equipment and technology industries that support deep-sea exploration such as the latest subsea technology development, floating production systems, state-of-the-art offshore support and construction vessels, design engineering and new on-board automation technologies”.
Among the shipyards specialising in FPSOs are Shanghai Waigaoqiao Shipbuilding, Hudong-Zhonghua Shipbuilding and Dalian Shipbuilding Industry. Smaller shipyards such as Fujian Mawei Shipbuilding and Qingdao Qianjin Shipyard, which has built eight anchor handling vessels for Swire Pacific Offshore, concentrate on smaller offshore ships.
Lionel Lee, the group managing director of shipowner Ezra Holdings, said charter rates for large platform supply and anchor handling vessels were expected to stage a strong recovery. “The boom years will be in 2013, 2014 and 2015,” he said.
Lee added: “The current environment favours medium to large anchor handling vessels and large platform supply vessels, with preference for new tonnage to replace older vessels.”