Keppel Offshore & Marine is one of the world’s leading offshore rig builders, a solutions partner to the maritime industry, is undergoing a transformation. It will replace the exploitation and commercialization of hydrocarbons with renewable energy from natural sources.
Keppel Corporation (Keppel) announced that amid the global energy transition and major fluctuations facing the oil industry, the Company will undertake a comprehensive transformation of its wholly-owned subsidiary, Keppel Offshore & Marine (Keppel O&M), to better align it with Keppel Vision 2030. This is part of Keppel’s strategic review of Keppel and its offshore and marine (O&M) business, with the aim of creating a more competitive Keppel O&M that is positioned to support the energy transition.
Reflecting Keppel’s commitment to sustainability and the fight against climate change, Keppel O&M will exit the offshore platform construction business, following the completion of existing platforms under construction. In line with the Group’s stricter approach towards capital allocation, Keppel O&M will not undertake any new projects that require large upfront capital expenditure. It will also progressively exit minor repairs and other activities with low contribution to the bottom line, and focus on larger jobs.
Loh Chin Hua, chief executive officer of Keppel Corporation and president of Keppel O&M, said, “The share of renewables and new energy solutions in the global energy mix has been growing rapidly, driven by environmental concerns as well as technological advances and the declining cost of renewables. Natural gas, as a transition fuel, is also expected to overtake oil as the world’s largest energy source in the coming years. To seize opportunities in this rapidly changing environment, we are taking bold and decisive steps to transform Keppel O&M and ensure that it remains relevant and competitive, and fully aligned with Keppel’s Vision 2030.
“We are also exploring inorganic options for the O&M business, but there is no guarantee that any transaction will materialize. In the meantime, we believe that our organic restructuring of Keppel O&M will not only enhance its competitiveness, but also its attractiveness, should we need to take any inorganic action.”
Mark Williams, who heads UK-based consultancy Shipping Strategy, praised Keppel’s decision.
“This is another example of commercial reality getting ahead of regulators and legislators. Investment in oil exploration and production, especially offshore, is falling, while investment in renewables is rising much faster than legislators might have assumed. Keppel is reacting presciently to the global trends,” Williams said.
Keppel yesterday reported an annual loss of 506 million Singapore dollars ($380 million), hit by large impairments. It has also put its logistics business up for sale.
Attention now turns to Sembcorp Marine, Singapore’s other major rig builder, which has long been linked with a merger with Keppel to weather the tough offshore scene.