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Tuesday, 5 June 2012

Global offshore oil and gas sectors continue to boom

SINGAPORE: The global shipping industry has been in the doldrums but industry players say the offshore oil and gas sectors remain resilient despite the global economic headwinds.

Ratings agency Moody's recently rated its outlook for the shipping industry for 2012 as negative.

Problems in the Eurozone have also added to greater uncertainty on the demand side, affecting the profitability of listed players.

FSL's president and CEO, Philip Clausius, said: "We're still suffering from significant oversupply of ships. And more recently, that has been met with greater uncertainty on the demand side given the problems we're going through in Europe. The shipping crisis has unfortunately proven to be very stubborn and we are still in it in a certain sense. As such, the stock price or the unit price has suffered."

But it's a different story for the global offshore oil and gas sector, which doesn't suffer from the issue of overcapacity.

This is a plus point that has prompted banks to increase lending to this market.

DNB's regional director and head of Asia, Erik Borgen, said: "Well, it has definitely gone up quite a bit. There has been more projects coming on and the need for capital expenditure in those industries has been tremendous. Our bank has been more involved in both offshore transactions as well as L&G transactions in various parts of the world."

Offshore drill rig companies are also shoring up more long-term contracts.

Manav Kumar, director at Vision Drilling, said: "Vision Drilling is constructing one jack up rig at Keppel shipyard in Singapore and we have secured a five year charter for that rig with ONGC, the national oil and gas company of India. The business is good.

"We see good demand globally on drilling rig and services. The simple fact is that the oil companies are willing to order or give long term contracts for the next five to 10 years and in some cases 15 years, given by Petrobras, is very encouraging."

Despite the prolonged challenges confronting the global shipping industry, the offshore oil and gas sectors are still booming, and experts say Asia will be the driving force of growth for this particular market as energy demand in Asia is projected to grow more than 50 per cent over the next three decades.

- CNA/fa

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