Keppel Corporation, the world's largest oil rig-builder, expects demand to remain sustainable as long as crude prices remain above US$80 a barrel.Keppel Offshore & Marine chief executive Tong Chong Heong told Reuters that he expects the company to secure orders for some semi-submersible rigs, particularly those that can be used in medium-depth waters, in the second half.
Mr Tong's remarks came after Keppel's shares, along with rival Sembcorp Marine, suffered in a global stock market sell-off this month, also due to concerns that a decline in oil prices would affect the sector's outlook.
"It's really difficult to say because I will not be able to be so definitively sure that it won't," Mr Tong said on the sidelines of a company event. "But as long as the price of oil is above US$80, I guess the viability of new conversions, building, should be justifiable to go ahead. What we hope for is not a sudden dip, where the price of oil goes right down to US$40 or 50 (a barrel)."
Keppel and Sembcorp shares fell 17 per cent and 19 per cent respectively in the past two weeks, steeper than the 10 per cent fall in the broader Singapore index as a 10 per cent drop in oil price spooked investors.
Keppel is enjoying a record year for new orders, in which it signed a total of S$7.2 billion in new contracts, taking its total order books to S$9.1 billion with deliveries into 2014. Most of the orders it secured this year are for jackup rigs, which customers will use in shallow waters, while a bulk of the deepwater projects have been awarded to Korean shipyards in drillship contracts.