Singapore: China is undercutting Singapore’s rig builders by as much as 20% as it looks to muscle into a sector that has traditionally been fought out by just the Lion Republic and South Korea, according to analysts in Singapore.
Low Pei Han, investment analyst at OCBC Investment Research, told Channel News Asia: "[Singapore offshore builders] have seen very good order books, Keppel and Sembcorp Marine each secured about 10 billion dollars worth of orders this year.
"About 50% of each came from Sete Brasil and Petrobras, which is what the market had more or less anticipated. Going into 2013, we expect Sete Brasil and Petrobras orders to remain about the same level as this year, which will be about S$4 billion to S$5 billion."
But the Singapore rigbuilders are likely to greater competition from Chinese companies going forward.
Analysts said some Chinese shipbuilders are offering similar products at a 20% discount.
In December, for instance, China’s Yangzijiang secured a $170m order for a jack-up rig, while a similar contract at Keppel O&M cost US$205m.
China has made clear it plans to bag 20% of the global market for rigs, production facilities and offshore products by 2015.
Not everyone is convinced the Chinese can overhaul Singapore so quickly, however.
Janice Chua, head of equity research (Singapore) at DBS Vickers, told Channel News Asia: "It is a tall order for the Chinese yards to try and get the global market share for rigs.
"In order for the Chinese yards to have a bigger market share globally, what is more important is the soft skills of project management, engineering, design expertise, as well as ensuring that they can deliver the projects on time and according to the clients specification. That will take at least three years to build for any of these offshore structures." [02/01/13]