Industry Profile

The Marine and Offshore Engineering (M&OE) industry is navigating a new course as Singapore evolves from a regional ship repair centre to a global offshore and marine hub. We also conduct related activities, such as oilfield equipment manufacturing, building and chartering of offshore supply vessels. The industry remains a steady and significant contributor to the economy, accounting for S$3.6 billion or 1% of Singapore’s GDP and employing more than 23,000 workers in 2016.

It looks set to grow even further with the M&OE Industry Transformation Map (ITM), a national blueprint to upgrade companies in the industry that is expected to value-add S$5.8 billion and create 1,500 jobs by 2025. This growth will be propelled by diversification into new areas such as liquefied natural gas (LNG) and offshore renewables. Global expenditure on LNG is projected to exceed US$280 million by 2021, while the global offshore wind market is expected to surge past US$130 billion by 20231. There are also new developments outside the traditional LNG space that present new opportunities, such as building and operating assets required for small scale LNG.

Singapore is well placed to become Asia’s LNG hub. Our proximity to traditional and emerging buyer demand in this region, status as a neutral marketplace, and reputation as a leading trading and financial hub all adds to our advantage. Enterprise Singapore, together with partner agencies like EDB, will focus on helping companies to acquire capabilities and knowledge, and tap into global networks to move up the industry value chain.

Macro trends

  • Global population growth, rapid urbanisation and economic growth create demand for power, and in turn LNG
  • Global transition to a low-carbon emission environment

Demand-side factors

  • Alternative uses: LNG is emerging as a potential transportation fuel. For example, Shell estimates that the global transportation sector accounts for 750 metric tonnes per annum of LNG-equivalent fuel. If 10% of this demand were converted to LNG, it would lead to an increase of 80-100 million tonnes in LNG demand.
  • Development of small-scale LNG facilities: A key change expected in Asia is smaller cargo vessels and trucks supplying LNG on ‘milk runs’ – round trips to distribute or collect LNG – to remote regions which can increase LNG mobility. This will create new demand for LNG, as the number of countries with import and regasification capacity (converting LNG back to its gaseous form) increases.

Supply-side factors

  • Limitation of traditional sources of energy: Emerging markets typically depend on gas reserves, hydropower or coal-fired power. But all three sources have constrains. Gas reserves are fast depleting and unable to meet demand, generating hydro-power depends on weather which we cannot control, and coal is increasingly less preferred due to environmental concerns. LNG emerges as a good alternative source of fuel.
  • Liquefaction capacities adding to new supplies: Rapid expansion of liquefaction capacities (the process that generates liquids from gas or solids) will add to the availability of supplies. This will keep prices low and increase LNG’s market share.

Opportunities for Singapore companies

Singapore oil & gas companies can tap on existing strengths to develop LNG capabilities and move into this industry. The delivery of LNG is dependent on the availability of the specialised infrastructure, supply chains, transportation and storage assets. Some examples of Singapore’s existing capabilities lie in offshore oilfield services, modules fabrication and systems integration. This knowledge can be adapted to meet project-based requirements for both conventional and small-scale LNG infrastructure, transportation and distribution.

Enterprise Singapore is currently working with trade associations and chambers to showcase our capabilities at international industry events. We have organised missions to regions such as North America, South Africa and Iran to explore more business opportunities.

We have also identified the following areas that companies can focus on:

  • Acquire and integrate intellectual property and strategic assets related to the gas/LNG value chain. Examples of core capabilities your company can look to acquire include LNG process modules engineering and fabrication, LNG cryogenic equipment component manufacturing and distribution, as well as LNG containment fabrication.
  • Develop strategic partnerships or sub-contracting relationships with key project movers. This includes upstream stakeholders (e.g. energy trading companies, gas source owners and terminal project developers) and downstream LNG project developers (e.g. governments, power utility owners, industrial hubs/park developers).
  • Tap on professional networks of advisory and engineering consultancies. This will help your company identify and develop complementary or niche capabilities that enable you to transition into LNG service providers.

 

1: The Straits Times