Fighting To Retain Repair Leadership

Tanker conversions to FPSO, FSU lead area's change The main marine activity in Singapore is ship repair. The Singapore area, which includes nearby Malaysia Shipbuilding & Engineering (MSE) at Pasir Gudang, comprises four large yards — Sembawang, Jurong Shipyard Ltd. (JSL), Keppel and Hitachi Zosen, along with a number of medium yards such as Singmarine, Pan United, Atlantis, and a large offshore yard — Far East Levingston Shipbuilding (FELS).

The ship repair industry is among the most competitive throughout the world, but Singapore is now facing threats to its leadership.

The current major threat comes from the two large yards in the Middle East, which have both been making inroads into Singapore's traditional markets including major oil company-owned tankers, Far East-owned tonnage, and more recently, the highly lucrative conversion market.

Singapore also faces a more longterm threat from mainland China, where ship repair prices (worker hours and steel) are currently much cheaper. Currently though, Chinese yards lack the necessary expertise to tackle the higher technical range of repair work as well as lack the type of infrastructure that has made Singapore such a success.

However, the Singapore yards maintain a steady battle to retain their leadership of the industry. Following expansions by Sembawang (new repair piers), MSE (new synchrolift system), and Singapore Technologies (new shipyard with two floating docks), the current expansion programs include a new 400,000-dwt capacity graving dock being built at the existing Tanjon Kling shipyard of JSL (the scheduled operational date being 1996) and a 300,000-dwt capacity graving dock, being constructed at Keppel's Tuas facility.

This new facility — which will complement two existing large docks at Tuas — will eventually take over for Keppel's City yard, which is due for redevelopment. The Singapore area is also very active in the conversion market, with particular emphasis upon offshore projects such as Floating Production and Storage and Offloading Units (FPSOs) and Floating Storage Offshore Units (FSUs). However, it is a pipelayer which is currently making the news.

In December, Allseas Marine Contractors SA, the Swiss offshore and shipping group, shiprepair yards. terminated a $211 million conversion contract with Singapore's Sembawang Shipyard.

A spokesman for Allseas said the company had taken that action because of delays in the final delivery date of the pipelayer Solitaire.

The source added that Allseas was in joint discussions with Sembawang to try to amicably agree upon termination of the contract, which is understood to be around 75 percent complete.

The delivery of the vessel had already been delayed one year, due to mutual agreement between shipyard and shipowner, to the middle of 1996 because Allseas had no available work for the ship until then.

The cancellation of the contract was necessary to guarantee delivery of the ship within a timeframe consistent with the requirements for Solitaire to be operational. Completion was set for the end of the next year, but Sembawang could not meet the new deadline. Other current offshore projects include the 137,684-dwt former NIS-registered conventional tanker Ellida, which arrived in Singapore's Keppel Shipyards during May 1995 for a nine month conversion contract to change her role to an FPSO for use by Shell on the Mauri Field off the coast of New Zealand.

The contract, believed to be worth approximately $35 million, was placed with Keppel by Modec Inc. of Japan. Keppel has also recently completed work on a similar project involving the $42.2 million contract dealing with the 149,494-dwt Cossack Pioneer, formerly Chevron London, for Woodside Petroleum's operations in the Cossack Field off the Australian coast.

Meanwhile, JSL also recently made inroads into this market with the $20 million contract to convert the 134,000-dwt tanker Mega Eagle into an FPSO, the first such conversion contract won by JSL from this specialized offshore market. The contract to convert the 1975-built tanker, which is to be renamed Nan Hai Sheng Li, was also awarded to the yard by Modec.

One of the medium sized yards, Pan United, recently won a twoship contract from Canada Maritime (CanMar) to carry out "winterization" modifications and general repair work.

The two ships are the 32,000- dwt, 1980-built containerships Alligator Joy and Alligator Excellence, both purchased from Mitsui OSK Lines. Both ships entered the yard in January for the work, which included the reinforcement of the steelwork around the vessels' ice bands, internal strengthening, insulation of deck pipes, etc., and container fittings modifications. In September 1995, Singapore's rig-building and conversion specialist FELS, part of the Keppel Group, purchased the semi-submersible offshore rig Polyportia from Norway's Rasmussen Offshore for a price approximated at $22.5 million. The rig will be converted for deepwater operations and then offered for sale to operators involved in such operations.

The rig arrived in Singapore in October.

Shipbuilding In addition to this conversion project, FELS is currently Singapore's largest shipbuilder with orders for two Floating Production Vessels from the Norwegian market. Statoil ordered one of the vessels in November 1994 for its Nome Field in the North Sea. The vessel is due for delivery in August.

Apart from the two large offshore vessels at FELS, small tankers appear to be the most popular size and type of ship currently under construction in the various shipbuilding facilities. Sembawang Bethlehem currently has an order for three tankers for Suisse Atlantic, JSL (Humpuss), Singmarine (Petroships and FT Everard), Pan United (Petroships), North Shipyard (PT Bumi), Hitachi Zosen (Daiichi Shipping and Ocean Tankers) and Atlantis (Ocean Tankers). Singmarine is also building containerships for Keppel subsidiary, Steamers Containerships; Singapore Technology is building containerships for Regional Container Lines; and tugs are being built at Singmarine, Pan United and President Marine. With Kvaerner Fjellstrand having a specialized aluminum building yard in the Tuas area, there is also a fast ferry capability in Singapore.