CORPORATE

CORPORATE -- Singapore's Sembcorp Marine and Keppel Corp. plan to merge their offshore engineering and construction activities to strengthen their hand as they shift away from oil and gas and pursue opportunities created by the energy transition. Offshore engineering companies -- which build drilling rigs, production platforms and specialized vessels for the oil and gas industry -- have struggled since the oil price collapse of 2014-16 and the Covid-19 pandemic only made things worse. Rivals in other Asian countries have already made similar consolidation moves, while Sembcorp Marine was spun off from parent company Sembcorp last year and Keppel was already planning to exit the rig-building business (IOD Aug.12'20). Plans call for Keppel O&M (Offshore & Marine) to merge with Sembcorp Marine. The resulting company would manage an order book with a value of almost S$7 billion (US$5.2 billion), made up of a combination of renewable energy and oil and gas projects. The proposed merger would transform the Asia-Pacific region’s offshore engineering and construction landscape, but such a consolidation had in fact been widely expected. "It did not make sense to have two Singapore companies duking it out for offshore marine projects," said Adrian Loh of brokerage UOB Kay Hian. "The new entity will be better placed to compete with overseas competitors."