Keppel, Sembawang, Samsung May Bid for $15 Billion Rig Business

Samsung Heavy Industries Co., Keppel Corp. and Sembcorp Marine Ltd. may compete for as much as $15 billion in business this year as Brazil orders rigs, JPMorgan Chase & Co. said. Petroleo Brasileiro SA will take bids for 28 oil-drilling rigs between May and December, according to the April 9 report. Petrobras may order 16 deepwater rigs and eight floating production platforms, which may translate into revenue of about $14 billion to $15 billion for yards.
“Singaporean yards may add about $5 billion, or 35 to 40 percent to their current combined order book, assuming a 30 percent market share for the yards,” Ajay Mirchandani and Ying- Jian Chan, analysts at JPMorgan, said in the report.
The rigs may be delivered between 2013 and 2017, assuring the yards of longer-term earnings, the report said. Keppel and Sembcorp may have lower margins from these orders as most of the drilling equipment has to be built in Brazil.
Oil and gas explorers postponing or scrapping deepwater drilling projects are potentially reducing crude supplies by as much as 2.4 million barrels a day in 2011, Morgan Stanley said in March.