Keppel to exit offshore rig building business

Keppel Corp announced today that, amidst the global energy transition and major disruptions facing the oil industry, the company will carry out a comprehensive transformation of its wholly owned subsidiary, Keppel Offshore & Marine (Keppel O&M). The goal is to create a more competitive Keppel O&M that is well-placed to support the energy transition.

Keppel O&M will exit the offshore rig building business, after completing the existing rigs under construction. In line with the group’s more disciplined approach toward capital allocation, Keppel O&M will not undertake any new project requiring large upfront CAPEX or without milestone payments. It will also progressively exit low value-adding repairs and other activities with low bottom line contribution, and focus on higher value-adding work.

“The share of renewables and new energy solutions in the global energy mix has been growing rapidly, driven by environmental concerns as well as technological advancements and the declining cost of renewables,” said Loh Chin Hua, CEO of Keppel Corp and Chairman of Keppel O&M. “Natural gas, as a transitional fuel, is also projected to overtake oil as the world’s largest energy source in the years to come. To seize opportunities in this fast-changing environment, we are making bold and decisive moves to transform Keppel O&M to ensure that it remains relevant and competitive, and fully aligned to Keppel’s Vision 2030.”

As part of the transformation, Keppel O&M’s business will be restructured into three parts: Rig Co, Development Co (Dev Co) and Operating Co (Op Co).

Rig Co: Keppel O&M’s completed rigs will be placed under Rig Co, which will put the completed rigs to work, or sell them if there are suitable opportunities. A dedicated team will be appointed to support its chartering and marketing activities. As the oil market recovers, Rig Co will sell the rigs or collaborate with Keppel Capital to seek funding from Keppel O&M will exit the offshore rig building business, after completing the existing rigs under construction. In line with the group’s more disciplined approach toward capital allocation, Keppel O&M will not undertake any new project requiring large upfront CAPEX or without milestone payments. It will also progressively exit low value-adding repairs and other activities with low bottom line contribution, and focus on higher value-adding work.