Singapore’s Keppel is positioning itself for the global energy transition amid the major disruptions facing the oil industry, a move that involves a “bold transformation” of its offshore and marine business that is suggested would cost an unspecified number of jobs.
Keppel O&M announced on Thursday announced it would seize opportunities as a developer and integrator of offshore energy and infrastructure assets, while exiting the offshore rig building business.
“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.
"Natural gas, as a transitional fuel, is also projected to overtake oil as the world’s largest energy source in the years to come,” said Keppel Corporation chief executive Loh Chin Hua.
“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.
“We are also exploring inorganic options for the O&M business but there is no assurance that any transaction will materialise. In the meantime, we believe that our organic restructuring of Keppel O&M will not only enhance its competitiveness, but also its attractiveness, if we were to undertake any inorganic action.”
The wholly owned offshore and marine division will be restructured into three parts, separating construction and ownership of legacy drilling rig assets from its core operations, which will be “slimmer, asset-light and people-light”.
After completing the rigs under construction, Keppel will exit the offshore rig-building sector.
Also, in line with the group’s more disciplined approach towards capital allocation, Keppel O&M will not undertake any new project requiring large upfront capex or without milestone payments.
The company will also progressively exit low value-adding repairs and other activities with low bottom line contribution and focus on higher value-adding work.
“Through these changes, we aim to create a nimble industry leader that is well-positioned for the global energy transition and can be a strong contributor to Keppel’s target ROE (return on equity) of 15% as we progress towards Vision 2030,” added Loh.
The transformation of Keppel O&M better aligns Keppel to the company’s Vision 2030.