SINGAPORE - The ongoing rise in global demand for energy and a tighter supply of rigs spell healthy growth prospects for Keppel Corp, said chief executive Choo Chiau Beng.
In the firm's latest annual report, he said these trends are also opening up new business areas for Keppel, such as the ultra-deepwater market.
As energy demand keeps surging, exploration and production firms are being pushed into new frontiers, which are deeper and harsher, he said.
"Political agendas and pressures have also nudged governments of emerging countries to quickly exploit their own oil and gas resources."
As a result, there is a lot of interest in the ultra deepwater segment, even as the shallow water segment remains robust, and Keppel is in a good position to provide products and services to meet these different needs. Shale gas, meanwhile, is a game-changer, Mr Choo added.
"With technology spurring the recent growth of shale gas production and the possible export of liquefied natural gas (LNG) from the United States, there is expectation that gas prices in the US, Asia and Europe could converge over time."
Keppel's ability to convert vessels into Floating Storage Regasification Units, and service and repair LNG carriers, places it in good stead to tap opportunities in this area, he added. "We are also looking at projects in the area of floating LNG facilities."
Other areas that Keppel can explore include the exploration of stranded gas reserves in smaller fields with under 1 trillion cubic feet of gas, he said.
Meanwhile, environment and sustainable development is also opening up new opportunities. "The group is committed to develop environmentally friendly solutions for office and residential buildings, rigs as well as renewable energy," he noted.
Amid all the opportunity, challenges remain.
With shipbuilding in the doldrums, yards in China and South Korea are chasing after offshore work. Their strong competition is putting pressure on newbuild prices and margins in some product segments.
"We must choose our battles wisely, competing on value creation rather than price and in areas where we have good prospects for success," Mr Choo said. "While we are mindful of keen competition, we are confident of capturing a fair share of new orders in 2013."
The report showed that Mr Choo earned a smaller pay cheque last year than he did the year before, even as the firm reaped record profits of $1.9 billion.
He was given a remuneration package worth $7.99 million last year, including a deferred bonus of $3.09 million. In 2011, he was paid between $11.6 million and $11.85 million in cash and shares.