SembCorp Marine wins US$165.5 million contract

SembCorp Marine yesterday announced the winning of a new jack-up rig order from local firm JackInvest Pte. Ltd. worth up to US$165.5 million. SembCorp Marine's Jurong Shipyard will construct the rig with effect from May 2006 and delivery of the rig is scheduled before end of 2008. This latest contract brings SembCorp Marine's total order book since the start of 2006 to S$1.6 billion. And in its order books are a total of 14 jack-up rigs and 4 semis which have resulted in a full schedule and its shipyards running at near to full capacity. An industrial accident which led to 3 deaths in SembCorp Marine's shipyards have highlighted this. Smaller shipyards in China and Singapore have also started to join in the fray for rig orders. All these will force margins down considerably.

However, one bright point to note is that prices of new orders have increased as well and this should help ease any increase in operating costs. Expect larger marine companies like SembCorp Marine and Keppel Corp to continue the lead in this market as they should be able to contain costs more efficiently than the smaller new entrants in this market.