singapore magazine

7/31/2019 Singapore Magazine

1/36

Eye for opportunityA keen focus on

policy and practice winshipping business

April 2012 | www.lloydslist.com


2/36

Wherever your port of call, you can depend

on our local logistics experts to deliver.

www.lubmarine.com

Tel. +86 21 5058 9928 / +86 21 5058 9968

[email protected]

The most important

ingredient in our

marine lubricants...

...people

Global Technology, Local Service


3/36

32/ Creative destructionSingapore is the ideal locale to centre a cash

buying operation in a world where the primary

yards span rom China to Pakistan

34/ Singapore in numbersIsland state builds on its maritime muscle

1 Hin Leong

Marine International6.81m dwt

, ,

S :

2010

2,639m dwt 2,427m dwt 2,252m dwt 2,067m dwt

2009 2008 2007

Singapore3,000m dwt

Pulau Bukom37m dwt

11.5m dwt

20.24m dwt

.

6.33m dwt

.

0.96m dwt

0.28m dwt

0.2m dwt

0.04m dwt

0.1m dwt 5.21m dwt

.

0.18m dwt 0.01m dwt

Top 10 owners

2 Pacific

International Lines3.03m dwt

3 Neptune

Orient Lines2.56m dwt

4 Samco

Shipholding2.52m dwt

6 Pacific

Carriers1.5m dwt

8 IMC

Shipping Co1.11m dwt

10 Raffles

Shipping Corp0.91m dwt

5Thome Ship

Management2.4m dwt

7 Cara

Shipping1.31m dwt

9 Pacific King

Shipping Holding0.95m dwt

Editor

Richard Meade

Special reports editor

Nicola Good

Chief executive

Fotini Liontou

Advertising manager

Matt Dias

[email protected]

April 2012 | www.lloydslist.com

Printing

ESP Colour

Managing director

Fergus Gregory

Advertising sales

Rosalind Loh

Design

Kaz Kapusniak

Production

Maria Stewart

Russell Borg

Editoral, advertising and

sponsorship inquiries

Lloyds List, 119 Farringdon

Road, London EC1R 3DA

Tel: +44 (0)20 7017 5000Fax: +44 (0)20 7017 4782

Email: [email protected]

Published by Informa UK Ltd.

Informa UK Ltd 2012

No part of this publication may be

reproduced, stored in a retrieval

system, or transmitted in any form or

by any means electronic, mechanical,

photographic, recorded or otherwise

without the written permission of thepublisher of Lloyds List.

Lloyds List is available in every

country in the world by placing

a subscription for a regular daily

supply with the publishers in London,

Informa UK Ltd. Copies are delivered

to subscribers by hand on the day

of issue, where possible, or sent by

priority first class airmail post. Please

place your order with the Lloyds List

marketing team at Informa.

This supplement is issued free to

subscribers of Lloyds List and is

one of a series published at regular

intervals each year. Additional copies

are available from Lloyds List for

50 per copy and there are attractivediscounts for bulk supplies.

For further information on thse

supplements, and Lloyds List, our

daily newspaper, please contact

Chris Rowe on:

Tel: -44 (0)20 7017 4187

Fax: +44 (0)20 7017 4973

5/ From strength to strengthSingapore continues to attract a diverse

range o maritime businesses

6/ Steady ocus on growthSingapore has kept an eye on the strains

aecting shipowners and has taken action

to ensure its competitiveness

13/ The Oslo-Singapore connection

The time could be right or dual listingsin the two maritime capitals

14/ Holding to standardsThome remains selective in a market

where quality could be compromised

17/ Taking a regional leadon seaarers rightsSingapore is the frst Asian nation to sign up

to the Maritime Labour Convention

18/ Proactive on piracyCity state to host ReCAAP or another fve years

20/ Sizing up SingaporeSingapores shipping world in fgures

23/ Rening the modelJaya is retreating rom its ambitious plans to

become both a builder and charterer o oshore

supply vessels to ocus on new chartering

markets in Southeast Asia and the Middle East

26/ Seizing the ofshore initiativeSingapores yards have developed

indispensible expertise in deepwater and

harsh environment vessel construction

30/ Going to great depthsSingapore is at the oreront o a quest or

better design and construction o deepwater

and harsh environment oshore vessels

p6 p26 p32

p20

The author

Tom Leanderis Editor-in-Chie, Asia

at Lloyds List

1 Hin Leongarine International

6.81m dwt

, ,

S :

, , , ,

,

.

.

.

.

.

Top 10 owners

2 PacificInternational Lines3.03m dwt

3 Neptune

Orient Lines2.56m dwt

4 Samco

Shipholding2.52m dwt

6 Pacific

Carriers

1.5m dwt

8 IMC

Shipping Co1.11m dwt

10 Raffles

Shipping Corp0.91m dwt

5Thome Ship

Management2.4m dwt

7 Cara

Shipping1.31m dwt

9 Pacific King

Shipping Holding0.95m dwt


4/36


5/36

www.lloydslist.com April 2012

Singapore 5

From strength

to strength

2011 was a good year or Maritime

Singapore, despite the uncertain

economic climate in Europe and

other parts o the world. The Port

o Singapore showed strong growth

in all areas namely, vessel arrival tonnage,

container and cargo throughput, and bunkersales. The Singapore Registry o Ships contin-

ued to grow and maintain its ranks among the

top 10 in the world, reaching 57.4m gt at the

end o the year. Singapore also hit more than

2bn gt in terms o annual vessel arrival tonnage

or the rst time.

As part o our investment in the saety and

security o our port, the Maritime and Port

Authority o Singapore opened a new port

operations control centre in Changi, which

is equipped with an advanced vessel trafc

inormation system that is able to track 10,000

vessels at any one time.

To promote environmentally-riendly

shipping, MPA has introduced the Maritime

Singapore Green Initiative ofering local rms

incentives to implement environmentally-

riendly shipping practices beyond the ones

already mandated by the International Mari-

time Organization. The initiative comprises o

three programmes Green Ship Programme,

Green Port Programme and Green Technol-ogy Programme and MPA will invest up to

S$100m ($80m) over the next ve years.

As an international maritime centre, Sin-

gapores dynamic maritime landscape has

continued to attract a diverse range o mari-

time businesses. Singapore is now home to

more than 120 domestic shipping groups,

contributing to some 7% o Singapores gross

domestic product, and employing more than

170,000 people.

Maritime Singapores achievements would

not have been possible without the spirit o

togetherness that governs our strong partner-

ships with the industry, institutions, unions

and other government agencies. I am confdent

Shining light:

more than 2bn gt

of vessels called at

Singapore in 2011

Singapore continues to attract a diverse range of maritime businesses

that in continuing to work as one, Maritime

Singapore will continue to grow rom strength

to strength.

Lam Yi Young is Chief Executive of MPA


6/36

6 Singapore

April 2012 www.lloydslist.com

Steady focus on growthSingapore has kept an eye on the strains affecting shipowners

and has taken action to ensure its competitiveness


7/36


8/36

www.swedishclub.com

Gothenburg . Piraeus . Hong Kong . Tokyo . Oslo

On a steady

course

With 140 years in the marine insurance business, we have a longhistory to rely on and can step in to the uture with confdence.

As the true mutual company we are, we provide additional strength

to our members and always put their interest frst.

Ask any o our loyal members.


9/36


Singapore 9

Bunker kingdom

Singapore holds its mantle as the worlds biggest bunker supplier by dint o its crucial position on

the Asia to Europe trades and its hub status in intra-Asia trades. Last year saw another record. Total

sales volumes o bunkers grew 5.6% to another record high o 43.2m tonnes in 2011, according to

data rom the Singapore Maritime and Port Authority.

But the character o bunkering in Asia is changing, and that stands to change Singapores status

as well. While BP has been the top bunker supplier in Singapore since 2003, Brightoil Petroleum,

an emerging marine uel supplier whose parent is listed in Hong Kong and with a major presence in

China, has been a ferce competitor or the British oil major over the past years.The marine uel trader moved up rom outside the top 20 in 2010 to second position behind BP

in 2011, according to Singapore Maritime and Port Authority. Brightoil surpassed ExxonMobil and

SK Energy in sales volumes. Glencore unit OW Bunker slightly improved its positioning rom 14 to

13 in the ranking.

However, some bigger names lost market share last year. Shell slipped rom eighth place to

12th, while refner Singapore Petroleum slid rom nine to 14.

Singapore, the worlds top bunker port, did not disclose detailed sale volumes or each company.

In 2010, Brightoil aggressively hired several senior staers rom BPs uel oil trading team,

including its global head. BP then sued some o them or breach o contract in Singapore, though

the cases were settled without coming to trial last October, according to media reports.

Singapore itsel aces competition rom China as the worlds biggest bunker supplier. Chinas

dominance will probably be inevitable, given the comparative sizes o the two nations and the

growth in Chinese ports.

Navy Liu, inormation manager o C1 Energy, an independent oil and gas market inormation

provider in China, orecasts growth rates o 15%-20% per annum or Chinas total bunker volumes

in the next fve years and 20%-30% per annum or its bonded bunkers, sold to internationally-

trading Chinese vessels and oreign vessels calling at Chinese ports.

He says the total bunker volumes in China will be close to volumes in Singapore in 2015,

and bases his predictions on the expected shipping trafc growth in China, brought about by

continuously increasing imports and exports.

Singapore has a way o hanging in

or the long ght.

The year 2011 will be remem-

bered as an extremely volatile

one in Asian shipping but posi-

tive records were plentiul in Singapore. Look

no urther than Singapore ports giant PSAs

throughput at its agship Singapore port.

The port handled 29.4m teu and registered

growth o 6.1% to reach a new record volume

in the year. This actually topped the combinedgrowth or PSA terminals outside o Singapore,

which expanded 5% year-on-year to reach

27.7m teu in throughput.

Singapores port also savoured a record year

in bunker sales last year. Total sales volume o

bunkers grew 5.6% to a record high o 43.2m

tonnes in 2011. Singapore is the worlds largest

bunkering port.

Singapore, one o the top 10 ship registries,

saw the tonnage o its agged vessels up 17.6%

at 57.4m gt last year.

The robust numbers come despite the Euro-

pean slowdown that began in the second hal

o last year. Singapore is the key port on the

Asia-Europe route. Annual vessel arrival ton-

nage increased 10.5% to 2.2bn gt last year, o

which containerships accounted or 31% and

tankers 30.8%. The port received the largest

level o tonnage globally, the MPA said.

You could argue that Singapores good

ortune in a tough year had more to do with

geographical destiny than endeavour.

But that would discount the advantage o

using advantages well which is perhaps Sin-

gapores greatest git to itsel.Over time, Singapores policy makers

have made the port city extremely riendly

to shipping, but also with benets that build

long-term loyalty. Singapore has avourable

tax regimes or shipowners with an efective

tax o 10% and similar, i not as ully leni-

ent, benets or rms that service shipping

companies. It has enhanced these benets

with sensible policies in the last two years.

A Green Shipping Initiative is an ingenious

scheme to promote lower carbon emissions in

the shipping industry generally. Its incentives

are linked to exemplary perormance under

the International Maritime Organizations

Energy Efciency Design Index and could be

used as model by other major port cities o

the world.

With an eye on the strains afecting ship-

owners, the nation has enhanced its tax

benets or ship disposals, including disposals

o newbuildings owned by Singapore-regis-

tered shipowners, but not yet registered in

the Singapore Ship Registry. This is a progres-

sive incentive scheme that benets owners in

a tight market, but also benets the industry

at large, because o the need send ships or

demolition to reduce overcapacity.

Financial incentives are important, but they

are only part o the equation. Singapore has

developed research and development inra-

structure through policies that encourage tie

mv p th as:

Brightoil Petroleum is now

the second biggest bunker

supplier in Singapore 5.6%growth in saleso bunkers in

Singapore in 2011


10/36

10 Singapore


What next for noL?

2011 was a tough year or Singapores fagship box line. Neptune Orient Lines posted an annual

loss o $428m, with the lions share o that loss coming in the ourth quarter.

In that period, the company shed $320m, and it saw its cash reserves all to $228m at the end

o December rom the year-ago level o nearly $1bn.

Since then, opinion on how and when the company will revive has been mixed.

NOL is the parent o APL, the worlds th-largest container line, according to Lloyds List

Intelligence. The lines core loss or earnings beore interest and tax was $297m or the ourthquarter o 2011 and $446m or the year. This compared to 2010 core ebit gures o $178m or the

ourth quarter and $492m or the ull year.

The worst eature is that they were burning cash at a signicant level in the ourth quarter,

says analyst Janet Lewis o Macquarie Research in Hong Kong.

NOLs cash position depleted to $228m at the end o December, rom $997m at the end o

2010. Its debt stood at $2.6bn at year-end 2011 rom $3.3bn at the end o 2010.

Although NOLs position looks tough, some observers expect a silver lining in 2012. For

one, the company has managed its costs well. The carriers costs per eu ell 4% year on year,

excluding bunker costs, due to slow steaming and operational cost eciencies and new chie

executive Ng Yat Chung has pledged to cut $500m in costs this year.

Moreover, APLs newbuildings are ully nanced by bonds and committed ship nancing,

the company says. According to Alphaliner, NOL has 27 ships on order, adding 280,740 teu,

equivalent to some 46% o its standing feet o 99 ships o 616,322 teu.

One executive rom a rival company believes that Singapore-based APL may have pushed

costs into the ourth quarter, recognising them in a loss-making quarter anyway, opening the

way or a better nancial position in 2012. That better position, o course, is predicated on the

industry-wide rates hikes holding this year.

Rigan Wong, an analyst or Cit igroup in Hong Kong, believes that investors have been skewed

towards NOL, but that a lot o that positive sentiment has already been priced into the stock.

However, Mr Wong says this caveat will vanish i the line has a so-called spring surprise in store.

The good news is that the box lines in general and NOL were able to sustain the general

rates increases they called or in March. Analysts believe that they will be able to do so with

another round in April.

But the rates increases will not be enough to support a big turnaround or the company

without headway on those promised cuts. Even to analysts positive on the company, the gure

o $500m seems high. Thats a lot o cuts, says Eric Bergoo, an analyst with DnB Nor in

Singapore, to achieve with slow steaming, other operational costs cuts and realignment o somebusiness processes.

Others note that i there is $500m to be taken out o operations, then why hasnt it been

done beore?

ups between universities, classifcation socie-

ties, and other interested parties. The result is

a cluster where the nest technical minds in

Asian shipping are able to interact and inno-

vate. Singapore is a banking centre rivalling

Hong Kong, and it has established an edge

in maritime nance. It is a law centre, and a

growing centre or arbitration in shipping dis-

putes. The Singapore Ship Sale Form, a recent

development, is designed in response to the

Singapore and Asian maritime communityscall or an alternate orm that would cater to

their needs, in view o increasing maritime

activities and maritime arbitration, says the

government.

Everything is here, says Masterbulk

chie executive Rune Steen, there really is

no other shipping centre like it in Asia per-

haps the world combining all the elements

o shipping, including law and fnance. Mas-

terbulk operates 23 dry bulk carriers, all open

hatch gantry crane ships, and is a Norwegian

amily-owned business. Masterbulk has dis-

tinguished itsel by a progressive policy o

seaarer training and benefts that has given

it one o the highest crew retention rates in

the industry.

Commentators rom completely separate

disciplines in shipping tend to agree. You

can operate ships worldwide rom here, says

Danilo Rafa, managing director o shipman-

ager Ishima. Its a good environment, with

tax incentives, a good legal ramework, and

a liveable environment. The only gripe that

shipmanagers have has grown out o Singa-

pores success at managing its economy. TheSingapore dollar has appreciated sharply over

the last two years against the US dollar, making

it tough or those companies shipmanagers

27NOL ships on

order

hvy ld:

NOL posted a loss o

$428m in 2011

Photo: Bloomberg

There reallyis no othershipping centrelike it in Asia perhaps the worldRune Steen, Masterbulk


11/36


Singapore 11

neW BenefitS for oWnerS under the Singapore fLag

Singapores rat o incentives or shipowners was enhanced in 2011 and 2012, with the addition o

two programmes, the Green Ship Programme and enhanced tax treatment or vessel disposals or

Singapore-fagged owners.

g S pmm

The Green Ship Programme is one o three programmes under the Maritime Singapore GreenInitiative. The Maritime and Port Authority o Singapore will provide incentives to shipowners that

adopt energy ecient ship designs that reduce uel consumption and carbon dioxide emissions.

Singapore-fagged ships registered on or ater July 1, 2011 that go beyond the requirements

o the International Maritime Organizations Energy Eciency Design Index, will enjoy a 50%

reduction on the initial registration ees under both the normal registration and Singapores Block

Transer Scheme during the registration o the ship. Eligible ships will also enjoy a 20% rebate on

annual tonnage tax payable every year until the ship ceases to exceed the requirements o the

EEDI based on the phased-in time period.

Existing ships that utilise energy ecient ship designs that meet the requirements or the

Green Ship Programme can also take part in this programme, but will only enjoy the 20% rebate

on annual tonnage tax payable every year until the ship ceases to exceed the requirements o

the EEDI Energy reerence lines. Ships that qualiy or the Green Ship Programme will be given

a Green Certicate issued by MPA. The Green Certicate will also be given to the company

owning the ship. A new award category SRS Green Ship o the Year will also be introduced in theSingapore International Maritime Awards beginning 2013.

To qualiy or the Green Ship Programme, shipowners have to submit a copy o the International

Energy Eciency Certicate or pre-verication report as proo that the attained EEDI o the ship

exceeds the IMOs requirements on EEDI or that particular ship type and size at the time when

the above nancial incentives are to be applied. Details can be ound via the MPAs Shipping

Circular No.12 o 2011. Additional details can be ound at www.mpa.gov.sg

ec x m vssl ssls

The enhancement o existing benet or the tax treatment ollowing ship sales were announced

in March. It establishes that revenue gains rom the disposal o Singapore-fagged vessels will be

treated as income that qualies or tax exemption under Section 13A o the Income Tax Act, as

part o the tax benets under Singapores Maritime Sector Initiative. The scope o the exemption

will also be expanded to include gains derived rom the disposal o newbuilding contracts. These

changes will take eect retrospectively rom the commencement o the Maritime Sector Initiativeon June 1, 2011.

For more inormation, see the MPAs Singapore Shipping Circular to Shipowners, No 8 o 2012.

in particular that are paid in US dollars but

have high Singapore dollar expenses. Mr Rafa

says that in time Malaysia and possibly Thai-

land could become rival centres, but concedes

that no other location has the combination of

services of Singapore. As for the dollar expense,

shipmanagers have started outsourcing lower

cost services to shared service centres in the

Philippines.

Singapore was to add to its comple-

ment of shipowners in 2011. Mitsui OSKLine strengthened its operational base in

Singapore, noting the port citys strong tech-

nical inrastructure, its status as a inancial

centre, and its location amid the Asia-Europe

and intra-Asia trades. Another very different

company, Thoresen Shipping, a subsidiary of

Thoresen Thai Agencies, moved operations

rom Bangkok to Singapore in 2011 in order,

says its new chie executive, to be nearer to

customers. And Singapore does abound in

cargo owners. Glencore has major operations

there, as does Noble Group and Cargill, to

name a ew.

It has been said that Singapores weak-

nesses stem from geography, too. Singapore

does not have Hong Kongs proximity to

China, and the natural advantages that grow

from Hong Kongs status as a Chinese port,

but one that also has rule o law and a thriv-

ing banking system. But distance rom China

need not necessarily be a drawback. Hong

Kong must always keep an eye over its shoul-

der toward China. How aggressively can it

openly compete with Shanghai, or example,

when Shanghai has been anointed as Chinasnumber one maritime centre o the uture by

government policy? In the current scheme,

Hong Kong must fend for itself and at the

same time be modest.

Modesty has never been a quality in Sin-

gaporean politics see the track record of

the confrontational and brilliant Lee Kuan

Yew. Nor has it ever been a factor colouring

Singapore maritime ambition. Singapore has

built the worlds not just Asias premier

maritime cluster. It has done so careully and

thoughtfully over 20 years. Singapore has

proven it is possible, yet no other nation has

managed it. At the moment, the lead is Singa-

pores to lose.

50%reduction on initial

registration eeunder the GreenShip Programme


12/36

Environmental Rating System including EVDI

Petroleum and dry bulk veing specialists

Online tanker veing information system

Database of over 70,000 vessels

Global inspection team

Tailored service to customers

Hosted + barge veing systems

TRADERS CHARTERERSSHIP OWNERS

TERMINALS / REFINERS

PORT AUTHORITIES

INSURANCE

MANAGINGMARINE RISK Australasia | Melbourne

P +

Europe | LondonP +

E [email protected]

Americas | HoustonP + ()

FOR MORE INFO CONTACT:

WWW.RIGHTSHIP.COM


13/36


Singapore 13

on hand:

Norwegian

investment banks

and law frms have

been preparing the

ground work or

dual listings rom

either Singapore

or Norwegian

companies

Photo: Bloomberg

In 2009, Singapore and Norway signed

an agreement to promote dual listings in

their respective markets. The move made

eminent sense because of both the dif-

erences and similarities between the two

nations. There is a great commonality in each

market: both have a speciality in shipping,

ofshore and energy businesses, and there is

little cross trading between the two exchanges.

The reasons are both geographical and cul-

tural. Singapores shipping companies both

serve the entire Asian trading region, and,

in the ofshore vessel building business, the

entire world. Norways shipowners are one

o the main orces in global energy shipping,

and Norways ofshore industry ocuses on the

North Sea, and increasingly Brazil.

The regulatory ramework on each exchange

is compatible both exchanges have strict

rules of transparency that would be attractive

to investors from either Singapore or Norway.

Marianne Sahl Sveen, a senior associate at

Wikborg Rein, the Oslo-based law rm with

a major presence in Singapore, notes thator Singapore-listed companies, a dual list-

ing in Oslo would bring a new investor base.

The major investment banks in Norway that

would handle the distribution or such a list-

ing DnB Nor, RS Platou and Pareto Securities

all have deep connections with investors

beyond Norway and throughout Europe in the

oil and gas and shipping sectors. Meanwhile,

Norwegian companies that are seeking to tap

long-term Asian investors amiliar with the of-

shore and shipping businesses could benet

rom similar exposure in Asia via investment

banks based in Singapore. DnB Nor, for exam-

ple, has led several important shipping issues

in China.

So far there has only been one dual listing

that o John Fredriksen-led Golden Ocean,

which listed in Singapore in 2010.

The company already had a substantial

operational presence in Asia, Golden Ocean

said in a statement. A listing in Singapore was

seen as a natural next step in the corporate

development.

But the lack o listing activity is easily

explained by the volatile markets that have

characterised both Asia and Europe since

2009. In the last ew years, says Ms Sveen,

the markets have been hard to assess. For a

ew months they can be stable, but volatility

always returns. She predicts that once stabil-

ity returns, interest will run high.

The robust outlook or the global ofshore

industry suggests that she could be right.

She says that since the 2009 signing o the

memorandum o understanding, Norwegian

investment banks and law rms have been pre-

paring the groundwork or dual listings rom

either Singapore or Norwegian companies.

Weve been seeing interest rom compa-

nies on both sides, she says. It is a matter

of timing.

A listing in Singapore wasseen as a natural next step in thecorporate developmentGolden Ocean statement

The Oslo-SingaporeconnectionThe time could be right or dual listings in the two maritime capitals


14/36

14 Singapore


Thome remains selective in a market where quality could be compromised

L

ike the shipping business itsel,

Thome is global in nature. The com-

pany has its roots in Norway, but it isa ull fedged Singapore entity. Olav

Eek Thorstensen established the com-

pany in Singapore in 1976 and it has grown to

encompass ull technical management o 154

ships, about two-thirds o which are tankers.

It has about 300 onshore employees and a vast

training network that includes its TSM Maritime

Training Centre in the Philippines.

Like all third-party shipmanagers, Thome has

to respond to the market pressures on owners

and the current economic crisis in shipping has

squeezed the shipmanagement industry. Regu-

latory compliance costs have mounted while

shipmanagement ees have stagnated as owners

ace higher uels costs and low reight rates.

This has made Thome especially vigilant

about maintaining high standards o saety

and best practice when managing vessels. We

want to grow our business, says Stefen Tunge,

the chie operating ocer tankers o Singapore-

based Thome Ship Management. But we are

very careul about the owners we choose.

He says that cuts by tanker owners to adjust

to the severely distressed market are making

third-party managers wary in general aboutcompromising their own service quality and

reputation. There are limits as to how ar owners

can cut without cutting corners dangerously,

Mr Tunge adds.

Mr Tunges comments refect how growing

distress in the tanker market is playing out in

the industries that service the sector.

The two most prominent tanker companies

acing severe cash fow troubles are Berlian Laju

Tankers, which roze repayments due this year

on $1.9bn in debt and Torm, which has strug-

gled to restructure its debt payment schedule

with its banks.

But many others ace huge cash fow con-

straints as rates languish and uel prices soar.

Mr Tunge says that Thome conducts thor-

ough due diligence on the quality o the

shipowners that approach it or business,

particularly on the tanker side, where Thome

manages 105 vessels that range rom product

tankers to liqueed natural gas carriers and

suezmax vessels.He says that oil major vetting via the Ships

Inspection Reporting Programme, a collabora-

tion between the oil industry and shipowners to

ensure tanker operating quality, has set a high

bar or shipmanagers.

SIRE inspections target a low number o

observations a recorded deciency or remark

by a vetting inspector per inspection. Thome

has halved its observations per SIRE inspection

rom 11.5 in 2006 to 5.8 in 2011.

We target zero, but it is very, very hard to get

zero observations, says Mr Tunge.

The stringent vetting process provides a

natural incentive to avoid owners whose cuts

compromise operating quality.

Another shipmanager worry centres on

buying on behal o the shipowner. Shipman-

agers order supplies rom vendors to sustain

operations, but i the owner runs into nancial

trouble and is unable to reimburse, then it is

impossible to go to the vendor again, even on

behal o an owner able to pay.We explain that were not banks, were

agents but it does no good, says Mr Tunge.

A urther challenge to growth is a amiliar

one: the shortage o qualied senior ocers,

particularly in the tanker world.

Despite reports to the contrary, this is still a

problem, he adds.

Nevertheless, Mr Tunge expects the problem

to ease should overcapacity all in 2013. Thome

addresses the problem o nding qualied crew

by intense training. The company has a high

number o training days across its operations,

with 24,492 days committed to training in 2010

and 12,661 through to July in 2011, when the g-

ures were last drawn.

Holding to standards

Selectiveapproach:

Thomes Steffen Tunge

says the company is

increasingly careful

about the owners it

chooses

154ships managedby Thome


15/36

The progressive mutual

Insurance solutions for our Members

and their brokers worldwide

LONDON SINGAPORE VANCOUVER

www.shipownersclub.com

The Shipowners Club


16/36


17/36


Singapore 17

Singapore is the frst Asian nation to sign up to the Maritime Labour Convention

Taking a regional leadon seafarers rights

at the

forefront:

Singapore is the

frst Asian nation to

ratiy the Maritime

Labour Convention.

It signed up in June

2011

Singapore is the rst, and so ar

only, Asian nation to sign up to

the Maritime Labour Conven-

tion (2006), which sets out the

minimum standards on working

conditions or seaarers worldwide.

Ratication o the MLC (2006) requires at

least 30 members with a total share o world

gross tonnage o ships o 33% to ratiy the con-

vention beore it comes into orce 12 months

later. The requirement is higher than or Inter-

national Labour Organisation conventions

because, in the words o the ILO, the enorce-

ment and compliance system established

under the convention needs widespread inter-

national co-operation in order to be efective.

So ar, 18 states, with two more pending,

have ratied, but these states have already

met the tonnage requirement, comprising 54%

o the worlds feet in terms o gross tonnage.

Thats because the our largest ship registers

the Marshall Islands, Panama, Liberia and

the Bahamas had ratied it by 2009. Arthur

Bowring, head o the Hong Kong ShipownersAssociation and chairman o the ISF Labour

Aairs Committee, projects that ratication

will come soon in 2012. Still, as he mentioned

at a manning and crewing conerence in

November, I would have expected the Philip-

pines to have ratied by now.

As or Singapore, the nation apparently rec-

ognised the benet o being rst out o the gate

in Asia, it ratied the convention in June 2011.

According to Lam Yi Young, chie executive

o Singapores MPA, Seaarers play a critical

role in enabling shipping, world trade and the

worlds economy. As a responsible maritime

nation, Singapore is committed to enhancing

and looking ater the wellbeing o seaarers.

Whats holding back the Philippines, or,

or that matter, fag states anywhere in the

globe? The MLC can be regarded as ourth

pillar to global maritime regulation, ollow-

ing Solas, Standards o Training, Certication

and Watchkeeping and Marpol. It consoli-

dates 68 maritime labour instruments o the

ILO into one concise body. While it is dicult

to imagine any government publicly resisting

ratication, reluctance to sign may signiy the

diculty o ensuring a mechanism o compli-

ance under national law.

Two o the early supporters o the conven-

tion, the United States and the United Kingdom,

have not yet ratied. Both insist that regulations

have to be in place on a national level to ensure

compliance. Earlier this year, or example, the

US representative to the ILO argued that it was

necessary to ensure national compliance and

examination o national laws, regulations

and practice had to come rst. As or the UK,

many o the necessary regulations are already

in place, and ratication had been expected in

2011, but no action has been taken.


18/36

18 Singapore


City state to host ReCAAP or another fve years

Proactive on piracy

anti-pircy

exercise: ReCAAP

actively engages

the industry onmeasures to prevent

attacks

Photo: Bloomberg

S

ingapore has become the most

active regional hub in the inter-

national eort to eradicate piracy

and armed robbery on the highseas. In March, the city state

agreed to host ReCAAP, Asias regional anti-

piracy inormation sharing group, or another

ve years, a milestone that underscored its

contribution to ghting piracy and maritime

crime in Southeast Asia.

Launched in Singapore in 2006, the ReCAAP

Inormation Sharing Centre has established

itself as an authority on incidents of piracy and

armed robbery against ships in Asia. ReCAAP

has actively engaged the industry on measures

to prevent attacks, and was used as a model for

similar inormation sharing eorts to combat

piracy o the coast o Arica.

As a global hub port and a major fag state,

Singapore is committed to combating piracy

and armed robbery at sea, says Singapores

Minister o Transport and Second Minister or

Foreign Aairs Lui Tuck Yew.

This new headquarters agreement will

enable the ReCAAP ISC to strengthen its part-

nership with government and industry towards

sae and secure shipping in Asia.

The agreement was signed by ReCAAP exec-

utive director Yoshihisha Endo and Maritimeand Port Authority o Singapore chie execu-

tive Lam Yi Young.

Mr Lam says that signing the new agreement

to host ReCAAP in Singapore sends a clear

signal that ReCAAP member states are com-

mitted to co-operation against piracy. ReCAAP

has 17 contracting parties, rom Japan, India

and Vietnam to Norway.

ReCAAP reported that piracy and armed rob-

bery incidents fell 7% last year, ending what has

been an upward trend since 2007. A total o 155

incidents were reported in Asia in 2011, includ-

ing 133 actual cases and 22 attempted cases.

Singapore has also been in the oreront o

the debate over how to attack the vexing prob-

lem o Somali piracy, which has extended ar

into the western Indian Ocean in recent years

but mostly outside the ambit o ReCAAPs

piracy attack tracking.

The Asian Shipowners Forum, based in

Singapore, called or a UN resolution that

would see the international body sponsor and

manage armed personnel on board ships sail-

ing through pirate-inested waters.The call, in a statement released by ASF in

March, ollows the groups proposal to Work-

ing Group 3 o the Contact Group or Piracy

O Coast o Somalia in Washington earlier in

the year.

It said that the proposed deployment could

serve as a mitigation measure whilst expecting

a much-awaited UN resolution on the root cause

o the Somali piracy problem on land.

Working Group 3 was created under UN

Security Resolution 1951 three years ago

as a voluntary international orum bring-

ing together countries, organisations, and

industry groups with an interest in combat-

ing piracy.

The ASF has proposed its counterpira-

cy proposal to be seriously considered or

adoption by the UN, the statement says. I

adopted, the ASF would expect armed mili-

tary personnel sponsored and managed by

the UN to provide much needed protection to

merchant ships and their crews in the Gul o

Aden and the Indian Ocean.

The key idea is to use foating bases onsea to serve as embarkation or disembarka-

tion points or these military personnel.

ASF rst proposed a UN anti-piracy mili-

tary task orce in September, calling or

armed military guards to be deployed in small

detachments on board merchant ships to pro-

tect them during their transit o the Indian

Ocean. It then proposed the concept o foat-

ing bases in February.

The ASF is a voluntary organisation o

shipowners associations o Australia, China,

Hong Kong, India, Japan, South Korea, and the

Federation of Asean Shipowners Associations.

It is seeking support or its proposal rom the

international shipping community.

7%all in piracy andarmed robbery

incidents last yearReCAAP


19/36

Global cover, local knowledge

WWW.PENINSULAPETROLEUM.COM

LONDON - Tel: +44 (0) 207 766 3999 [email protected]

GIBRALTAR - Tel: +350 200 52641 [email protected]

GENEVA - Tel: +41 22 322 9600 [email protected]

TNSBERG - Tel: +47 333 40 100 [email protected]

ATHENS - Tel: +30 210 4287 800 [email protected]

DUBAI - Tel: +971 4 445 8435 [email protected]

SINGAPORE - Tel: +65 6238 6621 [email protected]

SHANGHAI - Tel: +86 21 5386 8866 [email protected]

TOKYO - Tel: +81 3 5208 1511 [email protected]

MONTEVIDEO - Tel: +598 2903 3450 [email protected]

Pronounced ~ tjia laht

Translation ~ Strenuous

Singapore may be the worlds leading bunkerport but sometimes knowing just which of its

many suppliers or traders to work with and

trust can be jialat.

Speak to Peninsula Petroleum, the global trader

with truly local knowledge. We know how to turn

your Singapore bunkering experience from being

jialat to swee lah thats a relief to those

in the know.

ialat


20/36

1 Hin Leong

Marine International

6.81m dwt

Passenger

3m dwt

Reefer

1m dwt

Bulk

1,089m dwt

Tanker

1,026m dwt

Container

735m dwt

General cargo

57m dwt

Gas tanker

55m dwt

Calls to the Republic of Singapore 2011

2010

2,639m dwt 2,427m dwt 2,252m dwt 2,067m dwt

2009 2008 2007

Singapore

3,000m dwt

Pulau Bukom

37m dwt

Ro-ro

38m dwt

Other

31m dwt

11.5m dwt

3m dwt

20 Singapore



21/36

Sizing up Singapore

Singapore owned fleet and orderbook 2011

Source: Lloyds List Intelligence

0.24m dwt

1.53m dwt

6.33m dwt

4.82m dwt

0.96m dwt

0.28m dwt

0.2m dwt

0.04m dwt

0.1m dwt 5.21m dwt

0.07m dwt

0.18m dwt 0.01m dwt

Live fleet

On order

Top 10 owners

2 Pacific

nternational Lines

3.03m dwt

3 Neptune

Orient Lines

2.56m dwt

4 Samco

Shipholding

2.52m dwt

6 Pacific

Carriers

1.5m dwt

8 IMC

Shipping Co

1.11m dwt

10 Raffles

Shipping Corp

0.91m dwt

5Thome Ship

Management

2.4m dwt 7 CaraShipping

1.31m dwt

9 Pacific King

Shipping Holding

0.95m dwt


Singapore 21


22/36

Rosalind LohAdvertising Sales Manager - Asia

Orchard Building, #08-02, No. 1 Grange Road Singapore

Tel: +65 650 82456 | Email: [email protected]

Thursday 8 NovemberStamford Ballroom,Raes City Convention Centre, Singapore

www.lloydslist.com/asiaawards

Corporate Event Sponsor

Savethe

date

To be part of the premier networking event of the year contact:


23/36


Singapore 23

Jaya is retreating from its ambitious plans to become both a builder and charterer of offshore

supply vessels to focus on new chartering markets in Southeast Asia and the Middle East

Refning the model

Shifting focus:

Jaya is moving

its focus from

shipbuilding and

will increase its

exposure as an

owner and charterer

It is not oten that rumour o an acqui-

sition lingers. More oten, when thenews breaks, companies will either

announce an imminent deal, or a suitor

will back away, or all parties will issue

a straight denial.

Jaya Holdings public confrmation o talks

with IHC Merwede, the worlds largest build-

er o dredgers and heavylit vessels, came in

January, but no acquisition announcement

has materialised.

IHC Merwede has long said that it is look-

ing to buy a shipyard in Asia, and Jaya, a

Singapore-listed company that builds and

operates ofshore supply vessels, has yards

in Singapore, Batam in Indonesia, and China.

The yards specialise in anchor handling and

tug supply vessels, platorm supply vessels

and barges. IHC Merwede could convert the

yards to develop construction or its growing

ofshore support vessel portion o its busi-

ness, which include complex pipe-laying

vessels and ofshore supply vessels.

But IHC Merwede isnt looking at Jaya

alone, and is said to be actively seeking to buy

a yard or yards in Southeast Asia, including

Vietnam and Singapore. The company ownsve shipyards in Europe and has stakes in

yards in China, India and Bangladesh or

building dredgers. I the company does buy a

Southeast Asia shipyard, it would be its rst

in Asia to build ofshore support vessels.

Analysts now say that IHC Merwede may

now have a stronger interest in buying the

Singapore and Batam, Indonesia yards o Dry-

docks World, the troubled Dubai shipbuilder

that recently announced a restructuring plan.

IHC Merwede declined to comment on

market speculation.

Talks with IHC Merwede may have tapered

of, but Jaya is already well under way with

a strategy to ocus its earnings away rom

shipbuilding and increase its exposure as an

owner and charterer.Its longstanding chie executive Chan Mun

Lye exited the company on March 31, ater a

careully orchestrated changing o the guard.

Stepping into the vacant post on April 1 was

current chie operating ocer and executive

director Venkatraman Sheshashayee. Mr She-

shashayee, previously director o Greatship

(India) and managing director o Greatship

Subsea Solutions Singapore, joined the com-pany in January. His arrival at the top o Jaya

underscores the companys interest in building

its chartering business, as Mr Sheshashayee

has long experience in the international of-

shore services industry in the Middle East,

India and Southeast Asia, and important con-

tacts in the business in these regions.


24/36

THE TIDES HAVE SHIFTEDThe shipping industrys decisions makers are now reading

Lloyds List online.

iPad Views

iPhone ViewsPage Views

Visits

Make sure your companys advertising does notmiss out on the tidal shift from print to digital by

contacting our team today.

Matt Dias

Northern Europe Sales Manager

Telephone: +44 (20) 701 74188


Duncan McKenzie

Sales Manager

Telephone: +44 (20) 701 77103


Catrin Probert

Sales Executive

Telephone: +44 (20) 701 77220


50%31%

282%

663%

Percentage increase on viewing figures - January 2011 compared to January 2012

Figures based on Omniture statistics

Lloydslist.comMaritime business intelligence online


25/36


Singapore 25

Jayas original model was to build vessels

for sale, unlike traditional shipyards which

only build vessels for order. It also developed

its own oshore fleet simultaneously, as a

way to diversify away from excessive expo-

sure in the highly cyclical shipyard business.

Now the sole focus will be on its owned fleet.

Analyst Kay Lim from DnB Nor in Singapore

is positive on the move, saying that the com-

pany can position itself to capture higher

margins and earnings upside in its charteringsegment, given room for increased utilisa-

tion in the sector.

Utilisation levels are set to rise. Mr Lim

estimates that utilisation levels of oshore

support vessels globally stabilised at an

average 76%-79% in 2011, but that they also

began to tick up in the fourth quarter of 2011

and early 2012. The environment will favour

owners with existing fleets and newbuildings

close to delivery.

There is always a risk that newbuild order

flow could slow if current credit market tight-

ness continues for an extended period of

time, which could in turn be negative for

IHC MERWEDE ESTABLISHES SINGAPORE HUB

Denis Welch was tapped by IHC Merwede as its new chief executive for Southeast Asia last

November. Mr Welch, who left Drydocks World as the head of its Southeast Asia operations in

2010 to set up a consultancy, is now in charge of reinforcing IHC Merwedes regional identity and

expanding its Asian operations, which focus on its offshore and marine activities.

Singapore is one of the many countries where IHC Merwede has operations and the Southeast

Asia office opened in 2007 to service local customers in the dredging and offshore markets.

At the time of his appointment, Mr Welch pointed to the companys ability to develop innovative

solutions in-house and through strategic business acquisitions. I am confident that our customers

will welcome this further commitment to serving their interests in Asia, he said.

IHC Merwede had just set up offices in Singapores PSA building when Lloyds List visited last

month. This [city] is a vibrant business environment, says Mr Welch, adding that the new regional

headquarters are ideal to get closer to our customers as it expands its business in building highly

specialised offshore support vessels.

The companys strength in engineering and its experience in building complex dredging vessels,

he says, will allow it to deliver solutions in the offshore arena.

However, Mr Welch wouldnt comment on speculation that IHC Merwede is targeting Jaya

Holdings for a buyout nor on recent rumours that another target could be Drydocks Worlds

shipyard facilities in Batam or in Singapore.

But in December IHC Merwede confirmed that it was looking to buy a shipyard in Southeast

Asia. The companys global chief executive, Govert Hamers told the Singapore press that One

[shipyard] is enough to start with, and went on to say that he hoped for a deal to be completed

in the first half of 2012.The Southeast Asian market is a very big market, he said. Its for us to get started,

and hopefully well get a sizeable share of the market and we can grow quite a bit in the

years to come.

yards but work in favour of vessel owners,

says Mr Lim.

He also notes that the pace of ordering

OSVs has been slow compared with the heated

ordering of rigs in 2011, suggesting a pent up

demand that will lead to higher day rates.

Eventually, the industry will start ordering

new OSVs, so why is Jaya solely focusing on

chartered fleets exclusively?

Because shipbuilding is expensive and

risky and Jaya is in a good position to make

new inroads into the oshore service market

with the assets it has now. Shipyards require

a lot of working capital to stay in full opera-

tion. Full funding for Jayas 15 newbuildings is

estimated by the company to amount to $329m.

Jaya plans to pay for the existing newbuilding

programme partly with cash, earnings from its

chartered out OSV fleet, and with vessel sales.

Jaya is in a strong cash position, with $167m

in cash as of the end of 2011. It has net debt of

$96m and net gearing at 0.21. The companys

estimate of the total market value of these 15

vessels ranges between $533m and $588m.

Four funds have substantial holdings in

publicly listed Jaya, including Cathay Asset

Management, which is a liated with Deutsche

Bank, Linden Capital, Orchard Avalon Ltd and

Octavian Advisors. The funds are looking for

an exit, says a source close to the company,

and this is the best opportunity.

Jaya may have been left standing at the

altar by a possible suitor, but it is looking

forward to a fine life on its own.

Jaya is already well underway with a strategy to focus itsearnings away from shipbuilding


26/36

26 Singapore


Singapores yards have developed indispensible expertise

in deepwater and harsh environment vessel construction

Powering

ahead: Keppel has

11 shipyards around

the world

Photo: Bloomberg

Astrange thing happened on

the way to the boom in build-

ing vessels and rigs to support

the worlds oshore industry.

A nation o 5m people and 714

square miles has managed to angle in as a

close second to South Korea, a nation o 49m

people and 38,622 square miles. In rigs, semi-

submersible vessels and oating platorm

and storage vessels, Singapore cannot com-

pete with the scale o South Korea.

But as a specialist in the developing and

highly specialised arena o deepwater and

harsh environment drilling vessels it is unsur-

passed. Singapore is also one o the key world

centres or building ofshore service vessels.

These two areas are vital to the energy indus-

try, which is seeking oil in increasingly remote

and harsh environments as reserves deplete

on land.

Keppel Shipyards, which achieved a record

orderbook S$10bn ($8bn) in new orders in

2011, is developing a new type o rig with

ConocoPhillips that can unction in arctic

ice with completion o the new design slated

or 2013. In 2011, Keppel also delivered three

KFELS N Class jack-up rigs to oshore vessel

operator Rowan or use on the Norwegian

continental shel. The vessels are capable

o drilling and production at a deeper reach

and greater efciency than standard jack-

ups. The three rigs are now under to contract

to Total, Talisman Norway and Xcite in the

North Sea. The Keppel Oshore and Marine

Group which consists o Keppel FELS,

Keppel Shipyard, and Keppel Singmarine

has 11 shipyards around the world. A Keppel

FELS yard in Brazil is building the frst oat-

ing production completely built in Brazil and

designed or the new deepwater exploration

and production that is to take place in the

Marlim Sul feld.

Seizing theofshore initiative

$8bnin new orders

for Keppel in 2011


27/36

Start date: 24th September 2012Application deadline: 10th August 2012


Visit: www.mba4shipping.com/FLP2259AA101

Tel: +44 (0)20 3377 3209 / +1 (646) 957 8929VIP code: FLP2259AA101

The premier distance learningMBA for the maritime sector

I warmly recommend this MBA in Shipping &Logistics programme to all maritime specialistswho want to improve their skills, knowledge andunderstanding of the shipping businesses.

Catalin-Valerica Ancau, ArcelorMittal Steel Galati S.A.

Lloyds and the Lloyds Crest are the registered trademarks of the Societyincorporated by the Lloyds Act 1871 by the name of Lloyds

In times of great adversity, only the best will succeed -ensure your place among them

Programme OverviewThis internationally renowned MBA will equip current andfuture maritime leaders with the skills and knowledge theyneed to manage their business successfully.

The programme consists of six modules delivered over

two years:

Understanding the shipping business environment and the

dynamics of international trade Mastering the mechanics of business strategy

Executive leadership applied to the maritime sector

Advanced international marketing

The practicalities of finance and risk management

Optimising business performance

PLUS - Business Transformation Project

Your Business Transformation Project will allow you to analyse

a current issue affecting your company or the industry, usingreal world data and presenting realistic action points. Thisproject is not only integral to the achievement of programme

outcomes but will prove invaluable to you, your company or

industry sector.

Online delivery means you can study without having to travel toattend lectures or seminars. Our unique learning portal providesaccess to online written materials, complimented by audio/visualcontent, group interaction and networking opportunities. Eachmodule uses a variety of learning tools, combining throughout intoa varied, interactive and educational programme.

Go online to find out more.


28/36

28 Singapore


All told, in the second hal o 2011, the Keppel

Ofshore and Marine Group delivered ve rigs,

completed repairing another our, nished ve

FPSO newbuildings or conversions, upgraded

or outtted three drillships, and delivered seven

specialised vessels.

Sembcorp Marine, Singapores other power-

house ofshore builder has marched into 2012

with new orders o S$6.6bn, the latest being a

semi-submersible well intervention rig or of-

shore driller Helix Energy Solutions or $385.5m.The rig extends Sembcorp Marines building

range to encompass deepwater well interven-

tion models, and is likely to be bound or the

Gul o Mexico.

Like Keppel, Sembcorp is poised to become a

major supplier to Brazils pre-sal wave. Semb-

corp is also investing in a new yard Estaleiro

Jurong Aracruz in Brazil, targeting the orders

rom Brazil. According to Kay Lim, an analyst

rom DnB Nor based in Singapore, Sete Brasil

is set to place a rm order or one drillship

with options or six others at the new Jurong

Brazil yard. Mr Lim estimates that three o those

options will be exercised in 2012.

Sembcorp Marine is also developing a

modern, cost-eicient and integrated yard

acility on its home tur at Tuas, Singapore, on

a reclaimed site, to be developed in three phases

over 16 years. The ocus o the 73 ha yard will be

on shiprepair and conversion; and it will open

in late 2013.

The outlook is very strong or rig builders this

year, but competitive pressures are emerging.

Demand in Brazil or deepwater rigs and the

return o drilling activity in the Gul o Mexicocould trigger a new spate o orders in semi-

submersibles later in 2012, according to Mr Lim.

The semi newbuild market has tradition-

ally been a orte o Singapores rig builders,

says Mr Lim. However, competition rom the

Korean yards is also expected to be intense. He

notes that Korean yards recent drive to diversiy

away rom dry bulk and tanker shipbuilding has

proved relatively successul.

He believes the Korean yards will remain

aggressive in pricing their orders as well as

ofering attractive payment terms.

Singapores yards, he says, will l ikely have

to ollow their lead, which could squeeze

their margins.

Singapores two ofshore titans are comple-

mented by a host o manuacturers o ofshore

services vessels, an industry with a demand

aligned with rig building.

Mr Lim argues that new rigs ordered in

the current cycle that began in October 2010,

which include 60 jack-up rigs and another 14

outstanding options and 36 ultradeepwater

foaters rigs capable o working in water with

a depth o more than around 7,000 t to 7,500

t with another 10 outstanding options, will

require the support and services that will add

to already strong existing demand or ofshore

service vessels.

Singapore hosts more OSV builders than

any other major maritime centre. Companies

such as Swiber, Otto Marine, Ezion, Ezra

Holdings, ASL Marine, Kreuz, CH Ofshore

Competition from the Korean yardsis also expected to be intenseKay Lim, DnB Nor

Lofty ambitions:

Sembcorp Marine started

2012 with orders of

S$6.6bn under its belt and

it is also making Brazilian

inroads

Photo: Bloomberg


29/36


Singapore 29

doing it SafeLy

Keppel FELS distinguishes itsel not only by specialising in

building semi-submersible rigs, but by its ocus on saety,

which earned the Singapore yard the Saety Award in 2011

rom the panel o judges rom Lloyds Lists Awards Asia.

Through inrastructure improvements such as the

introduction o an automated pipe shop and the use o

advanced engineering sotware solutions like 3D modelling,

Keppel FELS has reduced the average number o man-hours

on a jack-up newbuilding by some 20% since 2005. But the

drive or efciency has not compromised the companyssaety record.

Keppel FELS has introduced numerous training programmes and its accident requency rate

improved to 0.02 or 2010 compared with 0.09 in 2009. To address gaps in saety practices, the

company also launched a saety perception survey with 20,000 employees and subcontractors.

From June 2011, all subcontractors supervisors have had to undergo and pass a saety capability

and coaching programme beore they can work at the shipyard. The programme consists o a

fve-day course conducted by the yards saety training centre. The yard has also introduced a

subcontractors re-education programme, to ortiy saety awareness and application on the part o

long-time contractor supervisors.

and Supuracrest have developed speciali-sations in this complex eld. Many are set

to thrive as demand or oshore intensies

worldwide.

Moreover, demand or oshore exploration

and hence marine oshore support is growing

rom the Bay o Bengal to Papua New Guinea.

Singapore stands at the centre o a region

that is undergoing a long-term trend toward

rising living standards. But the organic reserve

replacement ratio or petroleum companies

operating in the region a measure o a com-

panys reserves acquired through their own

exploration and production is low.

This suggests that the oil and gas compa-

nies will have to invest considerably more

into exploration and production o oil.

While there are plenty o OSVs operating

throughout Southeast Asia some 20% o

the world total they are old and may not

suit the developing needs o the charter-

ers that will deploy them to meet this new

demand. Charterers are not only pushing or

more sophisticated vessels to suit their new

projects, but also or vessels with more envi-

ronmental designs.

The age prole o Southeast Asias OSV

feet is instructive. There are 400 anchor

handling tug supply and platorm supply

vessels operating in the region and an esti-

mated 500-800 construction support vessels,

dive support vessels, tugs and crew boats,according to gures supplied by protection

and indemnity club the Standard Club (the

gures were published at the end o 2010 but

still apply).

About 12% o these vessels are more than

30 years old, while about 21% are between

20 years and 30 years o age. Owing to the

rising demand or newer, better designed

and greener vessels, demand or OSVs in

the region is expected to be strong.

Mr Lim notes that the ratio o OSVs to one

installation is expected to peak this year

worldwide, meaning that demand is likely to

pick up in 2012. Interestingly, greater demand

is likely to cause consolidation, in the reversal

o the usual pattern o overcapacity orcing

weaker companies out o the market as the

bigger companies regard them as acquisition

targets. The opposite is true here. A demand

or more capacity is orcing OSV owners to

mull mergers. DnBs Mr Lim explains why:

To enhance competitive advantage o getting

into chartering tenders and feet optimisa-

tion, a sizeable feet is needed.

He adds that OSV companies have been

building up cash piles in the economic cycle

that began with the recovery rom the 2009

recession and into 2010. Mr Lim believes that

some Asian OSV owners present themselves

as good acquisition targets by owners in the

US and Europe.Such was the case with Jaya Holdings,

which conrmed late last year that it was in

talks with IHC Merwede, the Dutch builder

o dredging vessels, or a possible buyout.

Rumours o an impending acquisition have

died out, however, recently, amid speculation

that Dubai Drydocks World may sell its Singa-

pore and Batam, Indonesia yards, to aspiring

oshore builders. That rumour has not been

conrmed, but the argument or an increase

o acquisitions in the ofshore shipyard arena

in Singapore and environs has the merit o

common sense. What enterprising global

company wouldnt want to get in on such a

successul act i the price were right.

$383.5mHelix Energy Solutions

order or a rig romSembcorp


30/36

30 Singapore


Equatorial Singapores average tem-

perature ranges between 25C and

32C and the waters surrounding the

island are generally calm.

Yet ingenious minds in various

corners o the island state spend their days

contemplating pressures o ice packs against

support beams and compression rates at great

depth that can twist steel.

So it is that tropical Singapores maritime

research cluster has moved to the oreront o

the worlds quest or better design and con-

struction o deepwater and harsh environment

ofshore vessels.

All the actors in the search or energy in

deeper waters and in northern ice-bound envi-

ronments have been present in Singapore or

some time. These include design and construc-

tion frms, classifcation societies as well as their

customers and contractors.

They have been drawn to Singapore because

o government benets including avourabletaxation or shipping and maritime services

rms that have brought interacting and thriv-

ing maritime markets to the republic. The mix

o intellectual, fnancial and physical inrastruc-

ture has led to innovation in a complex and

crucial global industry.

Consider the conditions o deepwater drill-

ing at, say, 10,000 t below sea level. At this

depth, the temperature stays between 0C and

2C and water pressure rises to about 2,300

pounds per square inch, a orce that can crush

some metals.

The danger o exploring and extracting

hydrocarbons in deepwater is hardly theoreti-

cal. The consequences o an accident are so

serious that superior design and engineering

are one o the only assurances that the deep-

water drilling is practicable at all.

The Macondo disaster o 2010 amply illus-

trates the consequences o an accident. The Gul

o Mexico spill continued unabated or three

months beore BP, the rigs owner, was able to

cap it. Early this March, BP settled $8bn worth

o private claims. In addition BP has paid out

$7.5bn in clean up costs and other compensa-

tion. TransOcean and Halliburton contractors

on the rig and BP are all amid countersuits

over their liability to each other. BP, which is

also being sued by the US government under the

US Clean Water Act, could ace additional liabil-

ity o up to $17.6bn. Financial consequences to

the companies pale in the ace o the environ-

mental damage and threat to livelihoods in local

communities threatened by the accident.

And yet exploration and extraction is cer-

tain to continue. Deepwater drilling will grow

in the relatively untapped regions o ofshoreBrazil, West Arica, the Gul o Mexico and

Southeast Asia despite the design and logisti-

cal challenges.

One Singapore company at the oreront o

the deepwater equipment drive is Keppel. Its

DSSTM 38 series o deepwater drilling rigs are

rated to drill at 30,000 t below the mud line

in over 9,000 t o water depth. The rig can

accommodate 130 men and support an added

weight o 38,000 tonnes. It has an innova-

tive system o vertical and horizontal storage

units, and eatures eight thrusters to keep the

rig in position. It is also designed to reduce

carbon emissions and can handle the tem-

perature and other operational requirements

Singapore is at the forefront of a quest for better design andconstruction of deepwater and harsh environment offshore vessels

Going togreat depths


31/36


Singapore 31

penetrating

resence: Keppels

DSSTM 38 series of rigs

can drill 30,000 feet below

the mud line

Photo: Bloomberg

o the so-called deepwater Golden Triangle

region, which comprises Brazil, Arica and the

Gul o Mexico.

Sembcorp Marine is meeting the demand

or deepwater semisubmersibles by creating a

system o manuacture that allows or simulta-

neous ast-track construction and heightened

saety procedures. The shipyards load-out

and mating-in-dock and transverse skidding

techniques have introduced the sequential

assembly o semi-submersible rigs. Since 2005,the company has built and delivered 11 ultra-

deepwater submersible drilling rigs.

It is worth looking at the environment that

allowed such designs to become reality. The

government backing to create a research and

development cluster to develop better designs

or deepwater and harsh environment ofshore

production is perhaps unique in the world.

Three government agencies the Maritime

and Port Authority o Singapore, the Agency

o Science, Technology and Research, and

the Economic Development Board teamed

together to establish the Singapore Maritime

Institute to drive public sector research or themaritime and ofshore and oil and gas indus-

tries. The purpose o the institute is to create a

kind o virtuous cycle o maritime intellectual

resource that can act as support and supply

to private sector maritime R&D. The institute

was ounded in 2010 with the aim o attract-

ing academics and researchers to establish

themselves in Singapore and groom the

next generation o local maritime academia,

increase the pool o maritime students in the

locality, and encourage more R&D projects to

take place in Singapore.

Another element o the governments

involvement is the MPAs S$100m ($78m) Mari-

time Innovation and Technology Fund, which

supports programmes or development o three

designated areas that make up Singapores

maritime cluster: ports, shipping, and ofshore

and marine engineering. The governments

involvement in ofshore and marine has led to

the National University o Singapores Ofshore

Technology Research Programme, which was

ounded in 2007 with $10m in MINT money. The

OTRP programme has launched research and

development to enhance the design o jack-up

rigs and subsea engineering equipment, withan emphasis on deepwater projects. Other pro-

jects include development o a smart sensing

system to determine the integrity o ofshore

substructures a valuable tool or racture

resistance and in knowing when, where and

how to retrot a rig.

Government ocus on deepwater research

was one attraction that prompted Det Norske

Veritas, the Norwegian class society, to open its

Deepwater Technology Centre in Singapore, its

rst in Asia, in January. The centre will hire 55

staf within ve years to ocus on sectors includ-

ing pipelines, drilling and wells, among others.

DNV says that it chose Singapore to launchthis centre because o the countrys strategic

geographic position and existing energy cluster

and intends to collaborate with local industries,

universities and governmental research insti-

tutes. DNV has a long history in Singapore. Its

DNV Petroleum Services, with a staf o 150, has

operated in Singapore or 31 years and the clas-

sication society has a separate oce with an

additional 250 employees.

We have good tie-ups with the Economic

Development Board, says Tore Hoiodt, senior

vice-president and communications director or

DNVs Asia, Pacic and Middle East divisions.

And being in Singapore makes us really part o

ront-end thinking.

The purpose of the institute isto create a kind of virtuous cycle of

maritime intellectual resource that canact as support and supply to privatesector maritime R&D


32/36

32 Singapore


No business in shipping takes

it easy, but each sector has its

lulls. As it happens the demo-

lition sector is white hot at the

moment. Cash buyers are the

intermediaries in the vital economic process

of bringing ships to breaking yards the

balance o them are in India, Pakistan, Bang-

ladesh and China and they act as a kind o a

reverse image o health to owners. They have

less to do in shipping upswings, and a lot to

do when owners start scrapping younger ships

in their feets.

No-one is willing to venture whether 2012

will set the record or the most ships sent or

scrap, but many agree that it will be a bumper

year for demolition. Weak charter rates and

the high cost o uel contributed to an accel-

eration o ship scrapping in 2011, which was

the third biggest year ever or demolition with

41m dwt sold or scrap, according to Braemar

Seascope. This level was only slightly below

the highest levels ever: 44m dwt in 1985 and

43m dwt in 1986.

Cash buyers expect good business and

heavy work in 2012. Rakesh M. Khetan, chief

executive ocer o Wirana Shipping Corp, the

Singapore-based cash buyer o ships, requent-

ly works 18 hour days. I havent been getting a

lot o sleep lately, the 47-year-old Khetan says.

We sold 152 vessels last year, and this year we

could cross the 200 mark.

Prospects look good, he says as Wirana has

booked 50 vessels already or the rst quarter.

He adds, Even 150 is too much work, thats

like three vessels a week or a vessel every

two days.

But Mr Khetan is not complaining, although

he does see some possible obstacles to growth

in the business this year, if the so-called tsu-

nami o vessels sent or scrap does emerge. He

believes that the shipbreaking yards can handle

up to 12m ldt per year. India and China currently

have capacity or up to 4.5m ldt, while Bangla-

desh has capacity or up to 2.5m ldt and Pakistan

or up to 1.5m ldt.

But i we go beyond 12m and I believe we

could then the capacity to scrap will not be

there, he says,

However, a new ship scrapping acility being

built in Dalian, China, which could handle

up to 1.5m tonnes, may help address capacity

concerns. The yard was scheduled to open in

February or March, but delays have postponed

its opening until the second hal o this year.

At a level beyond 12m ldt, a secondary prob-lem also emerges. Banks across the board in

China, India, Pakistan and Bangladesh do not

have sufcient US dollar liquidity to nance end

buyers. Challenges will emerge on the bank-

ing side particularly in Bangladesh, according

to Asifur Rahman, the head of ship sale and

purchase at Silvia Ship Trading, another Singa-

pore-based cash buyer.

The dollar shortage in Bangladesh banks is

particularly severe, and has led to lending limits

on customers in the shipping sector.

Even i the yards have the capacity to bring

in the growing inventory o ships or demoli-

tion, they may not be able to tap their local

banks for the credit to buy them. Anamul

Why Singapore?

Rakesh Khetan started his frm Wirana standing or Work is Religion

Aspire and Achieve in Singapore because, he says, it has a business

riendly environment, good banking system and its great or amily lie.

The company has an ofce in Singapore supporting 10 employees,

as well as ofces in China, India, Pakistan and Bangladesh, where

representatives keep tabs on the end buyers o ships sent or demolition.

Wirana also has a representative ofce in the United Arab Emirates.

In Mr Khetans view, Singapore has centrality and easy living. It is in the ideal geography because

it is midway between India, Bangladesh and Pakistan and China, where our business has growing

importance.

In Singapore, Mr Khetan says, he can still put in the punishing hours that the market now

demands a typical day might start at 1100 hrs and fnish a ew hours beore sunrise and still lead alaid-back enough lie to strike a work-lie balance.

Mr Khetan says that the level o spoken and written English is much better than in Hong Kong, that

Singaporeans tend to be relaxed and riendly, and the commute home only takes 20 minutes at most.

Singapore is the ideal locale to centre a cash buying operation in

a world where the primary yards span rom China to Pakistan

Creativedestruction

41mdwt sold orscrap in 2011


33/36


Singapore 33

Ship scrapping

horizons: many

believe that 2012

will be a bumper

year for demolition

Photo: Bloomberg

Haque Rony, business development manager

o ship sale and purchase or Silvia, suggests

that this may present an opportunity or

intermediary global banks in Bangladesh,which could back the 90- and 120-day letters

o credit needed or such transactions. But

the pricing on the risk would be higher and

flter down to the buyers and the interme-

diary banks. However, when demand arises,

it is usually met, even i the cost o business

becomes more expensive. And major inter-

national banks have a growing presence in

Bangladesh. JPMorgan has recently opened

a branch in country, adding to Standard

Chartered and Citigroups frmly established

presence there.

Demands o environmentalists and human

rights or green recycling and more humane

conditions in Asias shipyards have been

an ongoing concern to cash buyers. Both Mr

Rony and Mr Rahman believe that Bangladesh

yards have slowly improved standards. They

point out that an increasing number havebeen awarded International Standards Organ-

isation 9001, 14001, and 30000 certifcations,

as well as the 18001 certifcation under the

Occupational Health and Saety Assessment

Specication system.

This is also true o Alang, the area where

Indias shipyards are concentrated. Wirana

has an oce in Alang and one o its purposes

is to maintain direct contact with the yards to

scrutinise nancial standing as well as saety

and environmental compliance. But Mr Khetan

notes that green recycling has slipped rom

the top o shipowners agendas in this period

o expectation o a tsunami o ships or

demolition.

In act very ew owners actually go the

green way, says Mr Khetan. The reason is

that green recycling yards attach a premium

to their services, because the yards are more

expensive to maintain. Mr Khetan adds,

More and more pressure is being built up on

the owners. Its more important or them to

save their company rom a crisis rather than

ocus on green.

But Mr Khetan notes European law will

very soon ortiy the standards called or in

the International Maritime OrganizationsHong Kong ship recycling convention o 2009.

The European Union proposed a regulation in

March or a system o survey certication and

authorisation or vessels that fy the fag o an

EU member state. Building on the Hong Kong

convention, the proposal aims to implement

the convention quickly, without waiting or

its ratifcation and entry into orce, a process

which will take several years.

This is a good development in Mr Khetans

view, and one that will keep pressure on the

yards to continue upgrading their standards.

Fortunately, in shipbreakings tsunami year,

they may be making enough money to do just

that.

If we go beyond 12m ldt and I believe we could then thecapacity to scrap will not be thereRakesh M. Khetan, Wirana Shipping Corp


34/36

34 Singapore


Singapore in numbers

57.4mgt tonnage onSingapore ShipRegistry in 2011

43.2mtonnes

2011 sales of bunkers

in Singapore

170,000people employed inshipping business

2bngt of vessel arrivalsat Singapore ports

120domestic shipping

groups inSingapore

Source: MPA

Island state builds on its maritime muscle


35/36

What is security?

PROTECTION VESSELSI N T E R N A T I O N A L L T D

A well-hardened vessel, with a well-drilled

master and crew, a well-vetted and qualified

security team. This is the best deterrent,

ensuring a safe passage and allowing the

master to look for efficiency, not pirates.

Protection Vessels International is the world leader

in maritime security. We ensure safe passage to

vessels transiting areas of the world at risk from

piracy and maritime terrorism.

Professionalism Performance Protection

For further information please contact:

[email protected]+44 (0)1884 842 878

www.pviltd.com


36/36

As the premier ship repairer

and market leader in FPSO,

FSO and FSRU Conversions,

we have come to be known

or our fexibility, quality,

innovation, saety excellence

and commitment to customers.

Specialist in repairand conversion

singapore magazine

Documents