(EnergyAsia, August 28 2012, Tuesday) — Buoyed by strong energy demand from emerging economies and the continued outlook for high oil prices, the marine and offshore industry contributed over S$16 billion to Singapore’s economy last year. (US$1=S$1.25).

In addition, the sector provided employment for 18,000 local residents at the end of last year, up 30% a decade ago, said acting Minister for Manpower Tan Chuan-Jin.

The sector is also a source of innovation and productivity, helped by the government’s investments in building up research and development (R&D) capabilities.

“The Singapore Maritime Institute, jointly set up by EDB, A*STAR and Maritime and Port Authority of Singapore, drives research in areas such as green shipping, offshore and subsea systems, and oilfield and down-hole systems. In addition, as announced during Budget 2012, the National Research Foundation is channelling S$150million to EDB and A*STAR to build up R&D capabilities for deepwater oil production,” said Mr Tan.

“These R&D initiatives will lead to the build-up and retention of specialized knowledge, helping Singapore move up the manufacturing and technology value-chain. In particular, for the shipyards, these initiatives will enable them to undertake more design activities and move into higher value-added segments of the industry.”

Singapore’s two leading marine and offshore companies, Keppel Corp and Sembcorp Marine, are on course to deliver another record performance this year.

For the first half, Keppel Corp reported a 82.8% increase in net profit of S$1.27 billion while revenue surged more than 69.3% to nearly S$7.75 billion. Sembcorp Marine’s net profit slipped 5% to S$143 million on revenue of nearly S$1.22, which was 46% higher compared with the same period last year.

The two companies, the world’s leading builders of offshore oil rigs, along with Singapore’s other offshore companies will face increasing competition from China and South Korea.

China, which ventured into the sector early last decade, is expanding its production of jack-up rigs for shallow-water drilling and semi-submersibles for deepwater operations. Apart from serving its own upstream companies, the Chinese companies led by COSCO are aiming to undercut their competition through aggressive pricing and added services.