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Eye for opportunity

A keen focus on
policy and practice win
shipping business
April 2012 | www.lloydslist.com
Singapore.indb 1 05/04/2012 14:27
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32/ Creative destruction
Singapore is the ideal locale to centre a cash
buying operation in a world where the primary
yards span from China to Pakistan
34/ Singapore in numbers
Island state builds on its maritime muscle
Sizing up Singapore
Singapore owned eet and orderbook 2011
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
Source: Lloyds List Intelligence
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
20.24m 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 eet
On order
Top 10 owners
2 Pacic
International Lines
3.03m dwt
3 Neptune
Orient Lines
2.56m dwt
4 Samco
Shipholding
2.52m dwt
6 Pacic
Carriers
1.5m dwt
8 IMC
Shipping Co
1.11m dwt
10 Rafes
Shipping Corp
0.91m dwt
5Thome Ship
Management
2.4m dwt
7 Cara
Shipping
1.31m dwt
9 Pacic King
Shipping Holding
0.95m dwt
Editor
Richard Meade
Special reports editor
Nicola Good
Chief executive
Fotini Liontou
Advertising manager
Matt Dias
matt.dias@informa.com
April 2012 | www.lloydslist.com
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5/ From strength to strength
Singapore continues to attract a diverse
range of maritime businesses
6/ Steady focus on growth
Singapore has kept an eye on the strains
affecting shipowners and has taken action
to ensure its competitiveness
13/ The Oslo-Singapore connection
The time could be right for dual listings
in the two maritime capitals
14/ Holding to standards
Thome remains selective in a market
where quality could be compromised
17/ Taking a regional lead
on seafarers rights
Singapore is the frst Asian nation to sign up
to the Maritime Labour Convention
18/ Proactive on piracy
City state to host ReCAAP for another fve years
20/ Sizing up Singapore
Singapores shipping world in fgures
23/ Refning the model
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
26/ Seizing the ofshore initiative
Singapores yards have developed
indispensible expertise in deepwater and
harsh environment vessel construction
30/ Going to great depths
Singapore is at the forefront of a quest for
better design and construction of deepwater
and harsh environment offshore vessels
p6 p26 p32
p20
The author
Tom Leander
is Editor-in-Chief, Asia
at Lloyds List
Sizing up Singapore
Singapore owned eet and orderbook 2011
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
Source: Lloyds List Intelligence
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
20.24m 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 eet
On order
Top 10 owners
2 Pacic
International Lines
3.03m dwt
3 Neptune
Orient Lines
2.56m dwt
4 Samco
Shipholding
2.52m dwt
6 Pacic
Carriers
1.5m dwt
8 IMC
Shipping Co
1.11m dwt
10 Rafes
Shipping Corp
0.91m dwt
5Thome Ship
Management
2.4m dwt
7 Cara
Shipping
1.31m dwt
9 Pacic King
Shipping Holding
0.95m dwt
Singapore.indb 3 05/04/2012 14:27
P 4.indd 1 04/04/2012 17:18:42
www.lloydslist.com April 2012
Singapore 5
From strength
to strength
2
011 was a good year for Maritime
Singapore, despite the uncertain
economic climate in Europe and
other parts of the world. The Port
of Singapore showed strong growth
in all areas namely, vessel arrival tonnage,
container and cargo throughput, and bunker
sales. The Singapore Registry of Ships contin-
ued to grow and maintain its ranks among the
top 10 in the world, reaching 57.4m gt at the
end of the year. Singapore also hit more than
2bn gt in terms of annual vessel arrival tonnage
for the frst time.
As part of our investment in the safety and
security of our port, the Maritime and Port
Authority of Singapore opened a new port
operations control centre in Changi, which
is equipped with an advanced vessel trafc
information system that is able to track 10,000
vessels at any one time.
To promote environmentally-friendly
shipping, MPA has introduced the Maritime
Singapore Green Initiative ofering local frms
incentives to implement environmentally-
friendly shipping practices beyond the ones
already mandated by the International Mari-
time Organization. The initiative comprises of
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 fve years.
As an international maritime centre, Sin-
gapores dynamic maritime landscape has
continued to attract a diverse range of mari-
time businesses. Singapore is now home to
more than 120 domestic shipping groups,
contributing to some 7% of Singapores gross
domestic product, and employing more than
170,000 people.
Maritime Singapores achievements would
not have been possible without the spirit of
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 from strength
to strength.
Lam Yi Young is Chief Executive of MPA
Singapore.indb 5 05/04/2012 14:27
6 Singapore
April 2012 www.lloydslist.com
Steady focus on growth
Singapore has kept an eye on the strains affecting shipowners
and has taken action to ensure its competitiveness
06-11.indd 6 05/04/2012 14:39
P 7.indd 1 02/04/2012 15:41:12
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www.lloydslist.com April 2012
Singapore 9
Bunker kingdom
Singapore holds its mantle as the worlds biggest bunker supplier by dint of 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 of bunkers grew 5.6% to another record high of 43.2m tonnes in 2011, according to
data from the Singapore Maritime and Port Authority.
But the character of 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 fuel supplier whose parent is listed in Hong Kong and with a major presence in
China, has been a ferce competitor for the British oil major over the past years.
The marine fuel trader moved up from 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 from 14 to
13 in the ranking.
However, some bigger names lost market share last year. Shell slipped from eighth place to
12th, while refner Singapore Petroleum slid from nine to 14.
Singapore, the worlds top bunker port, did not disclose detailed sale volumes for each company.
In 2010, Brightoil aggressively hired several senior staffers from BPs fuel oil trading team,
including its global head. BP then sued some of them for breach of contract in Singapore, though
the cases were settled without coming to trial last October, according to media reports.
Singapore itself faces competition from China as the worlds biggest bunker supplier. Chinas
dominance will probably be inevitable, given the comparative sizes of the two nations and the
growth in Chinese ports.
Navy Liu, information manager of C1 Energy, an independent oil and gas market information
provider in China, forecasts growth rates of 15%-20% per annum for Chinas total bunker volumes
in the next fve years and 20%-30% per annum for its bonded bunkers, sold to internationally-
trading Chinese vessels and foreign 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 traffc growth in China, brought about by
continuously increasing imports and exports.
S
ingapore has a way of hanging in
for the long fght.
The year 2011 will be remem-
bered as an extremely volatile
one in Asian shipping but posi-
tive records were plentiful in Singapore. Look
no further than Singapore ports giant PSAs
throughput at its fagship Singapore port.
The port handled 29.4m teu and registered
growth of 6.1% to reach a new record volume
in the year. This actually topped the combined
growth for PSA terminals outside of 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 of
bunkers grew 5.6% to a record high of 43.2m
tonnes in 2011. Singapore is the worlds largest
bunkering port.
Singapore, one of the top 10 ship registries,
saw the tonnage of its fagged vessels up 17.6%
at 57.4m gt last year.
The robust numbers come despite the Euro-
pean slowdown that began in the second half
of 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, of
which containerships accounted for 31% and
tankers 30.8%. The port received the largest
level of tonnage globally, the MPA said.
You could argue that Singapores good
fortune in a tough year had more to do with
geographical destiny than endeavour.
But that would discount the advantage of
using advantages well which is perhaps Sin-
gapores greatest gift to itself.
Over time, Singapores policy makers
have made the port city extremely friendly
to shipping, but also with benefts that build
long-term loyalty. Singapore has favourable
tax regimes for shipowners with an efective
tax of 10% and similar, if not as fully leni-
ent, benefts for frms that service shipping
companies. It has enhanced these benefts
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 performance under
the International Maritime Organizations
Energy Efciency Design Index and could be
used as model by other major port cities of
the world.
With an eye on the strains afecting ship-
owners, the nation has enhanced its tax
benefts for ship disposals, including disposals
of newbuildings owned by Singapore-regis-
tered shipowners, but not yet registered in
the Singapore Ship Registry. This is a progres-
sive incentive scheme that benefts owners in
a tight market, but also benefts the industry
at large, because of the need send ships for
demolition to reduce overcapacity.
Financial incentives are important, but they
are only part of the equation. Singapore has
developed research and development infra-
structure through policies that encourage tie
moving up the ranks:
Brightoil Petroleum is now
the second biggest bunker
supplier in Singapore
5.6%
growth in sales
of bunkers in
Singapore in 2011
06-11.indd 9 05/04/2012 14:39
10 Singapore
April 2012 www.lloydslist.com
What next for noL?
2011 was a tough year for Singapores fagship box line. Neptune Orient Lines posted an annual
loss of $428m, with the lions share of that loss coming in the fourth quarter.
In that period, the company shed $320m, and it saw its cash reserves fall to $228m at the end
of December from the year-ago level of nearly $1bn.
Since then, opinion on how and when the company will revive has been mixed.
NOL is the parent of APL, the worlds ffth-largest container line, according to Lloyds List
Intelligence. The lines core loss for earnings before interest and tax was $297m for the fourth
quarter of 2011 and $446m for the year. This compared to 2010 core ebit fgures of $178m for the
fourth quarter and $492m for the full year.
The worst feature is that they were burning cash at a signifcant level in the fourth quarter,
says analyst Janet Lewis of Macquarie Research in Hong Kong.
NOLs cash position depleted to $228m at the end of December, from $997m at the end of
2010. Its debt stood at $2.6bn at year-end 2011 from $3.3bn at the end of 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 feu fell 4% year on year,
excluding bunker costs, due to slow steaming and operational cost effciencies and new chief
executive Ng Yat Chung has pledged to cut $500m in costs this year.
Moreover, APLs newbuildings are fully fnanced by bonds and committed ship fnancing,
the company says. According to Alphaliner, NOL has 27 ships on order, adding 280,740 teu,
equivalent to some 46% of its standing feet of 99 ships of 616,322 teu.
One executive from a rival company believes that Singapore-based APL may have pushed
costs into the fourth quarter, recognising them in a loss-making quarter anyway, opening the
way for a better fnancial position in 2012. That better position, of course, is predicated on the
industry-wide rates hikes holding this year.
Rigan Wong, an analyst for Citigroup in Hong Kong, believes that investors have been skewed
towards NOL, but that a lot of that positive sentiment has already been priced into the stock.
However, Mr Wong says this caveat will vanish if 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 for 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 for the company
without headway on those promised cuts. Even to analysts positive on the company, the fgure
of $500m seems high. Thats a lot of cuts, says Eric Bergoo, an analyst with DnB Nor in
Singapore, to achieve with slow steaming, other operational costs cuts and realignment of some
business processes.
Others note that if there is $500m to be taken out of operations, then why hasnt it been
done before?
ups between universities, classifcation socie-
ties, and other interested parties. The result is
a cluster where the fnest 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 fnance. It is a law centre, and a
growing centre for arbitration in shipping dis-
putes. The Singapore Ship Sale Form, a recent
development, is designed in response to the
Singapore and Asian maritime communitys
call for an alternate form that would cater to
their needs, in view of increasing maritime
activities and maritime arbitration, says the
government.
Everything is here, says Masterbulk
chief executive Rune Steen, there really is
no other shipping centre like it in Asia per-
haps the world combining all the elements
of shipping, including law and fnance. Mas-
terbulk operates 23 dry bulk carriers, all open
hatch gantry crane ships, and is a Norwegian
family-owned business. Masterbulk has dis-
tinguished itself by a progressive policy of
seafarer training and benefts that has given
it one of the highest crew retention rates in
the industry.
Commentators from completely separate
disciplines in shipping tend to agree. You
can operate ships worldwide from here, says
Danilo Rafa, managing director of shipman-
ager Ishima. Its a good environment, with
tax incentives, a good legal framework, and
a liveable environment. The only gripe that
shipmanagers have has grown out of Singa-
pores success at managing its economy. The
Singapore dollar has appreciated sharply over
the last two years against the US dollar, making
it tough for those companies shipmanagers
27
NOL ships on
order
heavy load:
NOL posted a loss of
$428m in 2011
Photo: Bloomberg
There really
is no other
shipping centre
like it in Asia
perhaps the world
Rune Steen, Masterbulk
Singapore.indb 10 05/04/2012 14:27
www.lloydslist.com April 2012
Singapore 11
neW BenefitS for oWnerS under the Singapore fLag
Singapores raft of incentives for shipowners was enhanced in 2011 and 2012, with the addition of
two programmes, the Green Ship Programme and enhanced tax treatment for vessel disposals for
Singapore-fagged owners.
green Ship programme
The Green Ship Programme is one of three programmes under the Maritime Singapore Green
Initiative. The Maritime and Port Authority of Singapore will provide incentives to shipowners that
adopt energy effcient ship designs that reduce fuel consumption and carbon dioxide emissions.
Singapore-fagged ships registered on or after July 1, 2011 that go beyond the requirements
of the International Maritime Organizations Energy Effciency Design Index, will enjoy a 50%
reduction on the initial registration fees under both the normal registration and Singapores Block
Transfer Scheme during the registration of 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 of the
EEDI based on the phased-in time period.
Existing ships that utilise energy effcient ship designs that meet the requirements for 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 of
the EEDI Energy reference lines. Ships that qualify for the Green Ship Programme will be given
a Green Certifcate issued by MPA. The Green Certifcate will also be given to the company
owning the ship. A new award category SRS Green Ship of the Year will also be introduced in the
Singapore International Maritime Awards beginning 2013.
To qualify for the Green Ship Programme, shipowners have to submit a copy of the International
Energy Effciency Certifcate or pre-verifcation report as proof that the attained EEDI of the ship
exceeds the IMOs requirements on EEDI for that particular ship type and size at the time when
the above fnancial incentives are to be applied. Details can be found via the MPAs Shipping
Circular No.12 of 2011. Additional details can be found at www.mpa.gov.sg
enhanced tax treatment of vessel disposals
The enhancement of existing beneft for the tax treatment following ship sales were announced
in March. It establishes that revenue gains from the disposal of Singapore-fagged vessels will be
treated as income that qualifes for tax exemption under Section 13A of the Income Tax Act, as
part of the tax benefts under Singapores Maritime Sector Initiative. The scope of the exemption
will also be expanded to include gains derived from the disposal of newbuilding contracts. These
changes will take effect retrospectively from the commencement of the Maritime Sector Initiative
on June 1, 2011.
For more information, see the MPAs Singapore Shipping Circular to Shipowners, No 8 of 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 OSK
Line strengthened its operational base in
Singapore, noting the port citys strong tech-
nical infrastructure, its status as a financial
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
from Bangkok to Singapore in 2011 in order,
says its new chief 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 few.
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 of law and a thriv-
ing banking system. But distance from 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, for example,
when Shanghai has been anointed as Chinas
number one maritime centre of the future 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 carefully 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 fee
under the Green
Ship Programme
Singapore.indb 11 05/04/2012 14:27
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P 12.indd 1 02/04/2012 15:53:30
www.lloydslist.com April 2012
Singapore 13
on hand:
Norwegian
investment banks
and law frms have
been preparing the
ground work for
dual listings from
either Singapore
or Norwegian
companies
Photo: Bloomberg
I
n 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-
ferences 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
of the main forces in global energy shipping,
and Norways ofshore industry focuses on the
North Sea, and increasingly Brazil.
The regulatory framework 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 frm with
a major presence in Singapore, notes that
for 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 for 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 familiar with the of-
shore and shipping businesses could beneft
from 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 of 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 of listing activity is easily
explained by the volatile markets that have
characterised both Asia and Europe since
2009. In the last few years, says Ms Sveen,
the markets have been hard to assess. For a
few months they can be stable, but volatility
always returns. She predicts that once stabil-
ity returns, interest will run high.
The robust outlook for the global ofshore
industry suggests that she could be right.
She says that since the 2009 signing of the
memorandum of understanding, Norwegian
investment banks and law frms have been pre-
paring the groundwork for dual listings from
either Singapore or Norwegian companies.
Weve been seeing interest from compa-
nies on both sides, she says. It is a matter
of timing.
A listing in Singapore was
seen as a natural next step in the
corporate development
Golden Ocean statement
The Oslo-Singapore
connection
The time could be right for dual listings in the two maritime capitals
Singapore.indb 13 05/04/2012 14:27
14 Singapore
April 2012 www.lloydslist.com
Thome remains selective in a market where quality could be compromised
L
ike the shipping business itself,
Thome is global in nature. The com-
pany has its roots in Norway, but it is
a full fedged Singapore entity. Olav
Eek Thorstensen established the com-
pany in Singapore in 1976 and it has grown to
encompass full technical management of 154
ships, about two-thirds of 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 fees have stagnated as owners
face higher fuels costs and low freight rates.
This has made Thome especially vigilant
about maintaining high standards of safety
and best practice when managing vessels. We
want to grow our business, says Stefen Tunge,
the chief operating ofcer tankers of Singapore-
based Thome Ship Management. But we are
very careful 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 about
compromising their own service quality and
reputation. There are limits as to how far 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
facing severe cash fow troubles are Berlian Laju
Tankers, which froze 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 face huge cash fow con-
straints as rates languish and fuel prices soar.
Mr Tunge says that Thome conducts thor-
ough due diligence on the quality of the
shipowners that approach it for business,
particularly on the tanker side, where Thome
manages 105 vessels that range from product
tankers to liquefed 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 for shipmanagers.
SIRE inspections target a low number of
observations a recorded defciency or remark
by a vetting inspector per inspection. Thome
has halved its observations per SIRE inspection
from 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 behalf of the shipowner. Shipman-
agers order supplies from vendors to sustain
operations, but if the owner runs into fnancial
trouble and is unable to reimburse, then it is
impossible to go to the vendor again, even on
behalf of an owner able to pay.
We explain that were not banks, were
agents but it does no good, says Mr Tunge.
A further challenge to growth is a familiar
one: the shortage of qualifed senior ofcers,
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 fall in 2013. Thome
addresses the problem of fnding qualifed crew
by intense training. The company has a high
number of training days across its operations,
with 24,492 days committed to training in 2010
and 12,661 through to July in 2011, when the fg-
ures were last drawn.
Holding to standards
Selective
approach:
Thomes Steffen Tunge
says the company is
increasingly careful
about the owners it
chooses
154
ships managed
by Thome
Singapore.indb 14 05/04/2012 14:27
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Insurance solutions for our Members
and their brokers worldwide
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P 15.indd 1 02/04/2012 15:54:55
P 16..indd 1 04/04/2012 17:13:36
www.lloydslist.com April 2012
Singapore 17
Singapore is the frst Asian nation to sign up to the Maritime Labour Convention
Taking a regional lead
on seafarers rights
at the
forefront:
Singapore is the
frst Asian nation to
ratify the Maritime
Labour Convention.
It signed up in June
2011
S
ingapore is the frst, and so far
only, Asian nation to sign up to
the Maritime Labour Conven-
tion (2006), which sets out the
minimum standards on working
conditions for seafarers worldwide.
Ratifcation of the MLC (2006) requires at
least 30 members with a total share of world
gross tonnage of ships of 33% to ratify the con-
vention before it comes into force 12 months
later. The requirement is higher than for Inter-
national Labour Organisation conventions
because, in the words of the ILO, the enforce-
ment and compliance system established
under the convention needs widespread inter-
national co-operation in order to be efective.
So far, 18 states, with two more pending,
have ratifed, but these states have already
met the tonnage requirement, comprising 54%
of the worlds feet in terms of gross tonnage.
Thats because the four largest ship registers
the Marshall Islands, Panama, Liberia and
the Bahamas had ratifed it by 2009. Arthur
Bowring, head of the Hong Kong Shipowners
Association and chairman of the ISF Labour
Afairs Committee, projects that ratifcation
will come soon in 2012. Still, as he mentioned
at a manning and crewing conference in
November, I would have expected the Philip-
pines to have ratifed by now.
As for Singapore, the nation apparently rec-
ognised the beneft of being frst out of the gate
in Asia, it ratifed the convention in June 2011.
According to Lam Yi Young, chief executive
of Singapores MPA, Seafarers 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 after the wellbeing of seafarers.
Whats holding back the Philippines, or,
for that matter, fag states anywhere in the
globe? The MLC can be regarded as fourth
pillar to global maritime regulation, follow-
ing Solas, Standards of Training, Certifcation
and Watchkeeping and Marpol. It consoli-
dates 68 maritime labour instruments of the
ILO into one concise body. While it is difcult
to imagine any government publicly resisting
ratifcation, reluctance to sign may signify the
difculty of ensuring a mechanism of compli-
ance under national law.
Two of the early supporters of the conven-
tion, the United States and the United Kingdom,
have not yet ratifed. Both insist that regulations
have to be in place on a national level to ensure
compliance. Earlier this year, for example, the
US representative to the ILO argued that it was
necessary to ensure national compliance and
examination of national laws, regulations
and practice had to come frst. As for the UK,
many of the necessary regulations are already
in place, and ratifcation had been expected in
2011, but no action has been taken.
Singapore.indb 17 05/04/2012 14:27
18 Singapore
April 2012 www.lloydslist.com
City state to host ReCAAP for another fve years
Proactive on piracy
anti-piracy
exercise: ReCAAP
actively engages
the industry on
measures to prevent
attacks
Photo: Bloomberg
S
ingapore has become the most
active regional hub in the inter-
national efort to eradicate piracy
and armed robbery on the high
seas. In March, the city state
agreed to host ReCAAP, Asias regional anti-
piracy information sharing group, for another
fve years, a milestone that underscored its
contribution to fghting piracy and maritime
crime in Southeast Asia.
Launched in Singapore in 2006, the ReCAAP
Information 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 information sharing eforts to combat
piracy of the coast of Africa.
As a global hub port and a major fag state,
Singapore is committed to combating piracy
and armed robbery at sea, says Singapores
Minister of Transport and Second Minister for
Foreign Afairs Lui Tuck Yew.
This new headquarters agreement will
enable the ReCAAP ISC to strengthen its part-
nership with government and industry towards
safe and secure shipping in Asia.
The agreement was signed by ReCAAP exec-
utive director Yoshihisha Endo and Maritime
and Port Authority of Singapore chief 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, from 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 of 155
incidents were reported in Asia in 2011, includ-
ing 133 actual cases and 22 attempted cases.
Singapore has also been in the forefront of
the debate over how to attack the vexing prob-
lem of Somali piracy, which has extended far
into the western Indian Ocean in recent years
but mostly outside the ambit of ReCAAPs
piracy attack tracking.
The Asian Shipowners Forum, based in
Singapore, called for a UN resolution that
would see the international body sponsor and
manage armed personnel on board ships sail-
ing through pirate-infested waters.
The call, in a statement released by ASF in
March, follows the groups proposal to Work-
ing Group 3 of the Contact Group for Piracy
Of Coast of 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
of the Somali piracy problem on land.
Working Group 3 was created under UN
Security Resolution 1951 three years ago
as a voluntary international forum 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 for
adoption by the UN, the statement says. If
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 Gulf of
Aden and the Indian Ocean.
The key idea is to use foating bases on
sea to serve as embarkation or disembarka-
tion points for these military personnel.
ASF frst proposed a UN anti-piracy mili-
tary task force in September, calling for
armed military guards to be deployed in small
detachments on board merchant ships to pro-
tect them during their transit of the Indian
Ocean. It then proposed the concept of foat-
ing bases in February.
The ASF is a voluntary organisation of
shipowners associations of Australia, China,
Hong Kong, India, Japan, South Korea, and the
Federation of Asean Shipowners Associations.
It is seeking support for its proposal from the
international shipping community.
7%
fall in piracy and
armed robbery
incidents last year
ReCAAP
Singapore.indb 18 05/04/2012 14:27
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Translation ~ Strenuous
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Sizing up Singapore
Singapore owned eet and orderbook 2011
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
Source: Lloyds List Intelligence
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
20.24m 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 eet
On order
Top 10 owners
2 Pacic
International Lines
3.03m dwt
3 Neptune
Orient Lines
2.56m dwt
4 Samco
Shipholding
2.52m dwt
6 Pacic
Carriers
1.5m dwt
8 IMC
Shipping Co
1.11m dwt
10 Rafes
Shipping Corp
0.91m dwt
5 Thome Ship
Management
2.4m dwt
7 Cara
Shipping
1.31m dwt
9 Pacic King
Shipping Holding
0.95m dwt
20 Singapore
April 2012 www.lloydslist.com
Singapore.indb 20 05/04/2012 14:27
Sizing up Singapore
Singapore owned eet and orderbook 2011
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
Source: Lloyds List Intelligence
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
20.24m 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 eet
On order
Top 10 owners
2 Pacic
International Lines
3.03m dwt
3 Neptune
Orient Lines
2.56m dwt
4 Samco
Shipholding
2.52m dwt
6 Pacic
Carriers
1.5m dwt
8 IMC
Shipping Co
1.11m dwt
10 Rafes
Shipping Corp
0.91m dwt
5 Thome Ship
Management
2.4m dwt
7 Cara
Shipping
1.31m dwt
9 Pacic King
Shipping Holding
0.95m dwt
www.lloydslist.com April 2012
Singapore 21
Singapore.indb 21 05/04/2012 14:27
Rosalind Loh
Advertising Sales Manager - Asia
Orchard Building, #08-02, No. 1 Grange Road Singapore
Tel: +65 650 82456 | Email: Rosalind.Loh@informa.com
Thursday 8 November
Stamford Ballroom,
Rafes City Convention Centre, Singapore
www.lloydslist.com/asiaawards
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A4 Asia ad.indd 1 04/04/2012 16:05 P 22.indd 1 04/04/2012 16:24:44
www.lloydslist.com April 2012
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
I
t is not often that rumour of an acqui-
sition lingers. More often, when the
news 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 of talks
with IHC Merwede, the worlds largest build-
er of dredgers and heavylift 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, platform supply vessels
and barges. IHC Merwede could convert the
yards to develop construction for its growing
ofshore support vessel portion of 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 owns
fve shipyards in Europe and has stakes in
yards in China, India and Bangladesh for
building dredgers. If the company does buy a
Southeast Asia shipyard, it would be its frst
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 of 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 focus its earnings away from
shipbuilding and increase its exposure as an
owner and charterer.
Its longstanding chief executive Chan Mun
Lye exited the company on March 31, after a
carefully orchestrated changing of the guard.
Stepping into the vacant post on April 1 was
current chief operating ofcer and executive
director Venkatraman Sheshashayee. Mr She-
shashayee, previously director of Greatship
(India) and managing director of Greatship
Subsea Solutions Singapore, joined the com-
pany in January. His arrival at the top of 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.
Singapore.indb 23 05/04/2012 14:27
THE TIDES HAVE SHIFTED
The shipping industrys decisions makers are now reading
Lloyds List online.
iPad Views
iPhone Views Page Views
Visits
Make sure your companys advertising does not
miss 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
Email: Matt.dias@informa.com
Duncan McKenzie
Sales Manager
Telephone: +44 (20) 701 77103
Email: Duncan.mckenzie@informa.com
Catrin Probert
Sales Executive
Telephone: +44 (20) 701 77220
Email: Catrin.probert@informa.com

50%

31%

282%

663%
Percentage increase on viewing gures - January 2011 compared to January 2012
Figures based on Omniture statistics
Lloydslist.com
Maritime business intelligence online
C
M
Y
CM
MY
CY
CMY
K
Ad v3 A4.pdf 1 04/04/2012 16:16:45
P 24.indd 1 04/04/2012 16:18:19
www.lloydslist.com April 2012
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 eet 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 eet.
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 chartering
segment, 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 eets and newbuildings
close to delivery.
There is always a risk that newbuild order
ow 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 ofce 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 condent that our customers
will welcome this further commitment to serving their interests in Asia, he said.
IHC Merwede had just set up ofces 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 conrmed 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 rst 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 eets 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 eet, 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 ne life on its own.
Jaya is already well under
way with a strategy to focus its
earnings away from shipbuilding
23-25.indd 25 05/04/2012 14:38
26 Singapore
April 2012 www.lloydslist.com
Singapores yards have developed indispensible expertise
in deepwater and harsh environment vessel construction
Powering
ahead: Keppel has
11 shipyards around
the world
Photo: Bloomberg
A
strange thing happened on
the way to the boom in build-
ing vessels and rigs to support
the worlds ofshore industry.
A nation of 5m people and 714
square miles has managed to angle in as a
close second to South Korea, a nation of 49m
people and 38,622 square miles. In rigs, semi-
submersible vessels and foating platform
and storage vessels, Singapore cannot com-
pete with the scale of South Korea.
But as a specialist in the developing and
highly specialised arena of deepwater and
harsh environment drilling vessels it is unsur-
passed. Singapore is also one of the key world
centres for 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 of rig with
ConocoPhillips that can function in arctic
ice with completion of the new design slated
for 2013. In 2011, Keppel also delivered three
KFELS N Class jack-up rigs to ofshore vessel
operator Rowan for use on the Norwegian
continental shelf. The vessels are capable
of 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 Ofshore and Marine
Group which consists of Keppel FELS,
Keppel Shipyard, and Keppel Singmarine
has 11 shipyards around the world. A Keppel
FELS yard in Brazil is building the frst foat-
ing production completely built in Brazil and
designed for the new deepwater exploration
and production that is to take place in the
Marlim Sul feld.
Seizing the
ofshore initiative
$8bn
in new orders
for Keppel in 2011
26-29.indd 26 05/04/2012 14:38
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P 27.indd 1 04/04/2012 16:19:42
28 Singapore
April 2012 www.lloydslist.com
All told, in the second half of 2011, the Keppel
Ofshore and Marine Group delivered fve rigs,
completed repairing another four, fnished fve
FPSO newbuildings or conversions, upgraded
or outftted three drillships, and delivered seven
specialised vessels.
Sembcorp Marine, Singapores other power-
house ofshore builder has marched into 2012
with new orders of S$6.6bn, the latest being a
semi-submersible well intervention rig for of-
shore driller Helix Energy Solutions for $385.5m.
The rig extends Sembcorp Marines building
range to encompass deepwater well interven-
tion models, and is likely to be bound for the
Gulf of 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
from Brazil. According to Kay Lim, an analyst
from DnB Nor based in Singapore, Sete Brasil
is set to place a frm order for one drillship
with options for six others at the new Jurong
Brazil yard. Mr Lim estimates that three of those
options will be exercised in 2012.
Sembcorp Marine is also developing a
modern, cost-efficient and integrated yard
facility on its home turf at Tuas, Singapore, on
a reclaimed site, to be developed in three phases
over 16 years. The focus of the 73 ha yard will be
on shiprepair and conversion; and it will open
in late 2013.
The outlook is very strong for rig builders this
year, but competitive pressures are emerging.
Demand in Brazil for deepwater rigs and the
return of drilling activity in the Gulf of Mexico
could trigger a new spate of orders in semi-
submersibles later in 2012, according to Mr Lim.
The semi newbuild market has tradition-
ally been a forte of Singapores rig builders,
says Mr Lim. However, competition from the
Korean yards is also expected to be intense. He
notes that Korean yards recent drive to diversify
away from dry bulk and tanker shipbuilding has
proved relatively successful.
He believes the Korean yards will remain
aggressive in pricing their orders as well as
ofering attractive payment terms.
Singapores yards, he says, will likely have
to follow their lead, which could squeeze
their margins.
Singapores two ofshore titans are comple-
mented by a host of manufacturers of 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 of working in water with
a depth of more than around 7,000 ft to 7,500
ft with another 10 outstanding options, will
require the support and services that will add
to already strong existing demand for 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 yards
is also expected to be intense
Kay 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
Singapore.indb 28 05/04/2012 14:27
www.lloydslist.com April 2012
Singapore 29
doing it SafeLy
Keppel FELS distinguishes itself not only by specialising in
building semi-submersible rigs, but by its focus on safety,
which earned the Singapore yard the Safety Award in 2011
from the panel of judges from Lloyds Lists Awards Asia.
Through infrastructure improvements such as the
introduction of an automated pipe shop and the use of
advanced engineering software solutions like 3D modelling,
Keppel FELS has reduced the average number of man-hours
on a jack-up newbuilding by some 20% since 2005. But the
drive for effciency has not compromised the companys
safety record.
Keppel FELS has introduced numerous training programmes and its accident frequency rate
improved to 0.02 for 2010 compared with 0.09 in 2009. To address gaps in safety practices, the
company also launched a safety perception survey with 20,000 employees and subcontractors.
From June 2011, all subcontractors supervisors have had to undergo and pass a safety capability
and coaching programme before they can work at the shipyard. The programme consists of a
fve-day course conducted by the yards safety training centre. The yard has also introduced a
subcontractors re-education programme, to fortify safety awareness and application on the part of
long-time contractor supervisors.
and Supuracrest have developed speciali-
sations in this complex feld. Many are set
to thrive as demand for ofshore intensifes
worldwide.
Moreover, demand for ofshore exploration
and hence marine ofshore support is growing
from the Bay of Bengal to Papua New Guinea.
Singapore stands at the centre of a region
that is undergoing a long-term trend toward
rising living standards. But the organic reserve
replacement ratio for petroleum companies
operating in the region a measure of 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 of oil.
While there are plenty of OSVs operating
throughout Southeast Asia some 20% of
the world total they are old and may not
suit the developing needs of the charter-
ers that will deploy them to meet this new
demand. Charterers are not only pushing for
more sophisticated vessels to suit their new
projects, but also for vessels with more envi-
ronmental designs.
The age profle of Southeast Asias OSV
feet is instructive. There are 400 anchor
handling tug supply and platform supply
vessels operating in the region and an esti-
mated 500-800 construction support vessels,
dive support vessels, tugs and crew boats,
according to fgures supplied by protection
and indemnity club the Standard Club (the
fgures were published at the end of 2010 but
still apply).
About 12% of these vessels are more than
30 years old, while about 21% are between
20 years and 30 years of age. Owing to the
rising demand for newer, better designed
and greener vessels, demand for OSVs in
the region is expected to be strong.
Mr Lim notes that the ratio of 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
of the usual pattern of overcapacity forcing
weaker companies out of the market as the
bigger companies regard them as acquisition
targets. The opposite is true here. A demand
for more capacity is forcing OSV owners to
mull mergers. DnBs Mr Lim explains why:
To enhance competitive advantage of 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 from 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 confrmed late last year that it was in
talks with IHC Merwede, the Dutch builder
of dredging vessels, for a possible buyout.
Rumours of 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
ofshore builders. That rumour has not been
confrmed, but the argument for an increase
of acquisitions in the ofshore shipyard arena
in Singapore and environs has the merit of
common sense. What enterprising global
company wouldnt want to get in on such a
successful act if the price were right.
$
383.5
m
Helix Energy Solutions
order for a rig from
Sembcorp
Singapore.indb 29 05/04/2012 14:27
30 Singapore
April 2012 www.lloydslist.com
E
quatorial Singapores average tem-
perature ranges between 25C and
32C and the waters surrounding the
island are generally calm.
Yet ingenious minds in various
corners of the island state spend their days
contemplating pressures of 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 forefront of
the worlds quest for better design and con-
struction of deepwater and harsh environment
ofshore vessels.
All the actors in the search for energy in
deeper waters and in northern ice-bound envi-
ronments have been present in Singapore for
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
of government benefts including favourable
taxation for shipping and maritime services
frms that have brought interacting and thriv-
ing maritime markets to the republic. The mix
of intellectual, fnancial and physical infrastruc-
ture has led to innovation in a complex and
crucial global industry.
Consider the conditions of deepwater drill-
ing at, say, 10,000 ft 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 force that can crush
some metals.
The danger of exploring and extracting
hydrocarbons in deepwater is hardly theoreti-
cal. The consequences of an accident are so
serious that superior design and engineering
are one of the only assurances that the deep-
water drilling is practicable at all.
The Macondo disaster of 2010 amply illus-
trates the consequences of an accident. The Gulf
of Mexico spill continued unabated for three
months before BP, the rigs owner, was able to
cap it. Early this March, BP settled $8bn worth
of 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 face additional liabil-
ity of up to $17.6bn. Financial consequences to
the companies pale in the face of 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 of ofshore
Brazil, West Africa, the Gulf of Mexico and
Southeast Asia despite the design and logisti-
cal challenges.
One Singapore company at the forefront of
the deepwater equipment drive is Keppel. Its
DSSTM 38 series of deepwater drilling rigs are
rated to drill at 30,000 ft below the mud line
in over 9,000 ft of water depth. The rig can
accommodate 130 men and support an added
weight of 38,000 tonnes. It has an innova-
tive system of vertical and horizontal storage
units, and features 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 and
construction of deepwater and harsh environment offshore vessels
Going to
great depths
Singapore.indb 30 05/04/2012 14:27
www.lloydslist.com April 2012
Singapore 31
penetrating
presence: Keppels
DSSTM 38 series of rigs
can drill 30,000 feet below
the mud line
Photo: Bloomberg
of the so-called deepwater Golden Triangle
region, which comprises Brazil, Africa and the
Gulf of Mexico.
Sembcorp Marine is meeting the demand
for deepwater semisubmersibles by creating a
system of manufacture that allows for simulta-
neous fast-track construction and heightened
safety procedures. The shipyards load-out
and mating-in-dock and transverse skidding
techniques have introduced the sequential
assembly of 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
for deepwater and harsh environment ofshore
production is perhaps unique in the world.
Three government agencies the Maritime
and Port Authority of Singapore, the Agency
of Science, Technology and Research, and
the Economic Development Board teamed
together to establish the Singapore Maritime
Institute to drive public sector research for the
maritime and ofshore and oil and gas indus-
tries. The purpose of the institute is to create a
kind of virtuous cycle of maritime intellectual
resource that can act as support and supply
to private sector maritime R&D. The institute
was founded in 2010 with the aim of attract-
ing academics and researchers to establish
themselves in Singapore and groom the
next generation of local maritime academia,
increase the pool of maritime students in the
locality, and encourage more R&D projects to
take place in Singapore.
Another element of the governments
involvement is the MPAs S$100m ($78m) Mari-
time Innovation and Technology Fund, which
supports programmes for development of 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 of Singapores Ofshore
Technology Research Programme, which was
founded in 2007 with $10m in MINT money. The
OTRP programme has launched research and
development to enhance the design of jack-up
rigs and subsea engineering equipment, with
an emphasis on deepwater projects. Other pro-
jects include development of a smart sensing
system to determine the integrity of ofshore
substructures a valuable tool for fracture
resistance and in knowing when, where and
how to retroft a rig.
Government focus on deepwater research
was one attraction that prompted Det Norske
Veritas, the Norwegian class society, to open its
Deepwater Technology Centre in Singapore, its
frst in Asia, in January. The centre will hire 55
staf within fve years to focus on sectors includ-
ing pipelines, drilling and wells, among others.
DNV says that it chose Singapore to launch
this centre because of 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 of 150, has
operated in Singapore for 31 years and the clas-
sifcation society has a separate ofce with an
additional 250 employees.
We have good tie-ups with the Economic
Development Board, says Tore Hoifodt, senior
vice-president and communications director for
DNVs Asia, Pacifc and Middle East divisions.
And being in Singapore makes us really part of
front-end thinking.
The purpose of the institute is
to create a kind of virtuous cycle of
maritime intellectual resource that can
act as support and supply to private
sector maritime R&D
Singapore.indb 31 05/04/2012 14:27
32 Singapore
April 2012 www.lloydslist.com
N
o 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 of them are in India, Pakistan, Bang-
ladesh and China and they act as a kind of a
reverse image of 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 for the most ships sent for
scrap, but many agree that it will be a bumper
year for demolition. Weak charter rates and
the high cost of fuel contributed to an accel-
eration of ship scrapping in 2011, which was
the third biggest year ever for demolition with
41m dwt sold for 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 ofcer of Wirana Shipping Corp, the
Singapore-based cash buyer of ships, frequent-
ly works 18 hour days. I havent been getting a
lot of 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 for the frst 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 of vessels sent for scrap does emerge. He
believes that the shipbreaking yards can handle
up to 12m ldt per year. India and China currently
have capacity for up to 4.5m ldt, while Bangla-
desh has capacity for up to 2.5m ldt and Pakistan
for up to 1.5m ldt.
But if 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 facility 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 half of 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 fnance 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 if the yards have the capacity to bring
in the growing inventory of ships for 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 for Work is Religion
Aspire and Achieve in Singapore because, he says, it has a business
friendly environment, good banking system and its great for family life.
The company has an offce in Singapore supporting 10 employees,
as well as offces in China, India, Pakistan and Bangladesh, where
representatives keep tabs on the end buyers of ships sent for demolition.
Wirana also has a representative offce 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 few hours before sunrise and still lead a
laid-back enough life to strike a work-life balance.
Mr Khetan says that the level of spoken and written English is much better than in Hong Kong, that
Singaporeans tend to be relaxed and friendly, 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 from China to Pakistan
Creative
destruction
41
m
dwt sold for
scrap in 2011
Singapore.indb 32 05/04/2012 14:27
www.lloydslist.com April 2012
Singapore 33
Ship scrapping
horizons: many
believe that 2012
will be a bumper
year for demolition
Photo: Bloomberg
Haque Rony, business development manager
of ship sale and purchase for Silvia, suggests
that this may present an opportunity for
intermediary global banks in Bangladesh,
which could back the 90- and 120-day letters
of credit needed for 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 if the cost of 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 of environmentalists and human
rights for 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 have
been awarded International Standards Organ-
isation 9001, 14001, and 30000 certifcations,
as well as the 18001 certifcation under the
Occupational Health and Safety Assessment
Specifcation system.
This is also true of Alang, the area where
Indias shipyards are concentrated. Wirana
has an ofce in Alang and one of its purposes
is to maintain direct contact with the yards to
scrutinise fnancial standing as well as safety
and environmental compliance. But Mr Khetan
notes that green recycling has slipped from
the top of shipowners agendas in this period
of expectation of a tsunami of ships for
demolition.
In fact very few 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 for them to
save their company from a crisis rather than
focus on green.
But Mr Khetan notes European law will
very soon fortify the standards called for in
the International Maritime Organizations
Hong Kong ship recycling convention of 2009.
The European Union proposed a regulation in
March for a system of survey certifcation and
authorisation for vessels that fy the fag of an
EU member state. Building on the Hong Kong
convention, the proposal aims to implement
the convention quickly, without waiting for
its ratifcation and entry into force, 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 the
capacity to scrap will not be there
Rakesh M. Khetan, Wirana Shipping Corp
Singapore.indb 33 05/04/2012 14:27
34 Singapore
April 2012 www.lloydslist.com
Singapore in numbers
57.4m
gt tonnage on
Singapore Ship
Registry in 2011
43.2m
tonnes
2011 sales of bunkers
in Singapore
170,000
people employed in
shipping business
2bn
gt of vessel arrivals
at Singapore ports
120
domestic shipping
groups in
Singapore
Source: MPA
Island state builds on its maritime muscle
Singapore.indb 34 05/04/2012 14:27
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Security Lloyd's A4 AW.indd 1 04/04/2012 15:24 P 35_IBC.indd 1 04/04/2012 16:04:35
As the premier ship repairer
and market leader in FPSO,
FSO and FSRU Conversions,
we have come to be known
for our fexibility, quality,
innovation, safety excellence
and commitment to customers.

Keppel Shipyard Limited (A member of Keppel Offshore & Marine Limited)
51 Pioneer Sector 1 Singapore 628437 Tel: (65) 68614141 Fax: (65) 68617767
Email: ks@keppelshipyard.com www.keppelshipyard.com
Specialist in repair
and conversion
P 36_OBC.indd 1 02/04/2012 15:44:22

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