Blockbuster Expansion of Offshore Engineering Equipment Market

By Mao Ping

In the first half of this year,the global offshore engineering equipment market has been continuously experiencing a flourish development,especially that the turnover of the large-scale drilling equipment building market exceeded expectations. Up to early July,65 large-scale drilling equipment,12 large-scale production equipment,65 triple-function work ships and platform service ships have been contracted over the world. It is estimated that the whole world is planned to deliver 61 drilling equipment of various types,36 in 2012 and 52 in 2013.

In the first half of this year,the global turnover in terms of offshore engineering equipment exceeded 35 billion dollars,taking up over 46% of the total turnover of newbuildings. Among them,17-18b dollars went to drilling ships,6-7b dollars went to jack up drilling platforms,and 12-15b dollars went to LNG-FPSO,FSRU and FPSO.Increase of unit price for all kinds of equipment also promotes the overall increase in the transaction price of this year. The unit price of jack up drilling platform reached 190-210m dollars,up 11% compared with 180m dollars of last year. Meanwhile,there has been a little increase in the unit price of drilling ships.

The surge of drilling equipment orders this year especially the sharp rise of drilling ship orders,according to industrial sources,is the result of high price of crude oil,and the release of many retrieve orders after financial crisis. The ordering for construction of drilling ships may have approached the end,the fl ushing in of orders will not continue,and because the hand-held orders for drilling ships account for 87% of the fl eet in service,the industry has a concern that there will be surplus in drilling ships in the future. On the other hand,there are still shipowners who are willing to order new drilling ships,and judging from the recent contracts,this trend is not weakening.

In fact,the motive for shipowners to order new ships is crude oil market. If the oil price could be kept at a high level,the marine equipment market would continuously be fl ourishing,and many new orders will come for the building market.Secondly,many multinational oil companies have greatly reduced investment projects in their programs due to the market depression as a result of the financial crisis,however,they will increase investment after the recovery of the market,which makes marine engineering operators and contractors optimistic about the future market. The only disadvantage at present is that the marine engineering operating market is still at the recover stage,and some new orders are speculation orders which are not rented by oil companies.This will increase the uncertainty of the operating market in the future,and in turn it will affect the construction market.Judging from the current situation,the marine engineering market will keep sustainable and stable development due to the positive factors. Due to the limited building capacity of large-scale shipyards in South Korea and Singapore,the shipowners may turn to China to order ships and to provide good opportunities for Chinese shipyards to enter the marine engineering construction market.