Aggressive Chinese yards outmuscle Singapore’s sinking rigbuilders

Would the city-state’s yards reclaim their dominance?

The island nation’s rigbuilders has been winning their fair share of rigs orders in 2011-2014, but the rise of determined Chinese yards have kept them on their toes.

According to a report by Credit Suisse, Singapore’s rigbuilders have won 80 out of 188 jackups in 2011-2014, representing 43% of the global market share.

But since 2014, Credit Suisse says increasing competition by Chinese yards has manifested in the form of a deterioration in payment terms for new contracts.

“This is reflected in Sembcorp Marine's contract with Marco Polo Marine in February 2014 which was based on a payment term of 10:10:80 (10% on contract signing, 10% on achieving milestone, and 80% on delivery), raising credit risk in the event of rig cancellation,” Credit Suisse explains.

Meanwhile, Credit Suisse expects continued working capital outflow in 2016, as customers continue to request for delay in the delivery of rigs.

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