Continued low oil prices have helped spawn a booming tanker retrofit business in Singapore.
Marine repair and maintenance in the island nation, home to one of the world's busiest, biggest ports, logged revenues of $875 million in 1991, mostly for oil tanker retrofits, OPEC News Agency (Opecna) reports.
Singapore yards repair or refurbish about 1,000 vessels/year.
An oil industry official told Opecna as long as oil prices remain at about $20/bbl and regional dependence on Middle East crude remains high, the oil tanker repair and refurbishment business in Singapore would prosper. The major contributing factors are continued strong growth in oil demand, lagging indigenous production in the Asia-Pacific region, and the high cost of new-buildings.
Tan Mong Seng, president of the Association of Marine Industry and managing director of the Sembawang shipyard, told Opecna, "It is still more prudent to have a reconditioned tanker than to go for a newbuilding, the cost of which is still very high."
Tan estimated the cost of an average new oil tanker of about 81,283 dwt at $60 million and noted Sembawang yard recently retrofitted a scrapped tanker of the same size for less than $23-75 million.
Sembawang yard, which repairs about 230 vessels/year, 60% of them oil tankers, recently rebuilt the Alandia Surf, a crude and products tanker scrapped in 1991 after being damaged by a fire in the Persian Gulf. Opecna quoted Alandia Tanker Managing Director Henrik Dahlman as saying the rebuilt tanker, with a capacity of almost 100,000 cu in, will be chartered to Shell International for about $15,000-20,000/day.
The trend toward retrofits of aging tankers began in 1989 and mushroomed alongside soaring costs of ship construction in Japan and South Korea.
Analysts had predicted growth of a more economical ship construction industry in China and other low labor cost nations, but that has not materialized, Opecna said.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
