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Singapore’s Keppel Corporation has announced that Keppel Offshore & Marine, which is up for sale, will undergo a major restructuring which will see it exit the offshore rig building business.
The comprehensive restructuring will see Keppel Offshore & Marine trim down significantly, and the company will no longer undertake any new project requiring large upfront capex or without milestone payments. Existing projects will be completed, with the company currently holding around S$2.9bn ($2.18bn) worth of completed and uncompleted rig assets
The business will be split into three divisions, separating construction and ownership of legacy drilling rig assets from core operations, which will be in the renewables and gas solutions sector where it currently has an order book of around $3.3bn ($2.48bn).
Keppel also says that the company will progressively exit low value-adding repairs and other activities with low bottom line contribution to focus on higher value-adding work.
Loh Chin Hua, CEO of Keppel Corporation and Chairman of Keppel Offshore & Marine, said, “The share of renewables and new energy solutions in the global energy mix has been growing rapidly, driven by environmental concerns as well as technological advancements and the declining cost of renewables. Natural gas, as a transitional fuel, is also projected to overtake oil as the world’s largest energy source in the years to come. To seize opportunities in this fast-changing environment, we are making bold and decisive moves to transform Keppel O&M to ensure that it remains relevant and competitive, and fully aligned to Keppel’s Vision 2030.
“We are also exploring inorganic options for the O&M business, but there is no assurance that any transaction will materialise. In the meantime, we believe that our organic restructuring of Keppel O&M will not only enhance its competitiveness, but also its attractiveness, if we were to undertake any inorganic action.”
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