Singapore-listed COSCO Corp said on Friday its subsidiary has signed a letter of intent to build two rigs worth $1.05 billion for Norway's Sevan Group, Reuters reports.
Analysts said the potential order for cylindrical drilling platform -- which is similar to a semi-sumbersible rig -- is a boost to the industry which had not seen orders for such rigs since the recent economic downturn.
Singapore is home to two of the world's largest rig-builders, Keppel Offshore & Marine, a unit of Keppel Corp , and Sembcorp Marine , which have secured billions of dollars worth of jack-up rig orders this year.
"This is a positive thing for the industry as it is the first order of semi-submersible rigs for the first time since the downturn," said an analyst at a U.S. bank who declined to be identified because he is not allowed to speak to the media.
"Sevan has always been a traditional customer of COSCO so this would not necessarily reflect negatively on the Singapore yards, but it could prompt the order of more semi-submersible rigs to the market," he added.
Sevan has also given an option to COSCO -- which is based in China -- for two more rigs at a similar price tag.
A semi-submersible rig is a type of floating vessel that is supported primarily on large pontoon-like structures submerged below the sea surface.
In a separate announcement, Sevan said the finalisation of the deal is subject to listing of Sevan Drilling.
Oilfield service firms were hit by the massive oil spill accident involving BP that led to a halt in U.S. deepwater drilling.
But the drilling halt has been removed and analysts said with stricter regulations in place, top tier rig-builders like Keppel and Sembcorp could benefit from a surge in orders as operators will try to replace their old platforms.
COSCO shares were suspended in afternoon trade and resume trade on Monday. Its shares were up about 3.1 percent before the suspension, but is down 6 percent so far this year.
Shares of both Keppel and Sembcorp Marine are up 5.3 percent and 7.3 percent respectively so far in 2011.
Analysts said the potential order for cylindrical drilling platform -- which is similar to a semi-sumbersible rig -- is a boost to the industry which had not seen orders for such rigs since the recent economic downturn.
Singapore is home to two of the world's largest rig-builders, Keppel Offshore & Marine, a unit of Keppel Corp , and Sembcorp Marine , which have secured billions of dollars worth of jack-up rig orders this year.
"This is a positive thing for the industry as it is the first order of semi-submersible rigs for the first time since the downturn," said an analyst at a U.S. bank who declined to be identified because he is not allowed to speak to the media.
"Sevan has always been a traditional customer of COSCO so this would not necessarily reflect negatively on the Singapore yards, but it could prompt the order of more semi-submersible rigs to the market," he added.
Sevan has also given an option to COSCO -- which is based in China -- for two more rigs at a similar price tag.
A semi-submersible rig is a type of floating vessel that is supported primarily on large pontoon-like structures submerged below the sea surface.
In a separate announcement, Sevan said the finalisation of the deal is subject to listing of Sevan Drilling.
Oilfield service firms were hit by the massive oil spill accident involving BP that led to a halt in U.S. deepwater drilling.
But the drilling halt has been removed and analysts said with stricter regulations in place, top tier rig-builders like Keppel and Sembcorp could benefit from a surge in orders as operators will try to replace their old platforms.
COSCO shares were suspended in afternoon trade and resume trade on Monday. Its shares were up about 3.1 percent before the suspension, but is down 6 percent so far this year.
Shares of both Keppel and Sembcorp Marine are up 5.3 percent and 7.3 percent respectively so far in 2011.