Malaysia's Nam Cheong sees more demand for small vessels
Singapore-listed Malaysian offshore vessel builder Nam Cheong sees charter rates for small vessels picking up over the next twelve months, driven by shallow water oil and gas activities in Southeast Asia, the Middle East and North Africa, a senior executive said, Reuters reports. Nam Cheong's executive director Seng Keat Leong said that rates for anchor handling towing supply (AHTS) vessels of around 5,000 brake horse power (bhp) could rise to $10,000-$11,000 per day, compared with $8,000-$9,000 currently.
"The market talk is that there is an oversupply of small AHTS, but they are very good for shallow water activities. AHTS perform various functions, whether it is towing or even the simple things like supply, that's why it's the workhorse of shallow water," Leong told Reuters on Tuesday.
"There is still room for the oil majors to move in terms of asset deployment in shallow water. Anything above $55 a barrel [in oil price] is very comfortable for them," he said.
Leong added that the demand for the company's 5,000 bhp AHTS has been coming from Indonesia, Malaysia, Thailand, the Middle East and North Africa.
Nam Cheong has a fleet of ten vessels, which are chartered out by way of bareboat or time charters. But its shipbuilding business still makes up more than 90 percent of its revenue.
As of August, the company's order book stood at 11 vessels worth a total of around 590 million ringgit ($194.8 million).
"In offshore production, about 75-80 percent is still in the shallow water region and the rest is deep water. In that sense, smaller vessels will always be needed in this space," said Kay Lim, DnB NOR's head of securities research in Asia.
"Especially in Malaysia, we are seeing a strong pick-up in activities. They are redeveloping their marginal oil fields and there is also an increase in exploration and production spending in the region, driven by Petronas. That will create jobs for the local guys," he added.
Nam Cheong debuted on the Singapore Exchange in May after a S$472 million reverse takeover deal with ceramic tiles maker Eagle Brand Holdings.
The company competes with other Singapore-listed players like Otto Marine and ASL Marine . Its customers include oil and gas service providers Bumi Armada and Petra Perdana.
"The market talk is that there is an oversupply of small AHTS, but they are very good for shallow water activities. AHTS perform various functions, whether it is towing or even the simple things like supply, that's why it's the workhorse of shallow water," Leong told Reuters on Tuesday.
"There is still room for the oil majors to move in terms of asset deployment in shallow water. Anything above $55 a barrel [in oil price] is very comfortable for them," he said.
Leong added that the demand for the company's 5,000 bhp AHTS has been coming from Indonesia, Malaysia, Thailand, the Middle East and North Africa.
Nam Cheong has a fleet of ten vessels, which are chartered out by way of bareboat or time charters. But its shipbuilding business still makes up more than 90 percent of its revenue.
As of August, the company's order book stood at 11 vessels worth a total of around 590 million ringgit ($194.8 million).
"In offshore production, about 75-80 percent is still in the shallow water region and the rest is deep water. In that sense, smaller vessels will always be needed in this space," said Kay Lim, DnB NOR's head of securities research in Asia.
"Especially in Malaysia, we are seeing a strong pick-up in activities. They are redeveloping their marginal oil fields and there is also an increase in exploration and production spending in the region, driven by Petronas. That will create jobs for the local guys," he added.
Nam Cheong debuted on the Singapore Exchange in May after a S$472 million reverse takeover deal with ceramic tiles maker Eagle Brand Holdings.
The company competes with other Singapore-listed players like Otto Marine and ASL Marine . Its customers include oil and gas service providers Bumi Armada and Petra Perdana.