World's top oil rig builder diversifying in downturn

The world's largest builder of offshore oil rigs is looking to diversify its business while trying to ride out the energy market downturn, a top executive said Tuesday.

"We're looking at some non-oil and gas related projects where we are able to use our offshore technology," Keppel Offshore & Marine chief executive Chow Yew Yuen said at an industry forum.

"That'll include power projects, desalination. So we'll look for alternate projects where we'll get to use our technology for jack-ups, for semis, for floaters and so on," he said, referring to different types of rigs.

Chow said it was an attempt to keep Keppel profitable in the face of the weak oil market.

Keppel Corp -- Keppel Offshore's parent company -- announced on Monday that it has been trimming employee numbers.

Staff worldwide have been reduced by 9.4 percent since the start of 2016, or about 2,800 positions.

Oil prices hit historic lows this year in the face of massive oversupply, with the US benchmark West Texas Intermediate trading at $26.05 on February 11, and European benchmark Brent seeing $27.10 on January 20.

They are now trading around $40 a barrel, well off mid-2014 levels of more than $100 a barrel.

At the same forum, a Norwegian consultant predicted the current oversupply will continue for the next three years before the market starts to pick up again.

Oil prices will cross the $100 mark only in 2020, said keynote speaker Jarand Rystad, who runs an energy consultancy.

"Even if the oil price returns, (the offshore marine) sector is lagging two to three years after the oil price. But the share prices will follow the oil price even if it's predicted the revenue will be very weak for the next two to three years," he said.