Singapore-based Keppel Offshore & Marine (Keppel O&M) will exit the offshore rig building business, after completing the existing rigs under construction, it said on January 28. 

“In line with the group’s more disciplined approach towards capital allocation, Keppel O&M will not undertake any new project requiring large upfront capex or without milestone payments. It will also progressively exit low value-adding repairs and other activities with low bottom line contribution, and focus on higher value-adding work,” it said. 

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Keppel O&M said the move is part of the strategic review of its offshore and marine business, with the goal of creating a slimmer, and more competitive company that “is well-placed to support the energy transition.” 

“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,” Loh Chin Hua, CEO of Keppel Corporation, said. “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.” 

As part of the transformation, Keppel O&M’s business will be restructured into three parts: a Rig Co and a Development Co, which will hold its approximately S$2.9bn (US$2.2bn) worth of completed and uncompleted rig assets; and an Operating Co, comprising the rest of Keppel O&M.