Keppel says clients may cancel orders worth S$1.2bln

November 27, 2008
Singapore Democrats

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Kevin Lim
Reuters

Keppel Corp, the world’s top offshore oil rig builder, warned on Thursday that three clients may cancel orders worth S$1.2 billion ($794.2 million), a sign companies may hold back on exploration amid falling oil prices.

The contracts, signed earlier this year, involve a semisubmersible for Scorpion Offshore, two jackup rigs for Seadrill and a support vessel for Lewek Shipping, the Singapore firm said in a statement.

Construction work has not yet started on these projects, for which Keppel has received downpayment.

The three firms were reviewing their options on the contracts and the deals may not necessarily be called off, a Keppel spokeswoman said.

Keppel posted a 10 percent rise in third quarter profits and said in October its S$13 billion order book, which stretches to 2013, was robust and well diversified. It said then expansion in rig fleets could be constrained by tight credit.

It benefitted from a jump in oil exploration in recent years, but crude futures prices have slid by almost $100 a barrel since hitting a peak above $147 in July, as the credit crunch and recession fears dent demand and investor sentiment.

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