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3 Key SembCorp Marine Ltd Acquisitions for a Future in Natural Gas

Sembcorp Marine Ltd (SGX: S51) is making its move to expand beyond the oil market. As a brief background, Sembcorp Marine is an important global player in the offshore and marine industry. It builds oil rigs and helps to convert and repair vessels. It is also majority-owned by Sembcorp Industries Limited (SGX: U96).

Sembcorp Marine has its eye on the natural gas market. In its 2016 annual report, the company said:

“A few years ago, we identified the market potential for offering innovative solutions to the gas value chain. Gas, as a cleaner fuel, is expected to be increasingly used for power generation and bunkering, amongst other applications.”

The company’s annual report also outlined three acquisitions Sembcorp Marine had made in 2016 which strengthened its natural gas product line-up.

1. Gravifloat

Sembcorp Marine has owned a 12% stake in Gravifloat AS since 2014. In March 2016, Sembcorp Marine decided to purchase another 44% of Gravifloat to bring its stake to 56%. Sembcorp Marine explained the rationale behind the investment:

“Gravifloat AS has enabled us to offer a suite of cost-effective, modularised and redeployable near-shore platform solutions for gas.

These solutions include import and export terminal infrastructure for treatment, storage, liquefaction, re-gasification and offloading of LNG [liquefied natural gas] and LPG [liquefied petroleum gas].”

The diagram below further describes the Gravifloat solution:


Source: Sembcorp Marine’s annual report

2. Aragon

The next acquisition is a company called Aragon. SembCorp Marine wrote:

“The Group also acquired 50% equity in Aragon AS, a process design and engineering group providing customised solutions for the FPSO [floating production storage and offloading] market.

This will enhance our ability to develop effective solutions for the production segment of the oil and gas sector.”

The 50% state was taken in June 2016 and is paired with the acquisition described below.

3. LMG Marin AS

In 2016, Sembcorp Marine also acquired complete ownership over LMG Marin AS. The company reported:

“Another important acquisition is LMG Marin AS, a Norway-based company now fully owned by Sembcorp Marine, with expertise in naval architectural design, engineering and technology development.

LMG Marin brings to the Group a cache of design patents and has more than 70 years of experience in designing drillships, offshore production and storage floaters, OSVs [offshore vessels], LNG carriers, LNG-powered ships, car ferries and cruise ships.”

Sembcorp Marine believes that the acquisition of Aragon and LMG Marine will deepen its proprietary design and engineering capabilities.


Source: SembCorp Marine’s annual report

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.