What Does the Future Hold for Keppel Corporation Limited’s Offshore & Marine Segment?  

Keppel Corporation Limited’s (SGX: BN4) offshore & marine (O&M) segment has been decimated by prolonged low oil prices.

But its O&M segment’s future could be lie beyond the oil and gas sector. In a recent presentation at Pareto Securities, the conglomerate shared this interesting slide on the projected sources of energy in 2040.  

Source: Keppel Corporation’s investor presentation  

Based on the forecast above, oil will remain a significant contributor to the world’s energy needs in 2040. But so will natural gas. In Keppel Corporation’s 2016 annual report, chief executive Loh Chin Hua said:

“There will also be other markets to explore such as for gas and production solutions, as well as opportunities to re-purpose and maximise our offshore technologies for other non-drilling applications.”

In another comment, Loh highlighted the expected growth in natural gas:

“Gas is expected to be the fastest growing fossil fuel for the next few decades, with demand rising at 1.5% per annum from now to 2040, to make up a quarter of global energy demand.

Keppel is well positioned to be an industry forerunner through an extensive gas strategy that spans the value chain from liquefaction to transportation to power generation.”

Keppel Corporation has also formed a 50-50 partnership with Royal Dutch Shell to supply liquefied natural gas (LNG) bunkering services in Singapore’s port. Loh explained:

“Together with Shell, we have the ambition of building a global bunkering network to serve shipowners across their travel routes. Being the forerunner in Liquefied Natural Gas (LNG) bunkering allows us to push the envelope for the use of LNG as a marine fuel, creating pull-through opportunities for our yards.”

It does not mean that Keppel Corporation will be abandoning the oil and gas space. Loh highlighted the acquisition of Cameron’s LETOURNEAU, and how it helps position the firm in aftermarket sales:  

“Last year, we completed the acquisition of Cameron’s LETOURNEAU suite of jackup rig designs, as well as rig kit, after-sales and aftermarket businesses. We now have a market share of about 40% of the world’s jack-up rigs in operation, giving us better access to the after-sales and aftermarket services sector.”

According to Loh, Keppel LeTourneau provides services like sensing technology, rig analytics, drone inspection services and enhanced 24/7 monitoring solutions to fleet owners.  

It might take a while for the efforts to bear fruit, but it could position Keppel Corporation for a brighter future.

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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 writer Chin Hui Leong doesn't own shares in any company mentioned.