Enticed by oil prices hovering around 22-year highs, oil companies are ramping up exploration and developing fields that made little economic sense in the past. They are also replacing an aging fleet of rigs, many of which were built more than 25 years ago in a burst of activity after the oil shock in the mid-1970s. Record-high oil prices turning out to be profitable for two Singapore companies. Keppel and SembCorp Marine have billions of dollars worth of orders for new rigs that will keep their earnings healthy for several years to come. The two companies have won all the 11 orders for jackup rigs placed worldwide this year, beating South Korean rivals Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering.

A huge S$990 million order for four jackup rigs by AP Moller-Maersk is among the eight contracts Keppel has won this year, helping its order book grow to S$5 billion from S$3.4 billion at end-2004. Smaller peer SembMarine has also seen its order book balloon to S$3.2 billion after the recent US$121 million contract to build a deep drilling offshore jackup rig for Norway's Awilco Offshore. It has won three such orders this year. It is expected that Keppel may this year win new orders of about S$3 billion, while SembMarine could get some S$1.8 billion in new business. Keppel and SembMarine together control about 70% of the global market for FPSO (floating, production, storage and offloading) conversion business and building jack-up rigs.

Keppel operates 16 yards across Asia-Pacific, the Gulf of Mexico, Brazil, the Caspian Sea, Kazakhstan, the Middle East and the North Sea, building jackup rigs, semi-submersibles and other specialized offshore rigs as well as designing, building, repairing and converting FPSOs. SembMarine runs four Singapore shipyards, including Sembawang. It also has yards in China, Brazil and Indonesia.