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Companies

Keppel quits oil rig business as energy goes green

Singapore group shifts focus to offshore wind projects and floating infrastructure

Rig construction has slowed since around 2015 for Keppel.   © Reuters

SINGAPORE -- Keppel will stop building offshore oil-drilling platforms, exiting what was once a core business as renewable energy gains momentum.

The industry faces "intense" headwinds from the "accelerated energy transition," CEO Loh Chin Hua said on a recent webcast.

The government-backed group will instead seek opportunities in offshore wind projects and floating infrastructure, including data centers.

Rig construction has slowed since around 2015, with falling oil prices making matters worse in 2020.

Keppel reported a net loss of 506 million Singapore dollars ($380 million) for the year, weighed down by SG$952 million in impairments on mostly receivables and assets in the rig business. The red ink was its first since 1998, during the Asian financial crisis, and marked a reversal from the SG$707 million profit of 2019.

Revenue slid 13% to SG$6.57 billion in 2020, hit by lower oil prices amid pandemic-induced economic sluggishness.

As part of a broader restructuring, Keppel will sell logistics assets, which include warehouses and trucks. While the business is growing amid the rise of e-commerce, new investments are needed to beat the competition.

Capital will be redirected instead to environmental and other important operations, Loh said. The company will sharpen its focus to reach the 15% return on equity targeted in its Vision 2030 plan, up from the 6.3% of 2019.

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