1. Good morning. Thank you for joining us. 

2. Today, we are visiting Sembcorp Marine, a part of  Singapore’s Marine and Offshore (M&O) sector. Let me start off by saying that this sector is not just about the queen bees like Sembcorp Marine and Keppel Offshore & Marine. There is a whole ecosystem of SMEs in Singapore supporting the sector. It also relates to the entire ecosystem of  SMEs that employ many other Singaporeans in supporting roles. 

3. The M&O sector has gone through various cycles, and it is perhaps a natural effect of the industry that there will be a regular cycles of peaks and troughs. Unfortunately for us, at this point in time, we are going through a trough, and the conditions are very challenging. 

4. This is an industry that is very engineering-intensive. It requires us to build up capabilities and skilled workers over the long haul, and this is why we are not just going to manage the short-term ups and downs, but more importantly, we have a plan to make sure that we help our industries and our workers to continue to do well over the long term. 

5. This is the reason why, despite the current challenging conditions, both Sembcorp and Keppel have continued to invest and build up capabilities for the long term, and continue to groom their engineering talent to make sure that they are ready for future projects and to upskill their workers. That is very important. 

6. Notwithstanding the short term challenges that we have, we must continue to invest in the long term as they have allowed both Keppel and Sembcorp to transcend some of the immediate challenges and capture new opportunities going forward. 

7. Even before COVID hit us, the industry was already undergoing a deep downturn, which started at the end of 2014, due to the fluctuations in the prices of crude oil. Many players in the industry, including Sembcorp Marine, then embarked on transformation to diversify into new areas and invested in research and development (R&D) and  upskill their workers. They were able to do this because we have a solid engineering base. The efforts were paying off because we were seeing the signs of gradual recovery in the sector, before COVID hit. The annual orders won by the Singapore M&O industry grew from about S$820 million in 2016 to S$4.5 billion in 2019. 

8. Today, due to COVID, the industry is again being hit by a sharp fall in the global demand for oil because of the reduction in air travel and transportation. For this year, the International Energy Agency (IEA) estimated a drop of about 8.4% in the global demand for oil, the largest drop in history. Consequently, the production is expected to drop by about US$156 billion in 2020 to US$383 billion, a 15-year low. Because of this, the demand for offshore rigs, with the cancellation or delay of existing projects, will therefore threaten the rig building industry. 

9. With this kind of challenges on the horizon, it is therefore very important for our industry to have the engineering capabilities to pivot to new areas. And indeed, this is what our industry has been able to do despite the challenging circumstances. The M&O sector, together with EDB, ESG and the Association of Singapore Marine Industry (ASMI), has been working to grow new capabilities in new verticals, specifically in liquefied natural gas (LNG), Offshore Wind and Smart & Digital products. 

10. LNG platforms and Offshore Wind renewables have emerged as growth opportunities against the backdrop for the demand for more sustainable energy solutions for the world. Our companies are making good progress in this and have secured S$1.5 billion and S$1 billion worth of LNG and Offshore Wind related projects respectively in 2019.

11. As the technology for the offshore wind power generation becomes more mature and competitive, the demand will grow. Global investments in renewable energy have grown significantly this year. Despite COVID-19 in the first half of 2020, we saw global investment of more than US$35 billion, well above 2019's full year investments of US$31.9 billion, and annual wind power installations are projected to grow at 8.2% CAGR to 31.9 GW per year in 2030, creating many good opportunities in this area.

12. Compared to the past, the demand for conventional oil rigs have come down over the years and the industry has used their existing capabilities to pivot to new areas like offshore wind. Another growth opportunity is the shift towards LNG, which is probably, at this point in time, the cleanest fossil fuel energy source that we have. The longer term outlook for LNG is still bright because of its relatively lower costs and relatively lower emissions. The gas demand is expected to grow at 1.5% through 2025, accounting for more than half of the incremental demand. LNG is also the only fossil fuel that is expected to grow through 2030. About US$200 billion worth in capital expenditure for LNG plant and upstream infrastructure is projected to be made between 2019 and 2025.

13. To capitalise on such opportunities, Sembcorp Marine has also set up a Gas Innovation and Solutions Centre focusing on design and engineering capabilities for LNG hybrid tugboats, LNG bunkering vessels and Gravifloat-based LNG refuelling terminals.

14. Over these years, with the reduction in our local manpower pool and also the constraints with the foreign manpower pool, our industries have heavily invested in productivity initiatives that leverage good upfront design, additive manufacturing processes, robotics and automation. Since 2017, the sector has committed more than S$350 million in state-of-the-art production technologies. Sembcorp Marine, Keppel Offshore & Marine, and ST Engineering Marine have invested in productivity measures covering yard connectivity, large format additive manufacturing, robotic systems for block fabrication and automated robotic welding. 

15. We will continue to make sure that we support our companies in their productivity, R&D, digitalisation and automation efforts. We are heartened that notwithstanding the immediate challenges, our M&O companies have recognised the need to help their workers develop new skills and solutions in order to remain competitive. For example, Sembcorp Marine is grooming its next tier of technology champions by training its employees in the areas of hydrogen liquefaction process and transport, electrification and autonomous systems through postgraduate programmes. 

16. The Government recognises the importance of human capital in this M&O sector, and we will continue to upskill our workers together with the industry via programmes such as the Professional Conversion Programme Programme (PCP), SGUnited Traineeships & Mid -Career Pathways Programmes, and the Enhanced Training Support Package (ETSP). Keppel Offshore & Marine (KOM) has been a strong proponent of these schemes. 134 employees have benefitted from the PCP and picked up new skills which enables them to be re-deployed to new roles. It has also already enrolled 117 employees in the latest ETSP which has been extended to this sector just last month. Sembcorp Marine has tapped on EDB’s Industrial Post-graduate Programme to support its employees in the areas of hydrogen liquefaction process and transport, electrification and autonomous systems.

17. On the whole, the industry is facing a downturn now, aggravated by the COVID situation. But our industry is not standing still. They realise that the world is not going back to the pre-COVID world, and are now actively pivoting to new areas. They have already started this way before, moving away from  oil rig building to many other new areas like building the FSRU and FPSO vessels. They have gone into new areas of vessels and wind turbines development because of the capabilities that they have built up over the years in terms of engineering capabilities, and the skills of the workers. 

18. Today, we are competing on a different plane. Today, the industry is competing on the basis that they have the design capabilities and they have the quality assurance that can allow the shipyards in Singapore to integrate parts of the productions from all around the world, to be assembled and qualified in Singapore. And that is how we make a mark for ourselves. 

19. Notwithstanding the short term challenges, we still see prospects for this industry going forward, into the new areas of engineering solutions required by the rest of the world. And we have every intention to make sure that we continue to support this industry and the ecosystem of SMEs that are supporting it so that we can distinguish ourselves through these difficult moments. 

20. While we are at a downturn now, consolidating capacity, we will not stinge on our efforts to continue to invest in new capabilities because these new capabilities will allow this industry to emerge stronger when the upturn comes. These new capabilities will include many of the things that Minister Josephine and I have shared in the areas of LNG vessels, new sustainable solutions including offshore wind turbines and many other engineering solutions. 

21. Whenever I visit this yard, I am always very proud of the kind of products and the kind of engineering solutions Singapore can offer to the world - those operating at very extreme conditions all around the world. It is a very amazing story of what we have been able to achieve with the kind of engineering capabilities that we have built up all over all these years. And we have every confidence that if we continue to invest in the new capabilities, then when the upturn comes, we will be at the forefront to seize those new opportunities. 

22. Thank you.