OPEC’s production cut isn’t enough to save the O&M industry

SINGAPORE (Dec 22): Maybank Kim Eng has maintained its “negative” rating on the Singapore offshore and marine sector, even as the Organization of the Petroleum Exporting Countries announced a production cut to stem falling oil prices.

Maybank Kim Eng’s analysts Yeak Chee Keong and Neel Sinha explained that the issue lies in the asset oversupply among the local shipyards and offshore support vessel owners, and higher oil prices do not immediately translate into higher vessel utilitisation.

“In our view, utilisation improvements from better oil price sentiment may not be fast enough before some players run out of cash,” said the pair in a note on Wednesday.

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