Manufacturing News

Oil rigs the wave of the future for shipbuilders

With many Chinese shipyards' earning capability being squeezed by low technical content, appreciation of the renminbi and blind expansion, Chinese shipbuilders are looking to stay afloat by building more maritime engineering products.

A recovery is still far off, said Wang Jinlian, secretary general of the China Association of the National Shipbuilding industry, although China's new ship orders reached 46.44 million deadweight tons between January and October, about 46 percent of the global market share.

The Beijing-based association previously represented more than 730 large and medium-sized Chinese shipyards before 2011, but the figure has dropped by half after only two years.

"Looking long-term, maritime engineering vessels and equipment will be key to Chinese shipyards' finding a way out and competing with South Korean and Japanese shipbuilders," Wang said.

As opposed to producing bulk ships, offshore engineering vessels and oil-drilling platforms are costlier and harder to build. But growing global demand for energy resources is expected to keep orders flowing, and demand for offshore energy products has rapidly risen in recent years.

COSCO (Nantong) Shipyards Co Ltd, a unit of China Ocean Shipping (Group) Co (COSCO), already has shifted its focus from shipbuilding and ship maintenance to maritime engineering products.

"The expertise and technology gained from building and maintaining ships offer a favorable condition for us to move into maritime engineering," said Ni Tao, COSCO (Nantong)'s managing director.

Maritime engineering products are essentially functional vessels and oil-drilling platforms that can float in deep water. Offshore gas and oil companies use these vessels to process the natural gas and crude that is pumped from the ocean floor. They also can be used in the extraction process.

Ni said shipbuilding and maintenance now account for just 10 percent of annual sales at COSCO (Nantong). Last year, the shipyard delivered five offshore drilling platforms to buyers in the United States, the Netherlands and Norway.

With two orders for drilling platforms and six offshore engineering vessels already in hand this year, the company received another two orders for semi-submersible drilling platforms from a Norwegian company in November. They will be built at COSCO (Nantong)'s Qidong base in Jiangsu province.

The total contract value of the two platforms is $450 million.

Chinese companies received about $12.8 billion worth of new maritime engineering equipment orders in the first 10 months of this year, accounting for 26 percent of the world's total. The country had held only 13 percent of the global market share in 2012, said China's Ministry of Industry and Information Technology.

According to CANSI, more than 110 Chinese shipyards have begun to produce different types of maritime engineering vessels or equipment, such as offshore wind power devices, maritime crane ships, and dredgers for both domestic and international buyers, including China National Offshore Oil Corp, China Huaneng Group, Exxon Mobil Corp and Royal Dutch Shell Plc.

Not only shipyards but China's largest heavy machinery maker, Shanghai Zhenhua Heavy Industry Co Ltd (ZPMC), also is cashing in on rising demand for maritime engineering products.

Maritime engineering contributed 10 percent of ZPMC's total revenue in 2009, far behind port cranes and large steel structures.

Riding on global orders, contracts for marine engineering equipment and steel structures totaled $1 billion in the first half of 2013, accounting for 34 percent of ZPMC's total contracts, which rose 71 percent compared with the same period last year.

"This industry won't face a slowdown over the next several decades. Deep-water fields are expected to be the main sources of conventional energy yet to be discovered and developed," said Dai Wenkai, ZPMC's executive vice-president.

Dai said deep-water pre-salt resources in South America alone are estimated at 70 billion barrels of oil equivalence, a figure that may continue to grow as more underwater locations are found.

To strengthen its maritime engineering capacity and technology, in 2010, ZPMC's parent company, China Communication Construction Co, paid $125 million for the US-based Friede Goldman United, one of the world's leading providers of design services and equipment for offshore drilling rigs.

"This acquisition gives us an advantage to build new vessels with a more complex technical edge," Dai said.

In 2012, ZPMC invested $70 million in maritime engineering research and development projects managed by more than 800 designers and experts.

The company hopes to gain more technical breakthroughs in developing derrick pipe-laying vessels this year, which can be used in cold water such as found in the North Sea and the Arctic.

Most Viewed in 24 Hours


Start a Digital Twin Journey from Engineering Simulation

Accenture releases survey of digital transformation

CIMC Reduces Unplanned Downtime by 30% with Greater Operational Insight from ThingWorx

Ansys Simulation Speeding up Autonomous Vehicles

  • Tel : 0086-27-87592219
  • Email :
  • Add: 3B1 International Business Center, No. 18 Jinronggang Road (No.4), East Lake High-tech Development Zone, Wuhan, Hubei, PRC. 430223
  • ICP Business License: 鄂B2-20030029-9
  • Copyright © e-works All Rights Reserved