Companies in the corporate world of oil and gas continue to restructure by shedding weight and acquiring new status in a bid to position well their businesses to support energy transition. The restructuring is in some cases come with name change to reflect the new area of business dealings.
Keppel Offshore & Marine will exit the offshore rig building business and be restructured into three parts, Offshore Magazine reports. Keppel Corp. has reported it will transform its wholly-owned subsidiary, Keppel Offshore & Marine (Keppel O&M), so that the business is well-placed to support the energy transition. Keppel O&M will exit the offshore rig building business, after completing the existing rigs under construction.
Loh Chin Hua, CEO of Keppel Corp. and chairman of Keppel O&M said: “The share of renewables and new energy solutions in the global energy mix has been growing rapidly, driven by environmental concerns as well as technological advancements and the declining cost of renewables. Natural gas, as a transitional fuel, is also projected to overtake oil as the world’s largest energy source in the years to come.
In a similar situation, Ditlev Engel, CEO, Energy Systems, DNV GL in a press release, stated that decarbonization is a major focus across the entire energy value chain, and the pressure is on to accelerate the transition and drive deep decarbonization. To support the complex transition to a more sustainable energy future, DNV GL has combined its current Oil & Gas and Power & Renewables businesses. We will serve our customers and the entire energy value chain as Energy Systems – the world’s leading resource of independent energy experts and certification body”, he stated.
Keppel O&M will be restructured into three parts: a Rig Co and a Development Co (Dev Co), which will be transient entities created to hold its approximately S$2.9 billion ($2.2 billion) worth of completed and uncompleted rig assets; and an Operating Co (Op Co), comprising the rest of Keppel O&M, which will be transformed into an asset-light and people-light developer and integrator of offshore energy and infrastructure assets.
DNV GL will combine her expertise, and will be better equipped to support in tackling the energy transition faster and with confidence. The power, renewables and oil and gas industries all have a crucial role in the transition, not only as separate sectors, but also in developing integrated solutions in areas such as energy storage.
While the renewable energy market will grow rapidly, natural gas is set to become the single largest energy source by the middle of this decade. Low-carbon fuels such as hydrogen and ammonia, and technologies such as carbon capture and storage, will be important tools to decarbonize hard-to-abate sectors such as transport, aviation and shipping.
According to CEO of Keppel Corp, “We are also exploring inorganic options for the O&M business, but there is no assurance that any transaction will materialize. In the meantime, we believe that our organic restructuring of Keppel O&M will not only enhance its competitiveness, but also its attractiveness, if we were to undertake any inorganic action.”
The Op Co will progressively transit to a developer and integrator role, focusing on design, engineering, and procurement.
The restructuring is expected to be executed over the next two to three years when most of the rig jobs would have been completed.
Energy Systems (of DNV GL) started operating on 1 February 2021, providing certification, advisory and digital monitoring services to the entire energy value chain. With more than 4,000 energy experts, they are ready to help realize a safe and effective transition.
However, in line with the current energy transition, President Joe Biden had immediately signed an executive order which allows all federal vehicles to run on electricity. He also signed an executive order that directs the Department of Interior (DOI) to pause new oil and natural gas leasing on federal public lands and offshore waters, concurrent with a review of the federal oil and gas program. All this is believed to be steps towards addressing climate change in a way no US President as done before. Biden plans to fight climate change with executive orders.
During the campaign, Joe Biden pledged to overhaul America’s electric grid so that it relies solely on “clean” electricity by 2035. As president, Biden is already working at decarbonizing the country and paying more attention to climate change. Companies will indeed continue to make transition to alternative energy that will keep the world safe.
