Once energized by the “drill, baby, drill” rallying cry of former U.S. President Donald Trump, the oil and gas sector may no longer be booming, but it’s far from obsolete. That’s the message from CGS International’s seasoned analyst Lim Siew Khee, who has spent nearly two decades covering the volatile offshore and marine (O&M) and energy landscape.
Despite the sector’s rebound from post-GFC lows, Lim cautions against exuberance. Elevated interest rates are discouraging capital expenditure cycles, and companies — bruised from the last boom-bust round — remain cautious about over-leveraging for new rigs or shipyard expansions.
Today’s survivors, including Seatrium Ltd (SGX:S51) and Keppel Ltd (SGX:BN4), have adapted by branching into renewable energy. Seatrium, for example, has evolved from fossil-fuel-focused rigs and FPSOs into a key player supporting wind energy and maintenance. “The shift is slow, but necessary,” Lim tells The Edge Singapore. While the spotlight is on solar panels and wind turbines, she notes, “lifting crude oil from beneath the seabed is still essential to meet growing energy needs.”
For companies like Seatrium and smaller players such as Marco Polo Marine Ltd (SGX:5LY) and Pacific Radiance Ltd (SGX:T8V), repurposing offshore support vessels for wind projects offers a “sweet spot.” The pivot toward renewables and multi-capability services allows these firms to remain resilient — and relevant — even if oil and gas demand tapers off.
“Singapore companies have to be nimble and improve their product offering,” says Lim, adding that policy swings, such as Trump’s reported pause on new renewable projects, can heavily influence capital flows.
Shipping Sector: Not Quite the 2021 Peak, But Staying Buoyant
Yangzijiang Shipbuilding (SGX:BS6)
Shipping, another sector under Lim’s watch, may never replicate the freight rate highs of 2021–2022 — peaks driven by pandemic-related supply disruptions. Still, Lim expects rates to remain “slightly higher” than pre-pandemic averages, supported by decarbonisation mandates and sustained global demand.
Container ship operators turned profitable from 2020 to 2022, reinvesting windfalls into fleet renewal and green vessels to comply with International Maritime Organization (IMO) standards. “It’s a virtuous cycle,” says Lim — one that supports shipbuilders focused on eco-friendly technologies.
Yangzijiang Shipbuilding, in particular, has surged ahead. While U.S. tariff proposals on China-built ships briefly sent its shares plunging by nearly a third earlier this year, the stock had already risen nearly 80% over 12 months — making it CGS International’s best-performing counter under Lim’s coverage.
With a US$24.4 billion (S$32.6 billion) order book and yards filled through 2027, the company is expanding into green-fuel vessels. It doubled its final dividend to 12 cents for FY2024 and is trading well below Lim’s bullish target price of S$3.62, up from S$3.20 in January. As of March 26, the stock closed at S$2.42.
As global energy dynamics shift and shipping navigates environmental mandates and geopolitical uncertainties, Lim’s approach is pragmatic: don’t time the cycle; understand the transition. The future, she suggests, belongs to companies that can straddle the old and new energy worlds with adaptability and purpose.
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