SPEECH BY MR MANOHAR KHIATANI, JTC’S CEO

AT THE DRIL-QUIP FACILITY GROUNDBREAKING CEREMONY

ON THURSDAY 10 DECEMBER 2009 AT 9.50AM

Mr Jerry Brooks, Vice President & CFO of Dril-Quip Inc,

Mr Blake DeBerry, Vice President of Dril-Quip Inc & General Manager of Dril-Quip Asia Pacific,

Distinguished Guests,

Ladies & Gentlemen,

Good morning. 

It is both a pleasure and an honour for me to join you today for the groundbreaking ceremony of Dril-Quip’s new manufacturing facility. 

Dril-Quip's Strong Commitment to Singapore

1                    Dril-Quip, based in Houston, established its first manufacturing facility in Singapore, which was also their first facility in Southeast Asia, in 1990.  It started with the manufacturing of surface equipment to support the markets in the Asia-Pacific and Middle East regions. Since then, the company has continued to strengthen its operations in Singapore culminating in today’s groundbreaking ceremony.

2                    Today’s groundbreaking event is particularly gratifying for me. I still remember clearly my first meeting with Mike Walker, President of Dril-Quip, in Houston in 2004.  At that time, we talked about the industry in general and I told Mike clearly that Singapore was very serious about the oil and gas equipment industry and we were determined to work closer with companies such as Dril-Quip to grow it. After that first meeting, my colleagues and I met many of our friends in Dril-Quip regularly, both in Houston and Singapore. The Dril-Quip-Singapore partnership strengthened, resulting in several interesting projects and finally, in the setting up of this new facility in Singapore.

3                    This new manufacturing facility, with an investment value of over S$40million, will substantially strengthen Dril-Quip’s presence in Singapore.  Sited on a land area of approximately 4.5ha, it will manufacture high-value and sophisticated subsea and rig equipment, which are critical components in the exploration and production of oil.  

4                    I want to thank Dril-Quip for your trust and confidence in Singapore. Your new facility reinforces Singapore’s leadership position in the marine and offshore industry.

Singapore's Marine & Offshore Industry

5                    Singapore's marine and offshore industry has weathered many storms and demonstrated tremendous resilience in achieving its current position.  The industry started out modestly in the 1960s as part of the country's industrialisation plan.  Over the years, with innovation and higher value-add activities, Singapore has evolved into a world-class marine and offshore hub with a wide range of capabilities, from rig-building, ship repair and conversion, specialised vessel construction, marine and offshore services, to oil & gas equipment manufacturing.

6                    Today, we pride ourselves as the market leader in the Floating Production, Storage and Offloading, or FPSO in short, enjoying 70% of the global share, and an established port of call for ship repairs. In the area of oil & gas equipment, Singapore is the largest manufacturing location in Asia-Pacific, and we are happy that more global companies, such as Dril-Quip, are choosing to set up sophisticated and state-of-the art manufacturing and development facilities here.

7                    Over the last few years, several global offshore and marine companies have established and expanded their operations significantly in Singapore. They include UK’s Rolls Royce, USA’s Halliburton, Sweden’s Berg Propulsion and Australia’s Toll Offshore Petroleum Services, or TOPS in short.  These global companies have each made a mark in Singapore.

8                    Rolls Royce’s global marine headquarters in Singapore will have global responsibility for business development, marketing and corporate services, while Halliburton's manufacturing and technology centre for the advanced logging-while-drilling oilfield tools is the first such facility outside the United States that is capable of manufacturing the high technology tools.

9                    Berg Propulsion’s manufacturing plant for controllable pitch propellers in Singapore is the first of its kind in Southeast Asia, and Singapore is also its global headquarters for sales and marketing.  As for TOPS, the company has invested S$400 million in the redevelopment of the Loyang Supply Base which, when completed, will further propel Singapore as a leading offshore logistics provider, a crucial component in the offshore and marine sector.  Other oil and gas equipment and services companies such as Schlumberger, Cameron and FMC have similarly made significant investments in Singapore for their engineering and manufacturing activities over the last few years. Our local shipyards have also expanded significantly in recent years.

10                These investments contributed to the industry's record manufacturing output over S$18billion in 2008. This represents a compound annual growth rate of almost 30% over the last five years, making this one of the fastest growing sectors in our economy in the last few years.

Growth Potential for the Marine and Offshore Industry

11                After five years of strong growth, the marine and offshore industry has also been affected by the global economic downturn. However, with the projected growth in Asia-Pacific's oil exploration & production and marine activities, the outlook for the sector remains positive. We also see a growing trend in the area of deepwater and Arctic operations that require complex equipment and vessels, and other emerging trends such as those in the development of floating LNG projects.

12                These new trends have created new opportunities for the industry and also transformed it into a knowledge-based cluster.  Companies have started setting up R&D centres and working with the local universities and classification societies to focus on new product development and process innovation, to enhance their technology capabilities.  The industry is hence creating many interesting jobs for skilled engineers and business professionals.

13                The marine and offshore industry also has a strong multiplier effect. It has positive spin-off effects on the supporting industries such as logistics and precision engineering.  In fact, several of our precision engineering companies have diversified to support the marine and offshore sector, and we are confident that they will continue to benefit from its growth.

New Developments for Singapore’s Marine and Offshore Industry

14                Given the importance of the offshore and marine sector, all the relevant government agencies – EDB, Spring, AStar and JTC have been working seamlessly to grow this industry in Singapore.  For our part, JTC has been looking at innovative infrastructural solutions to overcome some key challenges faced by the industry.  One of which is to come up with innovative ways to overcome the scarcity of waterfront land in Singapore.

15                To this end, JTC will be developing the Offshore Marine Centre at Tuas, an innovative infrastructure solution to optimise waterfront land use. The Offshore Marine Centre will be a multi-user waterfront facility offering common berthing facilities which targets companies engaged in manufacturing and fabrication of marine and offshore equipment and components.

16                Another recent example of exercising innovation to grow the industry is Sembcorp Marine’s integrated yard facility that was announced last month.  This project represents a major step in the transformation of the marine and offshore industry in Singapore.  Given the new yard’s special requirements, it was a challenging project for JTC and we worked very closely with Sembcorp Marine to create a unique 'custom-made' waterfront profile for the integrated new yard facility.   

17                JTC is also looking into harnessing the synergy between the shipyards in Singapore and the Riau islands, and in encouraging industrialists to implement innovative shipbuilding techniques to ensure that our scarce waterfront land is optimised.  

18                Strengthening the supplier base and our technology offerings, both in depth and diversity, are other key initiatives that the Singapore agencies are working on. By building up these capabilities, we hope to make Singapore an even more attractive location for global marine and offshore companies.

19                Through these initiatives and infrastructure solutions, we aim to establish Singapore as the Integrated Global Marine & Offshore Hub – what we call, a "Norway + Houston of the East" – a world leader in oil & gas equipment and oilfield services, anchored by a strong marine & offshore technology base.

Conclusion

20                The progress that we have made in growing the oil and gas equipment sector has only been possible because of the strong support that we have received from partners such as Dril-Quip. Again, I thank you for your trust and confidence in Singapore and you can be sure that we will continue to work closely with you. We want you to do well in Singapore – your success is our success. 

21                In closing, let me congratulate Dril-Quip on this landmark event, which is really the result of your vision and hardwork. I wish you many good years ahead in your new home in Singapore.

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