China Challenges Korea & Singapore In Oil Rig Market
China is challenging Korea and Singapore in the oil rig manufacturing market as a result of an offshore exploration boom in which the Chinese have garnered 20% of the $72 billion market, according to a Reuters report.
Chinese companies like COSCO Corporation have become a contender against Korea and Singapore in just seven years making jack-up rigs for shallow-water drilling and semi-submersibles for deepwater operations.
“Over time there is no reason why Chinese yards — the good yards — could not be competitive internationally,” Scott Kerr, chief executive officer of Norwegian oil service company Sevan Drilling, told the news service.
China is attracting customers with low prices that traditionally derive from government subsidized financial institutions able to provide its manufacturers with low cost financing to attract buyers.
A critical problem remains quality. This has been causing problems for buyers because Chinese shipyards are not yet able to equal the quality of Korean builders, one shipbuilding analyst noted.
A spokesman for DSME, a Korean shipbuilder, says “The Chinese shipbuilding industry is growing fast based on its low wage level, strong domestic market, and solid government support policy. But they also have some limitations: low technical skills, lack of skilled workers, lack of experience and know-how especially in the offshore construction part.”