Seatrium has played down any potential negative impact on its business from the current difficulties being experienced by the fledgling offshore wind industry in the US.
The sector has been rocked in recent weeks by news that BP and Denmark’s Orsted have taken large write-downs on projects off New York and New Jersey.
US offshore wind developments are said to have been impacted by a combination of supply chain problems, soaring interest rates and a lack of new tax credits.
The Singapore offshore yard group recently told analysts at a briefing following its third-quarter update that its work on the Empire Wind 1 project with Orsted was “proceeding as planned”.
However, management reportedly said that 2026 delivery of the two substations has been pushed out to beyond 2026 with no definitive delivery date provided.
“On the analyst call, management stated that it is not affected by the issues buffeting the offshore wind industry at present given that these issues are confined to the east coast of the US,” said UOB Kay Hian analyst Adrian Loh.
“In any case, Seatrium pointed out that all of its contracts are cash flow neutral given that it is paid based on milestones and will not suffer in the event of a cancellation.
“Specifically on Orsted, Seatrium noted that its Revolution Wind project offshore Connecticut and Rhode Island has achieved final investment decision, and the Changhua projects are progressing well, while discussions are ongoing regarding its Empire Wind project,” Loh added.
In Europe, the offshore wind industry appears more stable given that Seatrium’s exposure is via national grid operators such as RWE and TenneT, which are very focused on energy transition.
Addressing the key issues affecting the broader industry, Seatrium said that while some companies have been negatively affected by the wind industry’s supply chain, management was “sanguine given that it is partnered with Hitachi and GE for switchgear and transformers while issues with wind turbines are not applicable to Seatrium”, according to Loh.
“Overall renewables industry costs have spiked given the high inflationary environment and higher interest rates; however, the company pointed out that it is actively engaging with its clients and also looking at its own cost structure,” the UOB Kay Hian analyst said.
“Interestingly, management stated that the combination of Keppel Offshore & Marine and Sembcorp Marine has given rise to an extensive database of suppliers and providers, which have good track record to navigate these cost challenges.”
In May this year, Seatrium secured orders worth SGD 500m ($377.4m) for two offshore substation platforms from the BP and Equinor-backed Empire Offshore Wind project.
The scope of the project involves the engineering, procurement, construction, offshore hook-up and commissioning of the two platforms that will be located about 20 miles (32 km) south of Long Island.
Seatrium is already building a wind turbine installation vessel for Maersk Supply Service, which will be deployed on the Empire Wind development.
It is also working on a next-generation WTIV newbuilding for Maersk Supply, as well as the engineering, procurement and construction of another new WTIV for Dominion Energy.