It might take time for the offshore marine sector to regain its footing, but the worst of the downturn could be over for the largest offshore rig builder in the world.
"We are watching carefully … As far as we are concerned, the bulk of it is done," Keppel Corporation CEO Loh Chin Hua told CNBC's "Managing Asia" on the subject of "rightsizing" at the offshore and marine group.
Keppel ー the world's top offshore rig builder ー has been hit hard by the knock-on effect lower oil prices have had on the oil support services space. The company has laid off nearly 18,000 workers as part of a major restructuring exercise that began in 2015.
While there might be some adjustments left to work out regarding restructuring efforts, those will be done with more than just cost-cutting in mind as Keppel focuses on efficiency, Loh said.
"We believe the long-term prospects for offshore marine are very bright and we want to be sure that when we emerge from this down cycle, we will not only be in the lead, but we will lengthen the distance between us and our competitors."
On the issue of a recovery in the offshore marine sector, Loh acknowledged that, while higher oil prices were helpful, the markets remained "a little bit uncertain."
Oil prices might be off the lows touched in 2016, but have run into volatility in recent months as the markets reacted to rising production levels despite OPEC-led efforts to tackle a supply glut.
"The part on exploration rigs, which is what we are quite well-known for, building jack-ups and floaters, I think the market there, we believe will take some years," he added.
"The fact that oil price has recovered from its lows is a necessary condition, but it is not the only condition. We are faced with quite a number of oversupply of new jack-up rigs primarily in (the) Chinese yard(s)," Loh said.
Citi pointed out in a note earlier this month that the outlook for the sector remained subdued. Even though oil prices had climbed off lows, projects in the oil and gas sector continued to be delayed while new orders were sluggish.
"To be fair, we are still very positive about the long term for the offshore industry (and) the medium term as well, but in the short term, we see a lot of challenges," Loh said.
Correction: The headline of this article has been updated to reflect Loh Chin Hua's comments on the "bulk" of job cuts being done for his company.
