SINGAPORE: Keppel Corp, the world's biggest oil rig maker, said Thursday (Jan 26) it cut 10,600 jobs last year and mothballed two overseas shipyards as weak crude prices continued to batter the industry.
The cuts were in the conglomerate's Offshore and Marine (O&M) division, which has been hard hit by the downturn in oil and gas exploration following a prolonged slump in crude prices since 2014.
Three shipyards in Singapore are also in the process of being closed, Keppel Corp chief executive Loh Chin Hua said at a media briefing.
While a landmark deal between OPEC members led by Saudi Arabia and non-OPEC countries such as Russia to cut production came into effect on Jan 1 and led to a rise in oil prices, Loh said "challenging conditions" remain.
The agreed production cuts are aimed at soaking up a global supply glut that has brought prices down from highs of more than US$100 a barrel in June 2014.
Prices fell to near 13-year lows of below $30 in February 2016 before recovering to current levels of more than $50.
Keppel Corp, which also has businesses in property and infrastructure, said its 2016 net profit came in at S$784 million (US$552 million), down 49 per cent from the previous year, in part due to lower contributions from the O&M division.
Full-year net profit for that division plunged 94 per cent to S$29 million as orders for oil drilling rigs dwindled.
The job cuts comprised 35 per cent of the O&M division's total direct workforce.
Loh said the company is positioning itself for an upturn by investing in research and development and through measures such as retooling the technology they have developed in the offshore industry for other uses.
"What we are going through is a very long harsh winter," said Loh. "It's not business as usual."