Will Keppel Corporation be destroyed by US shale oil?

The recent corruption fine on Keppel Corporation amounting to $566.91 million by US, Brazil and Singapore authorities certainly rocked the market. The record fine came at a time when the oil market is perceived to be recovering from a devastating three-year slump. But more importantly, as a government-linked company, the episode left a taint on the reputation of Singapore, widely known to be one of the most corruption free cities in the world.

But beyond the corruption scandal, a far more sinister probably awaits Keppel Corp. In my opinion, it could be the dominance of US shale oil production that may change the game for the Singapore blue chip. Whilst the corruption fine may be staggering, Keppel Corp’s balance sheet is strong enough to withstand the impact without incurring significant damages to its growth prospects.

Diversified businesses

As an industrial conglomerate, Keppel Corporation has four major business divisions – Offshore and Marine, Property, Infrastructure and Investments. Keppel O&M (KOM) specializes in offshore rig design, construction and repair, ship repair and conversion, and specialised shipbuilding. It integrates and harnesses the experience and expertise of 20 yards and offices worldwide to be near customers and markets.

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Updated: April 5, 2018 — 8:15 am

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