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ffshore shipping companies are looking to expand this year, despite a number of challenges that may lead to slowing business '€” including falling oil prices and the country'€™s off-target oil and gas lifting.

The firm Logindo Samudramakmur, for instance, plans to disburse up to US$80 million to buy four new ships this year, but the plan will depend on the company'€™s bidding process this year.

'€œWe aim to spend $80 million this year, but the plan will depend on market conditions as oil prices remain low,'€ Logindo president director Eddy K. Logam said on Wednesday.

'€œWe are planning to purchase four new vessels this year, the type of which we have yet to disclose, but the ship procurement will only be certain after our tender-bidding process becomes clear.'€

His company, he said, was eyeing work on several projects worth up to S$100 million ($79.98 million) to S$150 million, up from its contract realization last year of $70 million. However, all projects are still going through the bidding process.

Logindo had only recently issued foreign bonds worth S$50 million to help finance its capital expenditure (capex) plan this year.

Last year, Logindo managed to spend only $40 million '€” half than its initial target to spend up to $80 million to purchase four new ships '€” given dwindling oil prices as well as investment uncertainty during election year, Eddy said.

Meanwhile, another offshore support vessel (OSV) company, Wintermar Marine Offshore, has prepared $50 million in capex to buy four new vessels.

'€œThree of them have been confirmed and will come in the second and third quarter of the year,'€ Wintermar head of corporate planning Pek Swan Layanto said. Last year, her company bought three new vessels.

Both Eddy and Pek Swan said the offshore shipping business may encounter several difficulties this year, including weak oil prices, low oil lifting and exploration realization, as well as the government'€™s plan to raise income tax from shipping activities.

Eddy said Logindo would set a realistic target of growth this year, due to the drop in the global oil price. '€œThis means oil and gas companies will slow down, including in renting our ships,'€ Eddy said.

Oil prices fell to the lowest level since 2009 last month and plunged by more than half to $50 per barrel early last year, as the US pumped the most in three decades and the Organization of Petroleum Exporting Countries (OPEC) kept its own supplies unchanged to defend its share of the global market, according to a Bloomberg report.

Another challenge, Eddy and Pek Swan said, was the finance minister'€™s plan to revise a 1996 law that imposed a 1.2 percent income tax on the shipping industry to boost tax collection from the sector, of which both said would take a chunk of their profit and was in contrast to President Joko '€œJokowi'€ Widodo'€™s vision to make the country a '€œmaritime axis'€.

Last, they said, were low lifting and exploration activities, which would further impact on the OSV business.

According to the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas), the country'€™s oil lifting (production) was 794,000 barrels of oil per day (bopd) last year, around 3 percent lower than the targeted 818,000 bopd stipulated in the state budget.