Since the war broke out earlier this year in February, the ongoing geopolitical disruptions around the Strait of Hormuz have created prolonged volatility across global energy markets, driving up energy, material, and transportation costs while inducing caution into corporate investment decisions. For the Boustead Singapore Group (“Boustead”), direct operational exposure to the Middle East remains limited.
While macroeconomic headwinds manifest differently across each business unit, management is proactively controlling internal variables, optimising operational efficiencies, and protecting margins rather than relying on speculative oil price forecasts.
Differentiated Dynamics in Energy Engineering
A common misconception is that rising oil prices directly dictate performance across Boustead’s Energy Engineering Division. Thermal Process Equipment and Real-time Process Control Systems – two major product categories under the Energy Engineering Division – distinctly serve different segments of the energy value chain and their performance is primarily driven by clients’ capital expenditure cycles, project timing, supply chain conditions, and critical infrastructure requirements. Over the past few months, the Energy Engineering Division has seen heightened business activity supported by active upstream and offshore activities, where continuous demand for wellhead control, process control, and safety systems remains essential as field operators prioritise production reliability and uptime to keep up with global demand.
The Energy Engineering Division also operates in downstream refinery and petrochemical markets, where some clients have deferred major capital investments due to global capacity adjustments and earlier production max-outs following the Ukraine conflict. However, overall enquiry levels remain steady in both volume and value, supported by strong Liquefied Natural Gas activities and a broader product mix. Operationally, the Energy Engineering Division’s long-term fundamentals remain firm as the global energy demand continues to rise and prolonged underinvestment will require replacement and upgrades.
Finding the Right Balance at Boustead Projects
In Real Estate Solutions, Boustead Projects Limited (“BPL”) is demonstrating disciplined management to protect project economics against rising site energy, transportation, and material costs. For private sector projects, BPL factors in energy cost risks and environmental variables into its contract pricing models. Contracts secured since the start of the energy crisis allow relevant cost increases to be passed through or structured dynamically based on project duration. For public sector contracts, BPL leverages price fluctuation mitigation measures such as Clause 33 of the Public Sector Standard Conditions of Contract established by the Building and Construction Authority (“BCA”) which allows dynamic contract adjustments based on market price index changes during the construction period.
To further mitigate cost pressures and enhance long-term sustainability, BPL relies on green construction methodologies, battery-operated site tools, increased solar energy adoption, and waste recycling initiatives such as concrete and steel. Having tracked energy and water metrics since 2015 under the BCA Green and Gracious Builder Scheme, BPL enforces project-level KPIs that control operational overhead while meeting current-year delivery targets.
These efforts strengthen BPL’s ability to manage costs and deliver projects in a market supported by sustained demand. Singapore’s industrial construction contract awards rose by over 43% to S$7 billion in 2025, while BCA projects total construction demand of S$47 to 53 billion in 2026. This provides a supportive backdrop for BPL’s engineering and construction business, with its emphasis on resource efficiency, cost discipline and timely delivery helping it pursue opportunities while maintaining operational resilience.
Sustained Outlook Supported by Core Strengths
While energy market volatility may persist in the near term, it does not change the global need for essential energy infrastructure and high-spec industrial facilities. As of May 2026, the Group’s engineering order backlog* was S$840 million**, comprising mostly of BPL’s disciplined execution in securing new E&C projects, as well as the Energy Engineering Division’s contracts.
Equipped with a healthy engineering order backlog, Boustead Singapore continues to position itself to navigate changing market cycles and deliver sustainable value to our stakeholders.
*Confirmed customer orders that yet to be delivered, shipped, or billed
**Unrecognised project revenue remaining at the end of FY2026, plus the total value of new orders secured since then, as announced in FY2026 financial results announcement.