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Offshore drilling also results in demand of MSVs. There are specialized vessels for carrying out seismic surveys, laying underwater pipelines, etc. Multipurpose Supply Vessels (MSVs) perform several tasks like supply, pipe-laying, etc
The offshore vessel industry is a specialised industry, its cyclicity depends upon oil prices and investments on offshore oil & gas exploration. However, offshore vessel industry is less cyclical compared to shipping industry. Earlier offshore vessel industry was characterized by a fragmented ownership (large number of players with few boats) and low barriers to entry. But with increasing asset price and complexity in the performance of vessels due to multitasking, the entry barriers for newer players have become high. The daily charter rates of these boats involved in offshore drilling are determined by several factors like supply/demand, the kind of boat, the type of contract (spot or long term) and the region of operation (harsh conditions in regions like North Sea result in higher day rates). |
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New vessels with deep water capability have a distinctive advantage over older ones, they command higher day rates and higher utilization rate. |
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Demand Drivers |
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The demand for offshore vessels is driven by production platforms, operational drilling rigs, day rates and fresh E&P activity. It is estimated that a floating platform requires services from 2 offshore vessels, whereas a fixed platform needs only 1 vessel every 10 days. Knowing the number of existing and future platforms gives a fairly accurate estimate of future demand for offshore vessels. |
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Within the offshore vessels, demand is more for new generation vessels with high capacity and the ability to multi-task. An analysis of the orderbook shows that a vessel like AHTS which can do anchor handling/towing and supply, is preferred over an AHT, which can only do anchor handling/towing. Similarly, offshore vessels with high engine power (more than 8000BHP), winch pull (> 250 tonnes) and dynamic positioning systems are now preferred. |
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The offshore vessel whose demand has increased the most is the Multipurpose Supply Vessel due to its ability to multi-task, and reduces the total number of vessels needed to complete an offshore job. |
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Offshore Vessel Fleet Profile |
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The global offshore supply fleet consists of more than 6,000 vessels. Following chart shows the age break of entire gamet of Offshore Vessels, comprising supply vessels, construction vessels, pipe laying vessels, crew barges, etc. |
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As can be seen in the chart, about 48% of the current fleet is 48 years of age and another 9% fall between 20 years and 25 years. Offshore vessels operating in Offshore Oil & Gas sector are at their best during first 15 to 20 years. After 20 years the operation and maintenance cost of offshore vessels increases.
Offshore vessels contain sophisticated equipments and machinery on board. Working in hard environment, these machinery incur extensive wear and tear leading to increase in break down and increase in Operation and maintenance cost.
E&P companies therefore tend to employ younger offshore fleet. But in case of unavailability of new offshore vessels, sometimes they have to settle with what is available.
The PSV fleet is the youngest with an average age of 10 years, whereas the AHT and AHTS fleets have average ages of 22 and 20 years respectively. MSVs are fairly young with an average age of 13 years.
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The fleet ownership is highly fragmented with the top 35 companies owning just above 50% of the total fleet by number. Top owners include Tidewater Marine, Edison Chouest, Bourbon, Dockwise NV, etc. The Indian fleet consists of more than 160 vessels. In addition, close to 40 foreign flagged vessels are operating in Indian water.
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Offshore Vessel Orderbook Analysis |
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The global offshore vessel orderbook stands at 1021 vessels. This represents nearly 18% of the current fleet by number. Industry is moving towards adopting multi functional vessels, that has led to lower demand for AHT, whereas demand for AHTS and MSV has increased. This can be reflected in the orderbook pattern. |
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Future Outlook |
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With recovering oil prices and rising E&P activities, the future seems secure for offshore supply vessels on the demand side. Going by the number of deep sea blocks being sold at programs like NELP, there will be an increasing demand for deep sea capable offshore supply vessels, as future exploration is going to be mainly in deep seas. |
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On the supply side, about 1000 new vessels will enter the market over the next 3-4 years. Taking into account newbuilds and possible demolitions of vessels over 25 years of age, the fleet is likely to shrink substantially. This will help reduce the overcapacity and increase day rates. The demand will still be met, because modern offshore vessels can do the same work as 2 or 3 older vessels
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