Tough times ahead for smaller, older OSVs worldwide

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By Richard Sanchez

Offshore support vessel (OSV) owners are facing slack demand and falling day rates in major marine transportation markets.

U.S. Gulf of Mexico

Offshore rig demand in the U.S. Gulf of Mexico continues to decline, tightening the number of jobs for OSVs in the area. OSV owners are facing sinking bottom lines and are doing their best to keep their boats and their people working. One Gulf owner facing difficult times said, “It’s a tough market, but we’ve been through this before. I have to work my boats. We have to find a bottom to oil and gas prices.”

One pragmatic owner said, “We will be in good shape till end of April. Construction in April might help. Less desirable boats have to compete against newer boats for the same prices.”

Some less sophisticated vessels are being forced out of the market, all to the advantage of vessel owners’ customers, if those customers have work, as they can charter higher-end vessels for less money. Owners of smaller, older vessels have little choice but to lay up equipment. For example, Seacor announced it had cold-stacked 15 U.S. Gulf OSVs.

Deepwater work is holding steady. A vessel manager with a sizable fleet said, “We’re taking a guarded approach; the fundamentals are pretty strong, decent for deepwater.”

One vessel manager hard hit by the current drop in PSV demand commented, “We can’t get any worse. The shelf-market is getting hit pretty hard, deep water is maintaining. Good, high quality equipment is holding its own.”

Day rates for PSVs of all sizes have been slipping in recent weeks. The lack of rig-related work on the shelf is forcing more aggressive competition for any short-term work that does materialize, although some owners with strong customer relationships have been more fortunate in terms of vessel utilization. One vessel owner commented, “I know the rates are down. It’s slow, but we’re happy to be working.”

Boats on the move

Two PSVs left the US Gulf of Mexico this month for other markets. Trico Mystic is headed to Brazil. Grayson Lab has been sold to Alaska-based Ocean Marine Services, and will work in Alaskan waters as an escort vessel, replacing a vessel which sank last month.

Northwest Europe

At any given time over the last month, 10 to 25 AHTSs have been idle in Aberdeen. More than 30 AHTSs are trading on the spot market, as are more than 30 PSVs, according to ODS-Petrodata’s online MarineBase market intelligence tool. OSV rates in the region have fallen.

In fact, the lowest North Sea AHTS spot rates in five years were recorded in February, according to ODS-Petrodata’s Offshore Marine Monthly. PSVs fared little better.

New construction

PSV Nicki Candies was delivered this month and is working in the U.S. Gulf for an undisclosed client. More than two dozen new PSVs could be delivered into the U.S. Gulf market this year, along with three new AHTSs.

Still overhanging the European market is the impending delivery of more new vessels. Around 30 new AHTSs and two dozen new PSVs are under construction in northern European shipyards for delivery in 2009, and these deliveries will exacerbate the over-supply situation in the region.

Worldwide, 111 PSVs and 260 AHTSs are under construction with estimated delivery dates in 2009. Work may be difficult to find for all of these new vessels.

www.energycurrent.com

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