The North Sea supply market:
Americans, Europeans and different strategies

WBy no means the largest offshore market, the North Sea remains the most significant when it comes to new technologies for frontier and marginal fields. Experience and technology from the North Sea have been transplanted to other areas, for subsea production,
shuttletankers and transfer technology, with considerable potential as oil exploration moves into deeper water.

Some 190 supply vessels are working in the North Sea, supplying and supporting a great number of exploration programmes, construction projects and production facilities on the Dutch, British, Danish and Norwegian shelves. In addition, there is a great number of specialized craft like emergency response/rescue vessels, survey, subsea construction, seismic research, etc. Of these 190 supply vessels – roughly 105 platform supply ships and 85 anchorhandlers – about 50 are presently working in the spot market out of Aberdeen or Bergen/Stavanger. These are available for rig moves, cargo runs and other commitments. This is about the same number as a year ago, but fewer than in 1998/99.
After a sluggish winter season, most brokers are expecting the market to pick up in April/May, although probably not quite to the firm level seen last year.
The balance between demand and supply depends in the short run on the exploration programmes for the season and on the delivery of new vessels. In a longer perspective, of course, the oil price is the determining factor for exploration programmes and construction projects. Most of the operators in the North Sea are also closely following the development in Brazil and West Africa – the latter hailed as the most promising market for the next decade.
Supply vessels can be shifted between the main offshore markets which include the US Gulf/Mexico, Brazil, West Africa, South East Asia, Atlantic Canada and the North Sea. Generally the ships for Northern latitudes are built to higher standards in power and seakeeping. Markets like Canada and Brazil are to varying degrees subject to national preferences, and moving vessels between markets is not entirely without restraints.

Large deliveries ahead
According to our statistics, about hundred supply vessels will be delivered into the Atlantic market this year and the next. There is a good number of powerful anchorhandlers, including MSVs with engine rating of 20,000– 30,000 bhp, and several large PSVs.
Figures may vary as vessels built to European specifications in the Far East may be transferred to the Atlantic markets, and vice versa.
At a time with a heavy orderbook, it should be noted that a good number of the vessels are fixed on contracts ahead. It is interesting to see the strong interest in large PSVs by Norwegian owners; vessels prepared for specialized tasks like pipelaying, ROV (remotely-operated vehicles) operation, subsea construction, etc, in addition to cost-effective supply operation.
Practically all the new vessels are built to standard designs. Rolls-Royce Marine can take 12 UT-722Ls anchorhandlers, eight UT-710 and several others to its credit, whereas Vik-Sandvik has seen its VS-480 and -486 chosen by owners like Tidewater, Stirling, SURF, Boa Offshore and Solstad. There is a similar preference in PSVs, with the smaller (3,000 tdw) UT-755 and the larger (4,750 tdw) UT-745 as the bestsellers.

The American return
The North Sea market is dominated by Norwegian and American companies, and with Maersk Offshore, Swire Pacific and a few European operators for the balance.
The industry has for long witnessed the American return to the North Sea, a market from which they withdrew in the 1970’s when the Europeans went for superior vessels designed for the more demanding conditions. After a consolidation process in the US Gulf the larger American companies began to acquire European operators. This was motivated by the desire to get a foothold in the North Sea and to acquire fleets and organisations with equipment and technology for deeper water.
These American take-overs have swallowed much of the European supply-ship industry in the 1990’s. The Dutch Smit-Lloyd supply vessels were acquired by Seacor, the German VTG by Tidewater, the Norwegian Sævik Supply by Trico and Brøvig Supply and Sea-Truck by GulfMark. But the main focus has been on the British supply market, where several of the operators have been taken over by the Americans, like OIL Ltd by Tidewater and Stirling Shipping by Seacor Smit last year.
Tidewater – the largest supply ship owner in the world – has also picked up a good number of modern vessels in the secondhand-market lately and is building advanced vessels to VS designs in USA and China.
So whereas the leading American companies have been branching out geographically, they have largely done so in the North Sea by mergers and acquisitions. This has been an excellent way to get market access and modern equipment, experienced personnel and organisations. But to a large extent, the main American actors in the North Sea – Tidewater, GulfMark and Trico – have sought a fairly conventional business with straight anchorhandlers and platform supply vessels.

A different path
Whereas the American companies have been gaining market strength by volume, the Europeans, i.e. Maersk, Sealion and the some of the Norwegians, have sought a different path – to develop vessels and technology for the more demanding tasks. These include more powerful anchorhandlers for working in deeper water and larger PSVs as platforms for subsea construction work, as well as branching out to related activities like total logistic services and cable-laying.
The European companies may be smaller, but tend to be more innovative. They are largely run by entrepreneurs, whereas the Americans are headed by vice-presidents of large organizations. The Europeans appear more inclined for advanced vessels at higher costs, while the Americans make do with standard vessels.
Does this put the European operators in a more exposed position? In a firm market the oil companies are prepared to pay for quality; in a depressed market they do not have to.
But on the other hand, the more sophisticated equipment and technology are essential in the push for oil production in deeper water.

//Dag Bakka Jr

 

 

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