| Safety, Environment
The offshore market
where are we heading?
After a booming 2001 for the North Sea offshore
service industry, this year has been a more sobering experience for supply
and support shipowners. We have seen a finely balanced market which has
left spot rate level sensitive to the day-to-day availability of vessels.
The backdrop has not been very encouraging, though. The number of active
drilling rigs in European waters has tumbled from 101 in April to 79 in
September, and a good number of vessels will come on the spot markt over
the winter. In addition to vessels redelivered from term charter, brokers
expect some 30 newbuildings to join the fleet next year. Prospects does
not look too bright.
The driving factor in the offshore market is the spending on exploration
and production by the oil companies. Such decisions are dependent on the
general economic outlook, on energy prices, on assessment of future prices,
supply and demand and ultimately on the return on investment.
has apparently been a shift in spending from the US Gulf and North Sea
to the Middle East, Africa and the Far East. The reason for the present
slowdown in exploration drilling in the North Sea is said to be the consistently
disappointing results over the last years. The recent 10 per cent tax
increase on production in the British sector this summer has also had
a negative effect. Analysts are not very cheerful about the prospects
for next year and generally expect a lower level of drilling activity
not very encouraging for the supply and support shipowners.
as for development plans, the latest figures for the Norwegian sector
reveal an increase in the region of NOK 10 billion for 2003, mainly for
Kristin, Kvitebjørn and Snøhvit, as well as the proposed
Ormen Lange gas pipeline.
both sides of the North Sea the governments have every interest in keeping
up the flow of oil and gas. For Norway, the resources presently in production
will run dry in eight years for oil and 22 for gas. It is vitally important
to keep up the pace of exploration and new field development to ensure
Growing spot fleet
The North Sea supply market is dependent on exploration drilling and construction
projects. Drilling rigs in action require anchorhandler for moving and
mooring, cargo runs for supplies, standby vessels for safety, whereas
construction requires a long range of specialized services, like diving
support vessels fitted with ROVs and cranes, pipelayers and pipe carriers,
tugs and anchorhandlers for towing barges, large anchorhandlers for ploughing
trenches for pipelines, etc. In addition, other vessels are needed for
seismic reasearch, detailed seabed mapping, for general supplies, for
standby support and so on.
North Sea market for supply vessels anchorhandlers and platform
supply ships comprises some 200 vessels working out of the bases
in Lowestoft, Aberdeen, Den Helder, Esbjerg, Stavanger and Bergen. Some
3/4 of this fleet is operating under term contracts, while the rest trades
in the spot market.
the good number of new deliveries this year, the spot fleet has increased
more marginally, picking up from 50 to 60 since December last. This is,
however, set to rise as more vessels are delivered from term charters.
Only in October, six Norwegian vessels are ending their term contracts,
another three PSVs are being released from pipe-carrying and two new PSVs
coming out from the yards. Add to this some 30 newbuildings expected for
delivery next year, of which the majority are without employment contracts.
and the spot fleet is set to grow significantly.
are the trends that may affect the market balance in the short term?
are indeed diverse.
the negative side, the trend towards consolidation and cooperation between
oil companies are clearly pointing towards higher utilization of vessels;
fewer vessels doing the same job. Effective from 1. September, Conoco
Phillips and BP Norway have started a joint operation programme with four
ships to optimize their logistics, initially for one years trial.
approaches for total logistic contracts, as pursued by the British ASCo
since the 1980s, are now also being sought on the Norwegian sector by
the Møkster/Eidesvik/NorSea group. Such concepts may also produce
a more cost-efficient logistic service.
the other hand modern vessels are leaving the North Sea.
summer around 20 vessels have departed for Brazil, Canada, West Africa,
the Mediterranean and the Far East. Recently three PSVs were fixed to
BUE for operations in the Caspian Sea. So far this year the number of
vessels leaving has roughly matched the newcomers, but with newbuildings
and more vessels terminating their term charters the spot fleet is set
to grow. The settings all indicate reduced exploration drilling in the
North Sea next year. When the fleet of supply and support vessels is set
to grow at the same time, this will in all probability make its mark on
the spot market. It remains to be seen whether requirements in other geographical
markets may offer alternatives. And again the largest vessels will be
the preferred ones, even though they rate-wise may not earn what they
have been used to.
the oil price appears to remain stable and high, but the general economic
downturn is bound to influence decisions on new drilling programmes. On
the other hand, the governments around the North Sea will be motivated
to keep up field development, which again will create work for the fleet.
Owners should be prepared for the worst and pray for the best.
// Dag Bakka Jr
Tillbaka till SSG 9, October 18
Latest update 18-10-2006 8:49
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