the market for offshore supply vessels

Size: px

Start display at page:

Download "the market for offshore supply vessels"

Tiffany Jordan
6 years ago
Views:

1 26 vessels indian Pacific 16 Vessels Northwest europe vessels brazil

About 62% of this world fleet is in NorthWest Europe, Brazil and Indian Pacific where our activities

2 the market for offshore supply vessels Farstad Shipping is currently among the six largest companies in the market for large and medium sized supply vessels. About 62% of this world fleet is in NorthWest Europe, Brazil and Indian Pacific where our activities are mainly concentrated. We have a market share measured in the number of vessels of about 7% in these markets. 8 newbuilds 7 Offices 1 vision

3 THE market in GENER AL With the current price level of oil, high activity in the offshore markets is to be expected also in the future. The current oil price stimulates the oil companies to increase their search activity in the coming years. In addition, when large discoveries are made, this gives a longterm need also for supply services in connection with field development and production as well as service/maintenance of subsea wells and subsea installations. The subsea segment shows a positive trend, while the supply vessel segment is still characterized by low tonnage and too much newbuild activity. The North Sea market was disappointing in 212. An Since then, growth has largely taken place in other markets. improvement depends on a net departure of tonnage to other This is connected to the fact that petroleum activity has markets. The Indian Pacific market is also characterized by increased in other regions, and that activity in these regions an excess tonnage capacity. The Brazilian market has in have taken place at greater depths and in more challenging 212 had a net departure of tonnage mainly due to Petro waters. Increased subsea activity has also contributed to bras temporarily reducing its need for vessels. The markets this development. in West Africa and the Mexican Gulf show positive development. In the second half of the year, contracting activity in Since the beginning of 2, the supply vessel fleet has traditional supply tonnage has been declining, although PSV increased with 95 vessels, which is more than a tripling of tonnage is still contracted. The order book does not give the fleet. 82 of these vessels (87 %) have gone to markets grounds for optimism in the short term with regard to the outside NorthWest Europe. Thus only 23.5 % (29 vessels) development in the PSV market. of the total fleet is now operating in this market at the beginning of 213. Especially the growth in the AHTS fleet has Traditionally, Farstad Shipping has concentrated its activity been large outside NorthWest Europe. In the beginning of in the segment of large and medium sized supply vessels the 2 s, there were 61 AHTS in NorthWest Europe. This defined as AHTS with an engine power above 1, BHP constituted 41 % of the world fleet. Today, the number is 64, and PSV with a load capacity larger than 2, DWT. Today, but now the share of the world fleet is down to about 13%. this segment constitutes about 43% of the total service vessel fleet, equivalent to 1,24 units. The total number of supply vessels worldwide is about 2,9. We have seen a similar development for the PSV fleet. At the beginning of the 2 s, 12 out of 14 PSV (73%) were in NorthWest Europe. Despite an increase in the number of Within the segment large and medium sized supply vessels, units to 226 units, only 3% of the PSV world fleet is in this the vessels are distributed over 178 operators. This number market. has increased significantly these past few years. The number of operators with 1 vessels or more (including newbuilds) is The largest customer group is petroleum companies and 43. These operators control 75 % of the fleet including new petroleum service companies which in turn have contracts builds. At the turn of the year 212/13, there were a total of with petroleum companies. The length of contracts and car 368 large and medium sized supply vessels ordered. rier category varies both with regard to the type of market and geographical location. Focus on health, environment, The most important markets are NorthWest Europe, Brazil, increasing both in number and complexity, it is a challenge for time, the market in NorthWest Europe was the most impor the industry to man the vessel with crews having the neces tant market for large and medium sized supply vessels. Back sary competence and experience. in 2, 56% of the fleet was associated with the activity in NorthWest Europe. 52 safety and quality has increased significantly. With a fleet WestAfrica, the Mexico Gulf and Indian Pacific. For a long business review 212 farstad shipping asa

4 AHTS >1 BHP AND PSV >2 DWT AND NEWBUILD SORTED BY OWNERS (2 largest) HAVILA CBO SAVEIROS AHTS > 1 BHP PER REGION SIEM OFFSHORE EZRA HOLDING ISLAND OFFSHORE SEACOR NAM CHEONG SOLSTAD OFFSHORE HARVEY DEEP SEA SUPPLY DOF SWIRE HORNBECK MÆRSK FARSTAD SHIPPING GULF OFFSHORE BOURBON OFFSHORE TIDEWATER EDISON CHOUEST Number of vessel JAN. 13 JAN. 12 JAN. 11 JAN. 1 NORTHWEST EUROPE SOUTH/ CENTRAL AMERICA INDIAN PACIFIC/ CHINA WEST AFRICA GULF OF MEXICO CANADA JAN. 9 MEDITER./ BLACK SEA PSV > 2 DWT PER REGION Number of vessel JAN JAN. 12 JAN. 11 JAN. 1 NORTHWEST EUROPE GULF OF MEXICO SOUTH/ CENTRAL AMERICA INDIAN PACIFIC/ CHINA WEST AFRICA MEDITER./ BLACK SEA JAN. 9 CANADA the market in general 53

5 Newbuild activit y Market development has led to the construction of larger and more complex vessels, both with regard to engine capacity, manoeuvrability and mechanized handling equipment. ROV and other subsea functions have to a greater extent been integrated into the vessels. The deck area has become larger, and flexible tank solutions have enabled transport of various types of cargo on the same vessel. Newer and more modern vessels are more environmentally The maritime industry in Norway still has a central position in friendly since fuel consumption is reduced. There is a lot of the development of new offshore vessels, and Norwegian focus on working environment on board, among other things shipyards still have a leading position in the construction of through efforts to reduce noise. The increased underwater the more advanced offshore vessels. At the beginning of activity has also led to building a large number of advanced 213, 52 supply and subsea vessels were under construc construction and subsea vessels. tion in Norwegian shipyards (49 a year ago). These are distributed on 5 AHTS (2), 28 PSV (44) and 19 (3) subsea vessels. In 212, the world fleet of large and medium sized supply Norwegian shipyards now supply about 12% of the order vessels increased with 12 AHTS (2.5%) and 63 PSV (9%). book (13% at the beginning of 212). The corresponding numbers for 211 were 26 AHTS (6%) and 29 PSV (4%). At the beginning of 213, the order book Shipyards in other regions, especially in Asia, have these past contained 368 (333) units. This corresponds to 3% (29%) few years increased their focus on offshore vessels. Several of the existing fleet. Of these, 64 (78) are AHTS and 34 western operators have therefore contracted vessels from (255) are PSV. About 65 % of the vessels are scheduled to Asian shipyards. Local operators have also largely contributed be delivered in 213. It is not realistic to expect that all these to the increased contracting activity in this region. These ves are delivered in 213. Only a few of the newbuilds have long sels are primarily built for operation in their home markets, but term employment as per today. increasingly also for other markets (Africa, Brazil). The order book for subsea vessels has increased these past Chinese shipyards have 122 (8) vessels under construction, few years and is now well above 5 vessels. About half of and is now the country with the most of this type of orders. these are socalled ROV support vessels. Especially Norwe These are distributed on 12 AHTS (11), 96 PSV (5) and 14 gian shipyards and shipping companies have been active in (14) subsea vessels. Indian shipyards have 28 (38) vessels this field in 212. under construction. These are distributed on 13 AHTS (), NEWBUILDS BY CONSTRUCTION PLACE 12 NEWBUILDS BY DELIVERY TIME 8 business review 212 farstad shipping asa VIETNAM SPAIN POLAND INDONESIA JAPAN MALAYSIA KOREA PSV (34) SUBSEA (51) 54 SINGAPORE INDIA BRAZIL NORWAY USA CHINA 9 AHTS (64) Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 SUBSEA (51) 4Q 14 1Q 2Q 3Q 4Q AHTS>2 BHP (13) AHTS<125 BHP (24) PSV<4 DWT (112) 125 BHP<AHTS<2 BHP (27) PSV>4 DWT (192)

Number of contracted newbuilds at year end 212 (number of vessels and percentage distribution) AHTS PSV SUBSEa 73% 34 VESSELS TOTAL % 12% 64 VESSELS 5 VESSELS 1 PSV (13) and 5 (1) subsea vessels.

6 Number of contracted newbuilds at year end 212 (number of vessels and percentage distribution) AHTS PSV SUBSEa 73% 34 VESSELS TOTAL % 12% 64 VESSELS 5 VESSELS 1 PSV (13) and 5 (1) subsea vessels. Shipyards in other 418 VESSELS tations for the region, these newbuilds are assumed to remain Asian countries have a total of 72 (81) vessels under con in the Mexican Gulf to a larger degree than what was the case struction. These are distributed on 16 AHTS (34), 52 PSV after the Macondo accident in 21. (36) and 4 subsea vessels (11). Asian shipyards have a 53% share of the newbuilds, up from 5 % a year ago. The contracting activity has declined at Brazilian shipyards. At Brazilian shipyards, there are 4 (37) vessels of this type American shipyards have had a significant contracting activ under construction. These are distributed on 3 AHTS (4), 36 ity throughout 212. There are currently 68 (56) vessels PSV (33) and 1 subsea vessel (). The vessels are being built ordered at shipyards in this region. The newbuilds are distrib for work on the Brazilian continental shelf and mainly for long uted on 8 AHTS (4) and 6 PSV (52). Based on market expec term contracts with Petrobras. the market newbuild activity 55

the INDIAN PACIFIC MARKET The region was characterised by the continuing modernisation of the OSV fleet with the less fortunate consequence of supply still outweighting growing demand.

7 the INDIAN PACIFIC MARKET The region was characterised by the continuing modernisation of the OSV fleet with the less fortunate consequence of supply still outweighting growing demand. Owners have continued to face a very competitive market and a further decline in operating margins. The older AHTS vessels have been the worst affected in terms of time charter rates and second hand values. Farstad Shipping itself improved its overall trading performance on the back of its modern market relevant fleet in the region. Although overall economic growth in the region has slowed largely due to setbacks suffered in advanced economies, the region (in particularly SouthEast Asia) is expected to continue to lead global GDP growth in the short and medium term. Despite slowdowns in growth in China and India as well as continued low growth in Japan, the ASEAN nations experienced higher GDP growth than other global regions. Considerate risks still remain based on the recovery or otherwise of advanced economies and global financial markets. Going forward, the demand for oil and gas is expected to continue to increase, although developments around the world (gas and oil finds/developments in the US, East Africa, Brazil, the Arctic as well as local flag preferences and territorial disputes in the South China Sea) all raise questions about which areas will be the most attractive towards new oil and gas expenditures. South East Market alone built 41 vessels (34 AHTS) in 212. The active fleet of OSVs (AHTS vessels over 1, BHP and PSV over 2, DWT) in the region rose slightly to 258 vessels in the 212. There was another 187 OSVs (49 AHTS and 138 PSVs) on the building blocks (including options) therefore the abatement of oversupply will rely on the continued absorption of these vessels in to other markets (the markets of the South Atlantic have to date been the main relief valve). In the second half of the year it was evident that OSV operators were turning to SouthEast Asia for better employment prospects which added uncertainty as to when the market will bottom out from the broader ongoing decline in charter rates. 56 business review 212 farstad shipping asa

8 OFFSHORE SERVICE VESSELS IN INDIAN PACIFIC SORTED BY OWNERS OFFSHORE SERVICE VESSELS AHTS > 1 BHP and PSV > 2 DWT (2 largest) HUAWEI CH OFFSHORE GAZFLOT BOURBON OFFSHORE JAYA OFFSHORE SHIPPING CORP INDIA DOF JASA MERIN GREAT EASTERN MÆRSK SINOPEC INTRA OIL GREATSHIP GULF FEMCO 212 COSL 211 SWIRE 21 TIDEWATER PSV AHTS 29 FARSTAD 28 EZRA HOLDINGS 27 PSV > 2 DWT (9) AHTS > 1 BHP (165) the market the indian pacific market 57

9 Overall rig utilisation improved from 79% in 211 to almost In 212, Farstad Shipping won the tender to assist Shell 82% last year with the improvement being mainly in the jackup Development (Australia), providing short and long term OSV segment which numbered 132 of 192 rigs in total at year end. services to the Prelude and Palta projects including contracts for two of the newbuild PSVs from delivery. The first of these Farstad s Shipping has 26 vessels in the region (16 AHTS and vessels, the Far Skimmer, has been met with high level of sat 1 PSVs) which continue to be highly suitable to market isfaction from our clients. Contracts such as these demon requirements. The fleet continues to be modernised through strate Farstad Shipping s commitment to long term charter the addition of modern vessels and the sale of older tonnage. ing strategy of large advance vessels. 212 saw sale of the 198 s built AHTS the Lady Cynthia, Lady Gerda, Lady Audrey and Lady Valisia. It also saw the The Farstad Shipping Offshore Simulation Centre in Perth arrival the AHTS Far Sabre (28) and the newbuild PSV Far continues to grow from strength to strength. The centre is the Skimmer. In 213 we have taken delivery of one sister new first offshore specific simulation centre in Australia and the build, PSV Far Sitella. In May we will take delivery of another largest integrated centre of its kind in the world. As an inte sister newbuild, PSV Far Starling. Both newbuilds have been gral part of the Group, the centre plays a key role in building constructed at Vard shipyard in Vietnam. These develop staff competencies and total team performance. ments continue to underpin Farstad Shipping s commitment to being a leading OSV supplier of larger and more advanced vessels in this region. INDICATOR MODEL FOR ASIA: PROJECTED VS. ACTUAL REAL GDP GROWTH In percent; quarteroverquarter annualized rate Actual growth rate (PPP weighted) Confidence interval (1 standard deviation) Model forecast WEO forecast :3 212:1 211:3 211:1 21:3 21:1 29:3 29:1 28:3 28:1 27:3 27:1 26:3 26:1 25:3 25:1 6 Sources: IMF staff calculations 58 business review 212 farstad shipping asa

10 the market the indian pacific market 59

11 THE BR A ZILIAN MARKET 212 was a challenging year for the Brazilian economy, the GDP growth was just,9 %, making the per capita income stable in 212. It was the worse result since the 28 international economic crisis, however, the expectations for 213 are positive, and a growth from 3% to 3,2% in terms of GDP is expected. Petrobras, has announced the business and Petrobras has announced that they will give emphasis to the management plans, involving total investments of USD installation of new platforms, with eleven new production billion over the next five years. The units expected to come on stream between 213 and 2. investment plans are still some of the world s largest corpo Crudeoil output is expected to reach 2.75 million barrels a rate spending plans, and the E & P segment will receive nearly day by 217. By 22, crudeoil output is expected to hit 4.2 twothirds of it (USD billion), which represents an million barrels a day. This means a significant increase as the increase of the E&P segment in the total budget of 12% 212 average domestic crudeoil production was 1.98 mil (approximately USD 16 billion) compared to the previous lion barrels a day (short of the 2.2 million barrelperday tar business plan (212216). The increase is mainly driven by get), and expects this output to keep stable in 213. projects scheduled for 217. Exploration will account for 6 16% of total spending, while 73% is related to production In 212 Petrobras received six additional ultradeep water development. Petrobras plans to have positive cash flow in drilling rigs. The company remains one of the world s largest 2 under the new business plan. The budgeting for the charterer of offshore drilling rigs, with a total of 74 units investment plan was based on Brent crude at around USD under term charter. By the end of 213, Petrobras shall have 1. a barrel over the period. a fleet of approximately 4 ultradeep water drilling rigs. business review 212 farstad shipping asa

12 Petrobras ended 212 with 57 exploratory wells drilled, nine Another very important player in the IOCs market in Brazil is less than the 66 originally planned. But, according to the com Statoil. The company is evaluating the development of the pany, this is still a very good result, if compared with 211, Peregrino Sul field, and will probably confirm its strong posi when 54 wells were drilled. ANP (Brazilian National Petroleum tion in Brazil by expanding its oil production in the next years. Agency) estimates that not less than 8 offshore exploration Peregrino Sul is an extension of the Peregrino Field. The wells will be drilled during 213 in Brazil, from which approx. company has reached record levels of 9 barrels per day 5% will be drilled in Santos Basin (presalt area). at Peregrino Field in 212, making Brazil the largest Statoil operating area outside the North Sea. There was an increase in the activities of the International Oil Companies (IOC s) and the Brazilian Private Oil Companies, By the end of 212 there were 429 offshore support vessels which ended 212 with ten drilling units doing services for working in Brazilian waters (196 of Brazilian flag and 233 of these companies. international flags). Approximately 87% of this fleet is under long term charter to Petrobras, 9% is working for the IOC s Shell, one of the main players in this market, has one DP drill and private companies and the remaining vessels are trading ship and one anchored semisubmersible under a threeyear the spot market. Regarding Petrobras OSV fleet, 2 vessels charter. To support these two drilling units, and also its two are PSVs with a DWT over 3t and AHTS of 1 BHP or production fields, Shell has under term charter ten offshore greater. The IOC s and private oil companies market (36 ves supply vessels. Farstad had the PSV Far Swift working for sels) is divided among eight owners. Shell in the first quarter of 212. Farstad Shipping ended 212 with a fleet of thirteen vessels Shell has shown interest in further investments in Brazil trading in the Brazilian market, being twelve under long term through the 11th ANP block auction, that is scheduled to May contracts with Petrobras (1 AHTSs, 1 PSV and 1 subsea), 213. and one PSV working for an Australian oil company named Karoon. It is expected that the number of Farstad vessels trading the Brazilian market will increase in 213. OFFSHORE SERVICE VESSELS BRAZIL SORTED BY OWNERS AHTS > 1 BHP and PSV > 2 DWT (2 largest) OFFSHORE SERVICE VESSELS VARUN SEACOR HAVILA BOURBON OFFSHORE OLYMPIC AUGUSTA FINARGE SIEM OFFSHORE E.R.OFFSHORE SOLSTAD HORNBECK ULTRAPETROL DEEP SEA SUPPLY FARSTAD SAVEIROS TIDEWATER DOF CBO MÆRSK EDISON CHOUEST PSV AHTS PSV > 2 DWT AHTS > 1 BHK the market the brazilian market 61

13 62 business review 212 farstad shipping asa

THE Northwest EUROPE AN MArket In 212, 21.3 % of the revenue in Farstad Shipping came from this region (21.9 % in 211). This is equivalent to a revenue of NOK 792.3 million (NOK 792.7 m illion).

14 THE Northwest EUROPE AN MArket In 212, 21.3 % of the revenue in Farstad Shipping came from this region (21.9 % in 211). This is equivalent to a revenue of NOK million (NOK m illion). The activity in the region shows continued growth. The demand for supply vessels increased by 6.1 % (3.5 % in 211) in 212, and ended at a year average of 294 (277) boatyears. The average demand per quarter was: 1st quarter 28 boat The demand is traditionally split between term and spot con years (262 in the 1st quarter of 211), 2nd quarter 299 boat tracts. Of the total demand in 212, 76% were term con years (279), 3rd quarter 35 boatyears (29), and 4th quar tracts, which is at the same level as in 211. An average of ter 291 boat years (277). In the same period, the average 222 vessels were on this type of contracts in 212, com number of supply vessels in NorthWest Europe increased by pared to 211 in 211. The tighter the market is, the greater about 7% (4%). Thus the average utilization rate was only the part of the fleet is expected to be on term contracts. 9% (91%). For each quarter, the utilization rate was: 1st quarter 9% (86%), 2nd quarter 92% (94%), 3rd quarter The largest part of term contracts (about 63%) are associ 9%, (96%), and 4th quarter 87.5% (9.5%). Although the ated with fields in production. In 212, an average of 139 beginning of 212 showed a positive trend, the inflow of ton boatyears was related to this type of activity (134 in 211). nage gradually became too large to be able to maintain a rea Forecasts for the activity in 213 do not indicate growth in sonable market balance despite the increase in activity. productionrelated activity. The demand connected to drill Especially, the increase in the number of PSV was detri ing activity was in average 34 boatyears (23). The demand mental to the market balance. As shown in the figures on connected to this type of activity is expected to increase page 65, rate development in 212 became significantly significantly also in 213. The activity connected to the worse than for the same period last year. development of fields and infrastructure (pipelines, pumping the market the north west european market 63

15 stations and buoys) represented a demand of 16 boatyears this region. In that case, this implies that the fleet in the in 212 (27). A further decline in activity is expected in this region must be reduced by 2 units in order to see a signifi area in 213. Another 33 (27) service vessels on average cant improvement in the market situation. Statoil, BP, Shell, have been engaged in activities related to subsea, cabling ConocoPhillips and Peterson SBS are the operators with the and salvage/coastguard in 212. The same level is expected most supply vessels on term contracts. Gulf Offshore, DOF, for 213. Møkster, Havila Shipping, Island Offshore and Solstad are the shipping companies which together with Farstad Ship According to research company IHS, only a minimal increase is expected in 213 of the total demand for supply vessels in 64 business review 212 farstad shipping asa ping have the largest number of term contracts.

16 OFFSHORE SERVICE VESSELS NORTHWEST EUROPE SORTED BY OWNERS AHTS > 1 BHP and PSV > 2 DWT (2 largest) OFFSHORE SERVICE VESSELS KLINE 27 ØSTENSJØ VROON SEALION TROMS OFFSHORE SIEM OFFSHORE ATLANTIC OFFSHORE OLYMPIC BOURBON OFFSHORE EIDESVIK MÆRSK REM OFFSHORE VIKING SOLSTAD MØKSTER ISLAND OFFSHORE DOF FARSTAD GULF HAVILA PSV AHTS PSV > 2 DWT (226) AHTS > 1 BHP (64) NORTH SEA AVERAGE WEEKLY SPOT RATES AHTS 16,+ BHP GBP NORTH SEA AVERAGE WEEKLY SPOT RATES PSV 9+ BHP GBP Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Source: Platou Source: Platou NORTHWEST EUROPE FLEET SUPPLY DEMAND UTILISATION Boatyear % TERM DEMAND SPOT DEMAND TOTAL UTILISATION TERM UTILISATION DEC. 12 EDEC EJUN JUN DEC. 11 JUN DEC. 1 2 JUN JAN JUL JAN. 9 3 JUL. 8 1 JAN FLEET SIZE the market the north west european market 65

Farstad Shipping ASA. Pareto Fonds Oil and Offshore Conference 13th September 2000

Farstad Shipping ASA. Pareto Fonds Oil and Offshore Conference 13th September 2000 Farstad Shipping ASA Pareto Fonds Oil and Offshore Conference 13th September 2000 Farstad Shipping ASA Pareto Fonds Oil and Offshore Conference 13th September 2000 Company Structure and Shareholders The