Offshore Support Vessels: The Market Expands

10 May 2011 (Last Updated May 10th, 2011 18:30)

Offshore support vessels play a vital role in maintaining and supplying offshore oil and gas operations. Ian McInnes tracks major recent contracts and assesses the health of this specialist market.

Offshore Support Vessels: The Market Expands

Once again through a combination of civil unrest, global catastrophe and simple supply and demand, the price of oil, although falling back somewhat lately, is high and looks set to remain so for some time. Offshore support vessels (OSVs) are a vital cog in the construction, supply chain and maintenance machine, and recent signs point to a boost in demand for the specialist companies that build and operate them.

In the US, a loan guarantee from the US Maritime Administration to the tune of $241m will allow the Eastern Shipbuilding Group (ESG) in Florida to build five offshore supply ships, a contract that will reportedly create 300 local jobs. ESG’s contract is with Boldini S.A., the five vessels all destined for oil drilling hotspots off the coast of Brazil. US maritime administrator David Matsuda told reporters that without the guarantee, ESG would have found it unfeasible to get credit on the open market. The nearly 86m-long vessels will be used to transport chemicals, parts, supplies and workers to offshore oil rigs and will also be used as emergency response, salvage and fire fighting vessels should the need arise.

“President Obama has suggested and is focusing our government on exports and the opportunities they provide,” said Matsuda. “This is certainly evidence that we can be competitive in the world markets and that the federal government will be there to help support every one of those opportunities.” The Maritime Administration says that it is currently guaranteeing around $2.2bn in US shipyard projects, including barges, dive support vessels, drill rigs, ferries, OSVs, tankers and tugs.

In Mumbai, India Garware Offshore (Garware) told Reuters recently that is was looking to invest $110m over the next 18 months to buy two OSVs; the company deploys its vessels off the coast of India and in the North Sea. “The offshore market is looking robust and demand is also good with oil prices hovering at more than $100 and there is a lot of exploration activity,” Garware’s president of finance Sandeep Akolkar said in an interview.

Akolkar went on to explain that there is a lag in the increase of the price of oil and the charter rates for OSVs. “We should see that in the next tenders,” he said. Akolkar said that Garware’s strategy has always been to look to the long-term on its charters and that the conservative policy has paid off in the long run. 

In the Netherlands, marine support company HvS Dredging Support BV (HvS) is investing too. The company said recently that it was building a multipurpose DP-1 support vessel, Zwerver III, which is designed to support wind farm / renewable energy, offshore installations and dredging projects; the vessel is being developed and constructed by Scheepswerf Gebr. Kooiman BV in Zwijndrecht in the Netherlands.

“Topaz says that it is pursuing a long-term strategy into deepwater offshore growth markets.”

HvS says that Zwerver III is a new class of OSV for the company and will enable it to compete with AHTS (anchor handling tug supply)/supply/support vessels. The 35m-long Zwerver III will have a minimum shallow draught of 2.70m and can accommodate 12 people. The on-deck equipment will include two anchor handling / towing winches capable of 100t and 200t pull capacity respectively, two knuckle-boom cranes of 370Tm (ton metre) with a reach of 20m and three tugger winches each with a 15t pull. New for this vessel, says HvS, is a hydraulically operated bow-door that protects the deck cargo from deck flushing in bad weather, which can be a serious problem for the OSV operator.

In Dubai in the UAE, the oilfield services group Topaz Energy and Marine (Topaz) said recently that it had won a two OSV contract for offshore Nigeria for the duration of 2011, representing a new market entry for Topaz in what it considers to be the strategically important and buoyant West African offshore sector. Topaz said that it is sending two AHTS vessels to support operations in the Atlas, Mira and Brittania fields, offshore Nigeria, on behalf of AXXIS Petroconsultants for a period of eight months.

“This award fits well with our international expansion plan and is significant since it lays the first cornerstone of Topaz’s strategic presence in the region,” said Topaz CEO Fazel A. Fazelbhoy. “These markets are large, high growth and will reward those that are well prepared with the right strategy. The youth and operational flexibility of our fleet gives us a compelling advantage due to increasingly stringent safety regulations and vessel age restrictions. We have taken our first step in the West African offshore sector and we believe this market has immense potential for growth.”

Topaz says that it is pursuing a long-term strategy into deepwater offshore growth markets and earlier in 2011 said that it had completed a $40m acquisition of two AHTS vessels in Brazil that are operating on three year contracts for Petrobras, a first for Topaz in the Brazilian offshore sector.

“Topaz said that it is sending two AHTS vessels to support operations in the Atlas, Mira and Brittania fields.”

In the Malaysian market, the Australian-owned shipbuilding company Strategic Marine announced in April 2011 that it had secured a contract with Malaysian company JCB Oil & Gas Services Sdn Bhd (JCB Oil & Gas) for two 40m crew boats with an option for another two vessels to be delivered during the fourth quarter of 2011. The new order will expand Strategic Marine’s total deliveries for the Malaysian marine market to 28; the company says that it is currently contracted for over 250 vessels at its yards in Australia, Vietnam, Mexico and Singapore.

In the same month, Strategic Marine said that it had won a repeat order with Western Australian company Bhagwan Marine to deliver two new vessels to service Western Australia’s offshore oil and gas industry, including the Gorgon Project. Two new landing craft vessels will join a landing craft and work barge that were delivered in March 2011.

Strategic Marine’s executive director Mark Schiller said that the company had won A$35m worth of orders in the Australian market over the last 18 months, “The board of directors is very excited by this progress and anticipates further growth in regional market shares as more and more gas and infrastructure projects in Western Australia and Queensland come online,” said Schiller.

The offshore sector seems to be gearing up for increased attendance at the Offshore Technology Conference; numbers in 2011 were reportedly up 10% over last year’s 73,000. These numbers and perhaps the order books of OSV builders and operators point to a boom for offshore oil with perhaps a question mark over natural gas in the North Sea.