Brazil: ‘the global epicentre of offshore vessel demand’

In an indepth presentation about the Brazilian OSV market, the factors driving the market and its future outlook, Arctic Offshore broker, Nicolas Garschagen, described Brazil as not just an important offshore vessel market, but as the ‘epicentre’ of the global OSV market, one that is nearly twice the size of that in the North Sea or Gulf of Mexico.

Highlighting a growing need for platform supply vessels (PSVs), anchor-handling tug/supply (AHTS) vessels and remotely operated vehicle support vessels (RSVs), Mr Garschagan backed up his assertions with some figures about the number of vessels currently active in Brazil and likely to be required by Petrobras by 2030. At the time that Mr Garschagan addressed the conference, he said, there were 346 OSVs offshore Brazil, with many more likely to be required by 2030, not least in the PSV market, for which he predicted explosive growth in demand of 50%.

“Petrobras remains the key player in the Brazilian market by far, with a US$78Bn E&P investment plan between 2026 and 2030,” Mr Garschagan explained. “One of the most important features of Petrobras’ role in the market is that, even when oil prices are low, the state oil major’s capex is to some extent protected, maintaining demand for offshore vessels even when demand in other markets around the world declines.”

Perhaps the single-most important demand driver for OSVs is Brazil’s ongoing, significant investment in floating production, storage and offloading (FPSO) units, Mr Garschagan explained. Twenty units are required from now to the early 2030s, with more units planned in the longer term, securing multi-year OSV demand of a type few other markets around the world can match. “We are not talking about a cyclical recovery, but a structurally undersupplied, production-driven market through 2030,” Mr Garschagan told delegates. “FPSOs provide long-term visibility for vessel owners.” 

According to Mr Garschagan’s presentation, seven or eight vessels are usually required per FPSO installation, a process that generally takes 12-15 months, locking in demand for vessels, with owners further benefiting from the fact that FPSO-related activity also attracts premium rates. In this scenario, large PSVs in excess of 4,500 dwt command significant rate premiums and Brazil trades at a widening premium compared with global OSV benchmarks. “PSV rates associated with FPSO activity increased by almost 50% between 2021 and 2025,” Mr Garschagan told delegates.

Other important drivers in the dynamic Brazilian market include the subsea umbilicals, risers and flowlines segment, decommissioning – demand for which is growing significantly – and, in due course, Brazil’s next frontier, the Equatorial margin.

Six major SURF bids are expected over the next 12 months, said Mr Garschagan, and SURF contracts convert FPSO awards directly into PSV and subsea vessel backlog. Then there is decommissioning, to which Petrobras has assigned a US$9.7Bn budget, and so far signed 14 contracts. More than 2,000 km of lines need to be removed, Mr Garschagan explained, noting that other decommissioning activity up to 2030 includes platform removal and well abandonment, creating additional OSV demand. “Decommissioning will compete directly with installation projects for vessel availability,” said Mr Garschagan. Looking further ahead, the Equatorial Margin will also drive demand for offshore vessels, with new exploration blocks across five basins in Brazil’s northern margin expected to create potential for five to six additional FPSOs post-2028, expanding offshore activity beyond the Santos and Campos basins, with each FPSO/drilling project representing a long-term opportunity for between four and six OSVs.