As the end of 2018 approaches, we can reflect on a year where a measure of optimism returned to the OSV sector, albeit tempered with a clear realisation the sector is a long way from being fully rehabilitated. This was also a year where energy efficiency and sustainability were again at the forefront as well as diversification and the search for new markets. With an oversupplied market, newbuilding orders are extremely low compared to historic highs but we did see Allseas jolt the market with talk of a second vessel to surpass Pioneering Spirit. This was also a year where the market finally, albeit modestly, consolidated.
Speaking at the midpoint of 2018 at Riviera’s Middle East Offshore Support Journal Conference in Dubai and then later in the year at Riviera’s Asian Offshore Support Journal Conference in Singapore, Westwood Global Energy Group director Thom Payne gave a balanced assessment of market conditions.
Oil prices were on a sustained rally this year and this pushed forward exploration and production spending. At the same time, it was too early to tell whether [the market] has restructured sufficiently or if there was more to come, and the elephant that is the shale market is still very much in the room.
Another major uncertainty was the extent older laid-up tonnage would be reactivated and whether orders booked at Chinese yards would actually see the light of day. That said, he felt there were the makings within the market to fix itself within the next five years.
The end of the year saw Scorpio Group acquire Nordic American Offshore and Allianz Middle East acquire the bulk of Singapore-based Swissco Holdings’ OSV fleet. The landmark deal of course was Tidewater's Gulfmark acquisition to create the OSV sector's largest fleet.
The new company, operating as Tidewater, is the second-highest valued OSV owner in the world, with a fleet of at least 50 more vessels than top-valued competitor Edison Chouest Offshore, according to VesselsValue.
That there is a need for further consolidation was driven home in vivid terms by Solstad Farstad’s chief executive Lars Peder Solstad in the keynote address at the 2018 Annual OSJ Conference, Awards & Exhibition. “In my opinion, we need to consolidate further,” he told the gathering. “That is obvious. As it is now, we compete each other to death.”
Industry minds in 2018 were again fully concentrated on any aspect of operations that would produce savings. No surprise, given fuel consumption accounts for, on average, more than one third of a vessel’s operating cost. Onboard energy management, minimising fuel consumption, and reducing vessel’s environmental footprint were very much the order of the day.
With the oil market still challenging, operators naturally diversified and looked for new markets. Notable contracts this year included Dreifa Energy pressing ahead with a plan to convert a platform supply vessel into a floating regasification unit (FRU) for liquefied natural gas (LNG).
Dreifa’s FRU consists of a regasification plant and associated utility systems located on the deck of a former PSV acquired by the company. The FRU operates in combination with an LNG carrier acting as a floating storage unit.
Perhaps one of the most tangible expressions of the industry’s renewed confidence was Allseas, owner of the Pioneering Spirit, unveiling plans for an even larger decommissioning ship. The vessel, to be called Amazing Grace, is designed to remove the heaviest platforms in a single lift, as Pioneering Spirit does, and could reduce decommissioning costs for global oil and gas producers, the firm said.
No review of the year would be complete without at least passing mention of 2018 as OSJ’s 20th anniversary year. A landmark year for the publication celebrated in this retrospective.