Here’s our pick of five trends likely to define the year ahead in the offshore support vessel market
With consensus that challenging times remain but the ‘worst is over’ we believe that the industry can look forward to ‘getting back to business’ and – as it has in previous downturns – find new and innovative ways of working with supermajors and smaller independents.
We agree with IMCA chief executive Allen Leat when he stated in November that there are encouraging signs [from both the super-majors and smaller independents] that they 'get it' and that the solutions to developing capex projects in the future cannot be a simple SCM-led bidding race to the bottom-dollar floor.
The North Sea and Gulf of Mexico have been, and still are, the major centres of decommissioning work. But, as oil fields in these regions reach the end of their commercially viable life, expect renewed focus on West Africa, southeast Asia, Latin America and the Middle East Gulf. All have significant numbers of ageing offshore oil wells.
Will a revived oil price translate into renewed appetite from the industry's financiers?
At the start of 2018, the expectation was that by January 2019, the OSV industry would have been through some major structural changes. Mergers, acquisitions and bankruptcies were set to radically change the face of the industry. The fire sale or scrapping of vessels would return the market to some sort of equilibrium and solve the oversupply problem allowing the strongest to survive and thrive.
These developments of course failed to materialise. Rather we saw modest M&A activity and a number of key issues kicked further down the road.
We predict that financiers’ issues in 2018 will persist into 2019. Successfully attracting the limited financing available will continue to rest on ensuring that they have the right personnel in key positions, that any new capital is not used to solve legacy problems and an unsentimental approach to their assets.
Readers will be fully aware that our sector of industry is much less affected technically by the sulphur cap of 0.5% because by-and-large we don’t use heavy fuel oil. We use marine diesel oil and therefore are well within the limit. But its impact might be seen in other ways such as supply chain choke points.
Next year sees the start of the data recording stage (fuel used in m3, distance travelled in nautical miles, and time underway in hours) element of the IMO’s greenhouse gas emissions strategy. Expect industry association IMCA to be in the vanguard of drawing to the committee’s attention the special situation of DP vessels, which will make the development of a meaningful 'transport work proxy' very challenging.
The year ahead will see continued uptake in demand for hybrid solutions. 2018 saw a number of key milestones passed including the successful conclusion of the FellowSHIP project which explored the use of battery, hybrid and fuel cell technology in the maritime industry as well as industry major Seacor selecting state-of-the-art battery energy storage systems for eight PSVs on order at COSCO Shipping Heavy Industry (Guandong) shipyard.
By the end of 2019, Seacor aims to have the largest fleet of hybrid vessels anywhere in the world. And where Seacor goes expect many of its peers to follow.
For further discussion of the OSV industry's prospects in 2019, book your place at the Annual Offshore Support Journal Conference, Awards & Exhibition in London.