Based on our discussions with analysts and some of the leading offshore support vessel owners over the past 12 months, Offshore Support Journal thinks these five trends will shape and define the market in 2020
Consolidation ahead: the power of attraction
Since the downturn five years ago, there have been notable mergers among offshore support vessel (OSV) heavyweights, namely 2017’s joining of the Norwegian quartet Solstad Offshore, Farstad Shipping, Deep Sea Supply and Rem Maritime and 2018’s Tidewater and GulfMark hook-up. 2019 saw DP World’s US$1.079Bn acquisition of Topaz Energy and Marine and Australia’s MMA Offshore purchase of Neptune Marine Services for US$13M.
More consolidation appears to be in the wind, as US-based Harvey Gulf International Marine continues to look for a willing international dance partner, while an investment vehicle for Malaysian billionaire Robert Kuok has launched a cash offer for all of the outstanding shares of Pacific Offshore Services Holdings (POSH). There is also consolidation occurring among charterers. It is clear that 2020 will be marked by much-needed consolidation as the OSV industry looks to return to a more stable financial footing.
Renewables: a breath of fresh air to the bottom line
Offshore wind will play an increasingly important part of revenue streams for OSV owners. Europe’s success and experience with offshore wind in the North Sea, combined with growing markets in the US and Asia will open up more opportunities for oilfield service companies and OSV owners. Norway’s Rystad Energy points out that revenues from non-upstream oil and gas activities grew from 22% in 2014 to 27% in 2018 for oilfield service companies. We expect this trend to continue its upward climb.
Getting a charge of out batteries
Battery-hybrid propulsion applications in OSVs are on the rise and this will continue as the sector pushes to reduce fuel consumption and improve its carbon footprint. OSV owners Tidewater, Eidesvik Offshore, Viking Supply Ships, SEACOR Marine, Atlantic Offshore, Harvey Gulf International Marine and others have all opted to upgrade their fleets with battery-hybrid newbuilds or refits. Others will follow suit.
Let’s get connected
Besides investments in battery-hybrid refits underpinned by charterer commitments, OSV owners will continue to explore ways to leverage internet of things solutions to improve productivity, efficiency and maximise uptime. Connectivity is crucial, with real-time data and communications becoming more widely available, allowing operators to improve decision-making. This will also enable OSV owners to offer more value-add services and take over more responsibility in the logistics supply chain.
An oversupply of OSV tonnage, much of it now obsolete, continues to plague the industry’s recovery. About one third of the OSV fleet has been laid up for an extended period, with some vessels on the side lines for as long as four years. Record levels of scrapping as of late have pared away some of the older tonnage. VesselsValue reported that about 147 vessels were sent to the demolition yard over the last year, but more need to scrapped. Once older tonnage leaves the market permanently, day rates and utilisation should begin to recover to more sustainable levels.