Global energy markets continue to drive OSV upcycle 

Westwood Global Energy Group head of offshore energy services, Thom Payne, expects new offshore oil and gas projects to result in rising vessel demand in 2025 to 2027 and likely to 2030. He highlighted Latin America as a major growth market for OSVs, while the Middle East will remain a strong and stable region for vessel utilisation and charter rates.

Mr Payne said there are differences in demand and supply in OSV regional markets with some seasonality in North America, the North Sea and Asia.  

“In the next few years, there will be new drilling campaigns and new projects resulting in more demand for vessels,” said Mr Payne. “Although 2025 is looking flat, 2026 and 2027 will be positive times.”  

Looking further ahead, demand should remain strong, but utilisation and charter rates will depend on the rate to which newbuildings enter these markets.  

“There have been some OSV newbuilds, including some speculative orders, but we are not approaching a replacement cycle and around 50% of global fleet will be over 15 years old by 2030.”

Many oil companies are currently reluctant to charter vessels on long-term charters if they are more than 15-20 years old, but within five years, they may need to review this.

Mr Payne urged owners to consider fleet renewal at a steady and sustainable level when considering ordering newbuilds.

“The OSV industry will need to contend with this growth and need to keep the good times rolling,” he said. “Owners should treat the replacement cycle sensibly and not fall into the traps of the last upcycle.”

During the last upcycle, in 2011 to 2015, owners ordered huge numbers of newbuild OSVs of all types and swamped the market, which resulted in a major downturn in utilisation, charter rates and margins until 2022, when the market started to rebound.

Now demand is growing and the supply of OSVs is tight, there is more pressure to order newbuilds, but owners should remain disciplined and not order too many, Mr Payne explained.