North Sea market achieves a balance of sorts

When do you think the market in the North Sea will be back in balance? That’s a question I often get asked, as do brokers specialising in the offshore support vessel market. Well, one well known broker Westshore, says it believes that, over the last month or so, the market in the North Sea has come “reasonably close” to a situation that owners and charterers could live with. But of course, there’s the small matter of over 100 North Sea vessels still in layup.

“The past three months have seen only a modest pickup in activity, but a healthy hike in the oil price,” said Westshore in the latest issue of its regular report, Navigator. At the time of writing the oil price was hovering at around US$50 barrel (and had actually briefly exceeded that). “As if our troubles were over,” said the broker, “a collective sigh of relief could be heard around the North Sea.” The point is, said Westshore, that the recent hike in the oil price has had a positive effect on sentiment across the board. “The spot market is still in a state of oversupply. But there have been periods where, for instance, for platform supply vessels (PSVs) out of Aberdeen, the market has been close to being sold out.”

Westshore’s broker Jørgen Knudsen said: “Though the number of vessels trading on term charters is way down on where it was pre-crisis, spot market jobs out of Aberdeen are often longer. Where previously operators had a couple of vessels on term contracts, now they have one plus a rolling requirement for vessels from the spot market.”

As Westshore notes, some owners have been quick to capitalise on this. Nordic American Offshore, for instance, is trading eight PSVs out of Aberdeen. Eight sister-ships have carved a successful track record for themselves on the back of impressively low fuel consumption and by cornering a segment of the market with their 800m² deck, which is small for Norway but more than adequate for the British sector.

Although things have been periodically sunny on the spot market, the peaks are still far apart and relatively short lived. Average rates are definitely up, however, particularly when compared to this time last year. As an example, VOS Pace was fixed in mid-May this year at around £9,000 and almost exactly a year ago the same vessel brought in just £2,000 for a spot job.

“We can but hope the worst is over,” said Westshore. “In the North Sea at least there haven’t been any vessels entering layup since April. How long will it be before owners are tempted to resurrect laid up tonnage and try their hand at the spot once again?”

In the anchor handling tug supply (AHTS) vessel market a smattering of project work has cropped up which will keep some familiar faces in steady employment for chunks of the summer. It is not much, however. In order for there to be a significant tightening on the spot market for anchor handlers project work needs to pile up  a bit. “We may see this happening briefly, but our expectations are not for a particularly ‘hot’ summer in the AHTS market,” Westshore concluded.