The opening session of Riviera Maritime Media’s Middle East Offshore Support Journal Conference debated the true meaning of vessel utilisation.
The discussion was triggered by Topaz Energy and Marine head of strategy and corporate planning Morten Jorgensen detailing the 84% regional vessel utilisation Topaz achieved in 2018. The company also reported a doubling in its West Africa fleet utilisation versus the previous year.
Synergy Offshore chief executive Fazel Fazelbhoy was quick to underline that the industry did not have a common understanding of what fleet utilisation represents: is it utilisation of the total fleet as represented on the balance sheet or only those vessels already working where it is easier to get a high utilisation because there is demand? “Many companies can claim 100% utilisation if they discount every idle asset going into stack,” he said to the amusement of the conference.
A related consideration is whether the encouraging utilisation figures quoted for the Middle East should be seen as ‘temporary utilisation’ ahead of another influx of tonnage from other parts of the world, especially southeast Asia.
Westwood Global Energy Group director Thom Payne said that when it comes to utilisation “it’s lies, damn lies and statistics… You can cut the data in many ways. The proof is going to be in the pricing… if the utilisation is not actually going up then there is going to be pricing growth.”
Mr Jorgensen confirmed that Topaz calculates its utilisation figures based on its entire fleet. He said the hike was linked to the attitude of its clients to counterparty risk. “My sense is that in the Middle East, as in other regions, a number of E&P companies have taken in providers of OSV services that turned out to not be able to deliver what they have promised because they bid for contracts below opex levels. Our customers are looking to OSV providers that they know are here for the future.”
Mr Fazelbhoy added that another reason for increased utilisation stemmed from the lack of exploration and production spend in recent years. At some point the investment had to resume as oil demand is not abating and shale cannot always be ramped up to cover pipeline constraints to meet the supply balance needed.