OSVs will soon have to compete with merchant shipping for spaces in drydocks and repair yards, while prices for overhauls are likely to rise by another 3% in 2020
Offshore vessel operators looking to undertake considerable repair and maintenance work on their assets will find it tougher to secure shipyard space in 2020.
They will be competing with an increasing need from commercial shipping for capacity, as repair yards worldwide fill up with vessels in desperate need of ballast water treatment and sulphur abatement systems.
This will be a significant concern for owners wishing to reactivate their OSVs to meet market demand in 2020; there will clearly be reduced drydock availability and higher costs for those spaces that become available.
Drewry head of research products Martin Dixon thinks prices for scheduled and unscheduled repair and maintenance work, across the maritime sector, will increase substantially in 2020.
Speaking at the Riviera Maritime Media Optimised Ship Forum, held in London on 10 December 2019, he said: “During 2013-2015 [merchant] shipowners postponed repair work because of commercial markets. In 2017, prices bottomed out and have been rising since. There was a 3.1% rise in 2019 because of increased retrofit activity in repair yards, which means less capacity and increasing repair costs.”
Although OSVs do not need ballast water treatment or sulphur-removing scrubbers, they will be required to undertake considerable repair work, including renovating engines, thrusters and hull cleaning.
For this work, Mr Dixon expects prices to continue climbing into the next decade. “There will be similar cost increases in 2020, but after that, more moderate repair and maintenance cost rises,” he said.
In his presentation at the Forum, Mr Dixon also forecast sharp rises in insurance costs for maritime.
“Hull and machinery insurance could rise by 10% and P&I by 6% in 2020. They could rise by 2% year-on-year after that,” he noted. He also forecast a 2% rise in lubricants costs, 1% increase in stores procurement and 1.5% hike in manning expenditure.
Drydocks World chief executive, Capt. Rado Antolovic, also feels available drydock capacity has tightened because of scrubber and ballast water treatment system installations. “We are filling space and have a number of enquiries for 2020,” he said. “Operators are also looking at retrofitting for LNG and LPG fuel and are looking at electric propulsion.”
He expects some OSV operators will consider upgrading vessels with alternative propulsion, including energy storage systems or dual-fuel engines and LNG fuel tanks.
Capt. Antolovic thinks operators wishing to order equipment for retrofits should consider the timeframe of procurement and then the drydock time.
“Procurement of material and equipment is difficult as there are different types of systems and we need to train people to install them,” he told delegates at the UAE Maritime Week in September 2019. Installation time has also lengthened at repair yards worldwide.
“At Chinese and Singapore shipyards, installation time [for scrubbers] is up from 35 days to 70 days and there are concerns about quality and timeframes,” he explained.
This means delays in drydocking and less available spaces in 2020 and the trend could continue well into the next decade, as merchant shipping continues to require drydocking for retrofits, according to Capt. Antolovic: “We foresee a wave of scrubber installations over the next four or five years as technology changes and there will be problems, meaning some will need retrofitting and changing for new scrubbers.”
New shipyard capacity
In the Middle East however, new capacity is opening for offshore vessel newbuilding and repair work. International Maritime Industries (IMI) is building a new shipyard in Saudi Arabia, with the first zone scheduled to open in Q4 2020.
IMI vice president of business development Julian Panter expects newbuild orders, repair and upgrade contracts will stem from the region’s US$130Bn of approved, probable and potential projects. “This is positive news for OSVs; there is a lot of activity and it will take time to get going,” says Mr Panter.
IMI intends to be part of this goldrush by providing facilities for drilling rigs and OSVs. “The first zone of our new facility in Saudi Arabia should be ready by December 2020 and OSVs will be a significant part of that,” Mr Panter says.
He expects additional business will come from upgrading vessels to benefit from digitalisation and constructing new vessels with autonomous systems.
“Companies need to use big data analytics and IoT as an edge versus the competition,” Mr Panter says. “They need to find the cash to do this and be pioneering companies to take that plunge.” He believes OSV owners will follow the lead of rig owners, noting: “Some jack-up rigs have robotic technology that makes drill-floors more efficient.”
Future offshore construction projects in the Middle East will also require larger, heavy-lift vessels because production platforms are getting bigger. Furthermore, developments are moving into deeper waters, where dynamic positioning (DP) is increasingly seen as a requirement.
This explains why one of the major engineering, procurement, installation and commissioning (EPIC) contractors in the region is looking at options for obtaining a DP heavy-lift and pipelay barge (DLB).
McDermott director for marine operations in the Middle East and North Africa, Doug Korth, says this could include upgrading an existing derrick lay barge with DP; or it might involve mobilising an existing asset from outside the Middle East.
“There are some very large projects coming up in Saudi Arabia, Qatar and UAE,” says Mr Korth. “There is so much volume of work coming that we will need to look at bringing in a DP-capable DLB … We could convert an existing DLB to DP, or we could look to lease one, or partner with a company that has one idle or that needs completion in a shipyard,” he explains.
Either way, this vessel will need higher lifting capabilities than existing vessels in the region.
“One general trend in offshore packages is larger topsides of more than 4,500 tonnes and vessels will be needed to lift that,” says Mr Korth. “Vessels are needed to lift 20,000 tonnes”, enabling contractors to provide floatover operations as options for future platform construction in the region.
Malaysian deals and European upgrades
In southeast Asia, more ship repair capacity will be opened in the next three years, as Malaysia’s largest OSV shipbuilder, Nam Cheong, redevelops existing shipbuilding facilities in Labuan to support offshore oil and gas industries in the region.
It signed a memorandum of understanding with Labuan Corp in Q4 2019 to redevelop land in Kiansam, Labuan, into an integrated marine engineering and construction facility. This will include Nam Cheong’s investment in waterfront facilities for ship repairing and berthing, a supply base, fabrication workshops and warehousing.
Its own fleet will use these facilities for ship repairing and supply when operational, expected in 2021. These facilities should expand Nam Cheong’s revenue streams to include ship repair, offshore engineering procurement and construction and logistics for offshore marine support services.
According to Nam Cheong chief executive Leong Seng Keat, the project lays a cornerstone for future opportunities in Malaysia’s growing offshore oil and gas industry.
“Providing integrated offshore marine solutions is in line with our strategy to strengthen our business via exploring engineering, procurement, construction, installation and commissioning and related segments,” he says.
In Europe, Damen has completed the retrofit of heavy lift jack-up vessel Innovation. The DEME installation vessel, with DP2, left the Damen Verolme Rotterdam shipyard in September 2019 following a refit lasting several months. This included the renewal of its aft leg sections, measuring 89 m, and an overhaul of its jacking motors.
During drydocking, Damen reinforced the legs to increase the rate of jacking operations; two aft legs were also removed and two new middle sections inserted on the quayside. Kegs were installed afterwards.
In addition, all 48 gearboxes of the aft legs were overhauled in the shipyard’s workshop and reinstalled on the vessel.
Damen also renewed box-coolers, repaired the spudcan shoes, replaced one aft thruster and installed a new pile gripper. DEME chose Damen Verolme Rotterdam because the drydock enabled the lifting of the vessel’s legs with a crane installed inside the drydock, while the vessel was sitting on the dock blocks.
Elsewhere, Portugual repair yard Navalrocha overhauled two tugs in 2019 for local operator Reboport. Repairs on tugboat Ulisses involved the complete disassembly and removal of a main engine. The vessel is set to return to the yard in 2020 for the installation of a new replacement main engine, reclassification and an overhaul to two auxiliary engines.
Reboport’s tugboat Spartacus was also repaired at the shipyard as part of a long-standing relationship between the yard and the owner. Work carried out included reclassification, blasting, painting, mechanical and pipeline work and tank inspections.
Engines overhauled on African and Caribbean OSVs
Royston engineers have overhauled the engines on OSVs operating in the Caribbean and Africa. The group repaired the engines on 2009-built GH Challenger, operated by United Offshore Support (UOS) in the Caribbean. This vessel’s MAK 6M32C engines had more than 30,000 running hours. Royston overhauled them while GH Challenger was in dock at Curaçao. The work included the disassembly of critical components and the installation of new cylinder head assemblies and injectors.
Cylinder liners were removed and cleaned while bearings in the bearing blocks were changed in situ. A new turbocharger was fitted, vibration dampers inspected and all associated pumps and coolers cleaned and overhauled.
In Nigeria, Royston completed engine health checks on Marine Platforms’ 93-m subsea support vessel, African Vision. During a three-day maintenance period at Onne port, engineers worked on four Yanmar 8N280L-EV generator engines. These had each completed more than 24,000 running hours and needed repairs.
Royston worked on the cylinder head covers, camshaft covers, fuel injectors and pumps. Engineers used a borescope to assess levels of pitting and carbon build-up on the pistons, liners, cylinder head faces, and valves.
Following Royston’s health check recommendations, Marine Platforms intends to conduct further repair work on these engines during African Vision’s next planned maintenance period in 2020.