Business Sectors
Events
Contents
Register to read more articles.
Rising Middle East upstream investment drives OSV demand
Offshore exploration and production spending is significantly rising in the Middle East, increasing demand for offshore support vessels and providing a market upswing for owners
Vessel utilisation and charter rates are at seven-year highs and are set to rise further into 2024, driven by growing expenditure in building and maintaining offshore oil and gas production infrastructure.
Clarksons managing director for shipbroking, offshore and renewables, Erik Tonne, said upstream budgets had risen in the Middle East, primarily driven by state energy companies investing in offshore facilities and assets.
He told delegates at Riviera Maritime Media’s Offshore Support Journal Conference, Middle East, that offshore spending in Saudi Arabia, United Arab Emirates and Qatar could rise over 25% collectively through to 2025, versus 2022 budgets.
Mr Tonne added that there are opportunities in the current market to build more collaborative regional offshore ecosystems and local capabilities that are sustainable over the longer term.
Petro Services Middle East managing director, Mark Kachouh, painted an exceptionally bullish picture on Middle East offshore activity and oilfield services demand during his presentation.
He said OSV utilisation in the region was around 85-90%, meaning there is further room for spot market gains.
Mr Kachouh sees national oil companies aggressively sustaining E&P campaigns on the back of supportive oil prices, resulting in longer-term demand for support and OSV services.
With rising demand and higher utilisation, owners could be encouraged to invest in fleet modernisation and expansion. But Mr Kachouh said there were lingering barriers to significant OSV newbuild orders in the next two years.
He cited shipyard capacity constraints, capital access complexities, extended build schedules and local content amendments as challenges to any rapid fleet renewal.
Outside the Middle East, upstream offshore investment is shifting to deeper waters in South America, west Africa and in south-east Asia and Australia, while there are some deepwater E&P projects planned in northern Europe.
Fearnley Offshore Supply market analyst, Jesper Skjong, expects rising offshore E&P expenditure to drive demand for more complex vessels and operations, such as floating production systems.
Renewables, like offshore wind, are also driving demand. Project backlogs point to strong upcoming growth in vessel demand and day rates could increase significantly by the middle of the decade as supply tightness emerges, said Mr Skjong.
Global offshore upstream E&P and OSV markets will be analysed in depth at Riviera Maritime Media’s Offshore Support Journal Conference, Awards and Exhibition 2024, set to be held in London, 7-8 February 2024, click here to purchase tickets and attend this industry-leading event and meet top executives from the world’s largest OSV owners
Related to this Story
Women in Maritime Today: Elin Saltkjel says no day working in maritime is dull
Events
Maritime Environmental Protection Webinar Week
12 May 2025
BST - ONLINE
Cyber & Vessel Security Webinar Week
12 May 2025BST - ONLINE
The illusion of safety: what we're getting wrong about crews, tech, and fatigue
13 May 2025CET - ONLINE
Responsible Ship Recycling Forum 2025
14 May 2025London
© 2024 Riviera Maritime Media Ltd.
