Diversification, digitalisation and decarbonisation are strategies offshore support vessel (OSV) owners need to adopt to survive during the double downturn the sector is facing
V.Group chief executive René Kofod-Olsen believes these will drive trends in the OSV sector in the next 12 months, with more vessels transitioning to offshore renewables as demand accelerates outside of oil and gas.
“Our industry is in a challenging situation, but the offshore sector has been disrupted by renewables, so people should focus on this global trend,” Mr Kofod-Olsen said during a spotlight interview at Riviera’s Annual Offshore Support Journal virtual conference and exhibition, supported by platinum sponsor Caterpillar. “Transition is ahead of us and it will be a difficult task to get the right strategy ahead,” he said.
Mr Kofod-Olsen said offshore oil and gas will exist alongside offshore renewables for the long term providing opportunities for OSVs of different types in hydrocarbon and offshore windfarm developments. Which is why he called on financial institutions to continue to back oil and gas investments, not just renewables projects.
“Oil majors must be allowed to find a balance to attract capital for oil and gas and renewables,” said Mr Kofod-Olsen. “Capital markets play an important role to support oil and gas and the transition to renewables.”
Digitalisation is also a growing trend owners need to consider to improve efficiency and reduce operating costs.
“We are harnessing data to ensure vessels are run more efficiently and we can attract people in the future,” said Mr Kofod-Olsen. “Digitalisation will help. We must deliver more digital systems and communications on ships.”
A third trend to follow is decarbonisation in both reducing emissions on vessels and focusing on the recovery of ocean ecosystems.
Mr Kofod-Olsen said OSV owners should invest in reducing emissions, while charterers should provide incentives. “Having the right technology on vessels could deliver lower costs, running more efficiently or higher margins,” he said. “Perhaps clients could invest. I am a big believer in client partnerships and long-term contracting.”
He said charterers can help through locking into longer-term vessel charters or providing other support for decarbonisation investments. “There should be open-book conversations with clients and more transparency – these are the way forwards,” said Mr Kofod-Olsen.
These three trends should be part of OSV owners’ strategies for their survival this year and growth in 2022.
“Looking at strategy, companies need to listen to client requirements to compete,” said Mr Kofod-Olsen. “There needs to be balance. There will be returns in oil and gas and there is a race towards renewables – we are at a crossroads and several assets can move from oil to renewables,” he added.
Owners must also consider removing their older and unused assets from the market to focus on improving margins for those existing vessels.
“Older tonnage may still generate some cash flow, but these vessels are less efficient and emit more emissions – these ships should be removed from the sector and scrapped,” said Mr Kofod-Olsen.
“We need to see more of this. It is a better balance for surviving companies. We need to see more vessels out of the market,” he said.
Riviera’s Offshore Support Journal Subsea Conference offers a platform for offshore professionals to discuss and debate growth, operations and opportunities. Industry leaders will share their experiences, review the latest industry trends and ensure attendees come away armed for future success and growth. Register here.