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Limited finance access stunting OSV newbuild campaigns
Finance for funding newbuild campaigns of offshore support vessels (OSVs) remains difficult to obtain despite improving market conditions supporting fleet additions
Financiers and lawyers offered insights into OSV newbuilding funding at Riviera Maritime Media’s OSJ Middle East Conference 2023 in Dubai, United Arab Emirates, noting where there is available financing and what owners need to achieve in environmental, social and governance (ESG) requirements.
Borealis Maritime Group vice president Souren Gharnagharian explained what institutional investors are typically looking for when they invest and whether there is truly capital available in sufficient amounts to finance vessel newbuilding programmes.
Banks have materially reduced offshore exposure over the last 15 years, creating a financing gap as OSV demand grows, said Mr Gharnagharian, adding that Asian institutions have partially begun to fill this void. Private equity and credit have also decreased allocations to the sector, in part due to changing ESG requirements and emissions concerns.
However, there are opportunities for companies such as Borealis Maritime Group to deploy further capital in the sector due to rising demand for OSVs and fewer OSVs available for energy companies to charter.
Greenfield Marine Technologies chief executive Abhay Nimbalkar outlined why ESG strategy setting should be regarded as important to the maritime industry as a whole and the OSV sector, in particular. Capt Nimbalkar underscored the benefits of adopting an ESG strategy and the current status of its adoption by OSV owners, saying that investors and regulators are demanding increased sustainability action. While Middle East national oil producers have made bold commitments, progress on the ground is more gradual, he said.
Capt Nimbalkar said he thinks collaborative leadership would be key to balancing growing expectations for sustainability in operations with commercial viability.
In the same vein, HFW partner Ian Chung said Middle East OSV owners must upgrade their fleets tactically even as owners will be facing further operational challenges during the current decade. Mr Chung said he foresees mounting operating costs from insurance premiums, cyber risks, debt costs and escalating regulatory bureaucracy. Despite the challenges, Mr Chung said that there are opportunities for owners who remain attuned to national priorities and evolving regulations when choosing when and how to expand their fleets and businesses.
Additional reporting: Edwin Lampert
Global finance and investment opportunities in 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
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