PSV owners must consider carefully how and when to reactive vessels from layup, as too much too soon could prove disastrous for the current recovery
While a recovery of sorts continues in the UK North Sea platform supply vessel (PSV) market, “owners still have the collective capacity to shoot themselves in the foot” if they reactivate too many vessels from layup too soon, noted Seabroker offshore market analyst Paul Dear at the Offshore Support Journal Conference, Awards and Exhibition.
Mr Dear highlighted that UK North Sea PSV market has been in recovery for the last 18 months. To illustrate this, he noted that 23 more PSVs were on term contract in July 2018 than at the same time a year previous.
However, Mr Dear said that the sector was still heavily oversupplied, with about 60 PSVs in long-term layup. He feels the cost to reactivate those vessels could be as much as £1M to £2M (US$1.3M to US$2.6M) and the current average day rates of £5,000 to £7,000 would not justify reactivating them.
Day rates for larger PSVs trended upwards close to £10,000 in mid-2018, but were still only half the levels seen five years earlier.
Still, positive signs exist. Mr Dear said exploration is increasing in the sector, with more than 60 exploration wells expected to be drilled across the UK North Sea this year, up 25% from 2018. There was strong interest in production licences in the UK and Norway and several high-impact wells in the Barents Sea and West of Shetland also indicate an improved outlook.