After a period of sparse opportunities, accommodation vessel owners are anticipating growing demand and contract tendering
Following a multi-year slump in demand and a long period of uncertainty, accommodation vessel operators have seen renewed interest for their services of late, in conjunction with a climbing oil price.
Energy companies are once again able to finance maintenance and repair on their ageing assets and are also taking investment decisions on delayed offshore oil and gas projects, prompting if not a surge then at least a growth in demand for flotels.
For publicly listed accommodation vessel owner, Prosafe, 2018 was a year of renewal, refinancing and order backlog building, as it worked on taking delivery of new accommodation units from China. By August 2018, Prosafe had reached a commercial solution with COSCO for two newbuild vessels that were residing at the Qidong shipyard in China.
These units were originally built for Axis Offshore and transferred to a Prosafe contract following a slump in demand for accommodation units. They were renamed Safe Nova and Safe Vega. In August 2018, Prosafe had secured agreements with lenders and the shipyard to finance their completion and delivery.
By December 2018, Prosafe had issued warrants with lenders for shares at a subscription price of NKr21.37 (US$2.46)/share in the company, in order to take delivery of Safe Nova and Safe Vega.
Prosafe chief executive Jesper Andresen considers this a sign that things are finally picking up, both for his company and the sector in general. “It is promising to see growth in order intake after several years of falling order backlog,” he said.
“We are especially glad to see that maintenance and modification work, which has traditionally been Prosafe’s bread and butter, is being sanctioned again,” he added.
“Since the start of this year we have observed increased tendering activity in the North Sea and internationally. With a renewed fleet, including the possibility to take delivery of three additional vessels, we are well positioned to take our share of this upcoming work.”
"Energy companies are once again able to finance maintenance and repair on their ageing assets and are also taking investment decisions on delayed offshore oil and gas projects, prompting if not a surge, then at least a growth in demand for flotels"
As part of a fleet rationalisation process, Prosafe sold its Safe Astoria for scrap and had two units, Regalia and Safe Bristolia, laid up in Norway during 2018.
In September 2018, the company was awarded contracts that improved its orderbook, including an order for Safe Caledonia for at least four months, starting in the middle of April 2019, on a UK project. This unit was operating for BP at the Clair Ridge platform in the west of Shetland area of the UK between May and November 2018.
Prosafe also gained a contract in September 2018 covering Safe Boreas’ operations with Equinor, which extends the firm operational period to June 2019, with six additional one-month options. Safe Boreas was stationed at Equinor’s Mariner heavy oil production platform in the UK throughout 2018.
Also in September, Safe Scandinavia commenced operations at Aker BP’s Ula platform on the Norwegian Continental Shelf, under a contract that has a duration of seven months, with eight one-month options.
In October 2018, Prosafe received a contract from BP to provide Safe Zephyrus to support the Clair Ridge platform in the UK for five months, with a one-month option, commencing in May 2019. This should follow completion of a 12-month contract that Safe Zephyrus is on supporting Equinor at the Johan Sverdrup oil platform complex.
Prosafe was also active in Brazil during 2018, as will be the case in 2019. Safe Notos is in the middle of a three-year and 222-day contract with state energy group, Petrobras; Prosafe also mobilised Safe Concordia to Brazil to begin a 200-day contract with Modec to support operations on a floating production storage and offloading unit, which started in November.
Prosafe is the third largest owner of accommodation units, with eight existing vessels and three on order, according to VesselsValue. The largest owner is Gulf Marine Services (GMS), with 14 units at an average age of 9.5 years; Seafox International is the second largest operator, with 12 units at an average age of more than 32 years.
The youngest fleet is owned by Marine Assets Corp, which has one operational vessel and six on order; the oldest according to VesselsValue is Bibby Marine, with five units and an average age of 39.6 years.
GMS also gained contracts during 2018 for its accommodation and support units. In October it secured a contract for one of its small class, self-propelled, self-elevating support vessels in the Middle East Gulf. This will be supporting well-intervention activities for 12 months.Source: VesselsValue
The month beforehand, GMS gained three long-term contracts for its vessels with national oil companies in the region. This included contracts for two of its mid-size class vessels and one for another small-class liftboat. These contracts are each for five years and begin in Q1 2019. During these periods, the vessels will be supporting well intervention and maintenance activities in the region.
In reaction to the contract awards, GMS chief executive Duncan Anderson said higher oil prices were “having a positive impact in our sector, with increasing levels of maintenance and capex activity generating more contract opportunities for our vessels.”
He added: “We continue to be encouraged by levels of enquiries and tender activity, as our clients focus on increasing their operations in a recovering market.”
Elsewhere, Seafox’s accommodation and service vessels are used in both the offshore oil and gas and renewables sectors. In December 2018, it sold a 51% stake in jack-up vessel Seafox 5 to Fred. Olsen Windcarrier. Keppel Offshore and Marine owns the remaining 49% of the vessel. Seafox 5 will be used on the Hohe See project in 2019. Fred. Olsen Windcarrier also owns jack-up vessels Brave Tern and Bold Tern.
Accommodation vessels - global fleet
In total, there are 187 accommodation vessels in the global fleet, according to VesselsValue. This includes 64 accommodation barges, 61 jack-up flotels, 36 accommodation ships and 26 semi-submersible flotels. There are also 22 vessels of various types on order. The worldwide fleet has an average age of 19.6 years.
The nation with the largest ownership of accommodation vessels, according to VesselsValue, is the UAE, with 33; this is followed by Singapore with 28 and the Netherlands with 20 units, while Indonesia has 18 under ownership.