Like a pack of ravenous wolves, the challenges that have plagued OSV owners during the prolonged downturn continue to gnaw, gnash and nibble at the weak recovery into the new year
Chief among these challenges is the oversupply of OSVs, despite higher levels of demolitions in the last three years. AlixPartners says scrapping has not been close to the levels needed to align the global OSV fleet with demand. Based on its analysis of the current scrapping rate and schedule of deliveries for newbuilds, AlixPartners estimates that the global OSV fleet would grow to 3,558 vessels by December 2021. However, it points out, based on the demand created by a sustained fleet of 550 working drill rigs, that the fleet’s projected overcapacity would be equal to a whopping 1,100 vessels, or 30%. Making the situation even more problematic is that OSV ownership remains highly fragmented, with 70% of the capacity of the world fleet controlled by about 400 OSV owners, with fleet sizes that average 6.1 vessels each. AlixParters, which will be presenting at the Annual Offshore Support Journal conference in London, says there is no reason to expect these smaller owners to take collective action for the benefit of the sector as a whole.
Indeed, there are no easy solutions to this problem and without a sharp increase in scrapping, oversupply could continue to hound the industry for years to come.
Looking ahead, it is also clear that OSV owners will be under increasing pressure to cut greenhouse gas (GHG) and CO2 emissions to underpin the oil industry’s ambitions to decarbonise offshore operations in the UK North Sea, making it the first net zero oil and gas basin globally by 2035. This will most likely mean investments in alternative fuels and electrification. These efforts will need to be supported by all stakeholders, ports, harbours and government, through policy and investment in shoreside infrastructure.
By 2050, the UK government plans to reduce or offset carbon emissions to net zero (2045 in Scotland). Carbon capture storage, hydrogen as a fuel and offshore wind will become increasingly important in the maritime industry’s effort to achieve this goal.