As the North Sea markets wind down, several spot trading OSVs have been seen heading south for the winter
July heralded the start of summer in the North Sea and OSV owners began to anticipate an uptick in demand as the maintenance season got underway; sadly, they were to be disappointed. The surfeit of available craft kept rates down, although PSVs did manage highs of £9,000/day (US$11,700) at one point.
By August however, enough projects were on tap to occupy the OSV fleet. Seabrokers reported average fixture rates for large PSVs (900m²+) remaining north of £7,500 for five consecutive months. The fear was that those OSVs coming off contract would join the reactivated fleet and flood the sector in the tail end of the season.
Instead, nature intervened; a sudden downturn in the weather in mid-September locked many North Sea PSVs in port during a time of high demand, leading to an escalation in rates. September started with 20 PSVs open for work and rates hovering around the £5,000/day level. Those vessels that had left port and were available to work in the North Sea suddenly found themselves open to offers closer to £20,000/day.
The inclement weather had the same impact on the North Sea AHTS market, where day rates for larger units (over 22,000 bhp) increased from lows of £7,000/day to double that amount over roughly the same period.
Now that the North Sea market is entering the winter season demand has fallen away and several OSVs have been reported engaged for work in Africa. This includes two spot trading vessels, PSV Far Starling (4,000 dwt, 2003-built, PSV 08 CD, 810 m2) and AHTS vessel Normand Ranger (4,500 dwt, 2010-built, 720 m2) which are heading south to work for Total. VOS Partner (4,200 dwt, 2016-built, PX121, 850 m2), VOS Patriot (4,200 dwt, 2018-built, PX121, 850 m2) and NAO Horizon (4,100 dwt, 2016-built, Vard 1 08, 830 m2) are also reported to have also left the North Sea for Gambia. Rates were not reported.
OSV Value Matrix
The OSV sale and purchase market has been perky during the summer months (source VesselsValue)
The OSV sale and purchase market has been perky during the summer months, with VesselsValue reporting OSV sales up about 80% from August 2017, when five OSVs were traded on the second-hand market. During the same month in 2018, the total number of vessels bought and sold increased to nine.
This summer, OSV sales up about 80% from August 2017 (source VesselsValue)
PSV sales included the Lewek Aquarius (5,400 dwt, 2012-built, 950 m2) which was sold by Emas Offshore as part of its restructuring process to Rem Offshore for US$11.0M. The vessel has been laid up and the next Special Survey is due.
In an interesting move, Norwegian shipowner Østensjø Rederi sold OSV Edda Fonn (spec as sold: 2,354 dwt, 2003-built, 700m2) to the Royal New Zealand Navy (RNZN). Built in 2003 by Myklebust Verft, in its current configuration Edda Fonn is a multirole vessel that can carry out light construction, survey and inspection, maintenance and repair work. It has a length of 85.0 m, a breadth of 18.0 m, a draft of 6.8 m and a dwt of 2,354. Its moonpool measures 7.2 m x 7.2 m. DNV GL has assigned the vessel a dynamic positioning class of DP2, a Clean notation and an ice class of Ice-C.
“Scrapping levels throughout 2018 have been markedly higher than in 2017, peaking at the start of the year with 19 vessels sold for demolition in January 2018”
Following the installation of dive, ROV and hydrographic systems by Østensjø Rederi, the OSV will be commissioned into service in 2019 as a dive and hydrographic survey vessel under the name HMNZS Manawanui. The repurposed OSV replaces two decommissioned RNZN survey vessels, its namesake HMNZS Manawanui and HMNZS Resolution. The RNZN has a budget of NZ$103M (US$69M) for the acquisition, including modifications and introduction into service.
On the AHTS side, seven AHTS sales were confirmed in August, according to VesselsValue. Notable sales included Viking Supply Ships offloading three of its ice breaking Super Large AHTS to the Canadian Government for an undisclosed sum. The vessels include Vidar Viking (2,600 dwt, 2001-built, 603 m2), Balder Viking (2,400 dwt, 2000-built, 603 m2) and Tor Viking (2,600 dwt, 2000-built, 603 m2). Elsewhere, Bhagwan Marine has scooped up the small AHTS CMV Athos (1,900 dwt, 2017-dwt) from Caspian Mainport for an undisclosed sum, while MMA Confidence (2,500 dwt, 2010-built, 490 m2) has been sold by MMA Offshore to Perenco, again for an undisclosed sum.
Vard's 3 03-design vessel was originally contracted by Harkand Group, which entered administration in 2016
In other notable OSV sales news, Vard has agreed to sell a diving and support vessel, originally contracted by defunct offshore support firm Harkand Group to an undisclosed buyer.
The vessel was contracted by Harkand in December 2013, but the group entered administration in May 2016. Vard has cancelled the original contract with Harkand’s administrator to agree the new sale.
Built to Vard's 3 03 design, the vessel is equipped to carry out a range of diving and subsea operations. It is fitted with a 250-tonne offshore crane and a twin-bell 18-man saturation diving system, which enables split-level diving operations to a maximum depth of 300 m.
The vessel is scheduled for delivery from Vard's Søviknes yard in Q1 2019, before which it will be finalised, tested and prepared for operations.
Finally, VesselsValue notes there has been a resurgence in sales for demolition.
The number of vessels taken off the water remained higher than August 2017 (source VesselsValue)
Scrapping levels throughout 2018 have been markedly higher than in 2017, peaking at the start of the year with 19 vessels sold for demolition in January 2018. While August 2018 saw levels drop to eight OSVs sold for scrap, the number of vessels taken off the water remained higher than August 2017.
If the North Sea and other markets are going to return to the levels of profitability owners desire, sales for demolition need to continue at this pace or higher to drawdown the huge stock of idle OSVs.