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Global offshore E&P vessels market-III: The situation will get worse for PSVs before they turn better
Apr 04: No where is the impact of the downturn felt more than in the offshore Platform supply vessels
8There was indeed a dramatic fleet increase for large PSVs and the market did have earlier an amazing ability to absorb new tonnage. However, those days were over in 2014.
8A significant fall in contracting was expected, but then the oil price slide in 2014 drove the nails into the coffin.
8Dayrates are now very low and a very large number of vessels are laid up.
8There is still also a significant orderbook where the big majority orders were placed at yards in China in 2012-2014. However, quite many of these PSVs will never be completed or make it to the market.
8Perhaps more than one third of the orderbook will be in this category. Many vessels are in fact built, completed in 2014-2015, but not delivered to owners who are struggling financially, some bankrupt.
8Thus, the vessel status is “On Order” in most public vessel registers, while the real status should rather be “Scrapped” or “Cancelled”. Many completed vessels are already in poor condition due to no inspection or maintenance, no ventilation, mold and rust.
8The condition will get worse in the course of the next few years and most ships will of course be very hard to sell.
8Charterers can now hire high-quality tonnage at a very low price.
8Thus, the outlook is best for new and efficient vessels. Older tonnage will often be ignored and vessels will be scrapped or removed from the market.
8Consolidation may improve future ordering discipline and allow some more scrapping but it will not be enough to address the current supply overhang. A lot of scrapping will be needed.
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