All content in this website is sourced legitimately

Page No: 1
Global offshore E&P vessels market-II: An update
Apr 04: The following are the observations on the offshore E&P vessel supply market
8The rig downturn is both supply and demand driven where we see a severe overcapacity for both shallow- and deepwater units. The day rates have plunged and the 2nd hand prices are extremely low. Rigs are coming off contracts and it is very difficult to secure new work. Scrapping and cold-stacking will increase further as the owners’ choice is costly class surveys or scrapping. Cold-stacking will often be synonymous with scrapping, indeed for veteran rigs. Some rig owners may loose more than 50% of their fleet. Thus, this will change fleet size ranking among rig companies.
8On the other side, low rig rates will also help oil companies to increase activity at some point. When contracts signed at peak levels disappear, oil companies are left with a totally different cost picture. That could lead to volume effects. However, companies will first need to believe in a higher future oil price. This is the key driver for drilling activity. Recovery will come eventually and mid-water rigs will most likely recover first. However, the number of new rigs to be ordered in the next five years will be very limited.
Floating Production
8With budgets being trimmed and with an intense pressure on costs, investment decisions are being deferred. Units are coming off contract and there are more idle FPSOs. However, the demand for floating production units is expected to increase and drilling is not a “bottle neck” anymore. Costs have dived. There are over 200 projects at different planning stages (IMA), but with wait-and-see tactics on projects. Expected future oil price is what really counts. The timing for when the projects will materialise is uncertain and there is a possible trend towards conversions rather than newbuilds. Thus, there is a challenge to evaluate number of newbuilds which will come up in the future, but improvement is expected from 2018 onwards where Brazil’s ability to order new units will be key. This market is also an important driver for subsea and other offshore support vessels.
Construction Support Vessels
8A massive build cycle has gone bust as most orders were on the on speculation. Many such projects now stand cancelled or postponed after the oil price slide. This has led to significant oversupply, downturn in charter rates and financial results. This has of course had a severe impact on the ordering of new ships.
8There is uncertainty around new awards of new projects, but strong demand growth towards 2020 and beyond is expected where field development will be the key driver. New large projects are not likely to commence before 2018, but another driver is also growth in installed base and inspection,maintenance and repair markets (IMR). In the current market environment, much IMR activity has been postponed and will need to come later.
8Adjacent markets, like offshore wind installation and support, will be of increasing importance.
Click on Reports for more


Back  |  Top