The tide has turned for the offshore support vessel (OSV) sector, with good visibility in the market going forward, according to Fearnley Offshore Supply’s latest report.
The Norwegian shipbroker said that there seems to be optimism brewing around in many corners and segments of the industry with plenty of opportunities for offshore vessels.
Despite a relatively slow start, vessel chartering and field development activity are up this quarter.
Malaysia and Australia are driving the hydrocarbon E&P activity in the region. There is also eagerness to offer OSVs to regional renewables development.
The renewables industry in China was the primary source for transaction in the east, with a substantial number of barges, AHTs, and terminal tugs heading for a new industry before the Chinese subsidy window closes at the end of October.
Term requirements in Taiwan, India, and Middle East have also prompted local buyers to boost their fleet in anticipation of increased demand in the near future.
Activity in the North Sea is also picking up for the AHTS and PSV segments. For the first time in around three years, Fearnleys experienced an AHTS spot fixture in the North Sea exceeding the NOK1m ($120,000) mark with few other fixtures in the same area.
Term fixture activity for PSVs has also had a positive impact on the spot day rates as vessel availability is decreasing. In Norway, for example, the market for 1,000 m2 deck PSVs is now close to sold out for the summer months. The high PSV activity lately has also resulted in shipowners preparing for reactivation of vessels from lay-up.
An increase in transaction of mid-sized AHTSs and PSVs has also been observed, as new players are picking up cheap vessels. However, despite transaction volumes at the highest seen since 2019, there is yet to be any price movement in this segment due to oversupply.
On the other hand, demand for the highend vessels has started to drive up prices.
“As contract duration and day rates are increasing, prices are moving closer to reflecting the cost of constructing the industry’s top assets, albeit with still some room to go, thus there are still bargains to be made,” Fearnleys noted.
Looking at subsea, following a slow Q4 last year, Fearnleys reckons that this market has shifted gears and is again moving towards higher levels of activity, with all the majors announcing large contracts and new tenders rolling out in Brazil these last months. According to Oslo-based investment bank Fearnley Securities, potential for subsea awards in Brazil could go up to $6.5bn.
With increasing demand for vessels supporting installation and maintenance of wind farms, day rates have risen. Prices for vessels that can serve both in the hydrocarbon and renewables market have followed.
With these recent and potential market movements, Fearnleys estimates that a lot of the large-capacity subsea assets could be torn between higher demand from subsea and offshore wind developments, but also decommissioning scopes and even the emerging deepwater mineral scene, all of which are forecasted to increase going forward.
“Asset values are on the up, and with increased spending in both oil and gas and the renewables market, our industry’s outlook is better than it has been for a while. This does not mean that the industry can be in any way declared a healthy one, we are moving upwards, however, from miserable levels,” the Norwegian broker noted.
Fearnleys also noted that many shipowners are still heavily debt burdened and it is only for the new venturers, the few who never took on too much debt and those who have shaken up their balance sheets, who will report black numbers going forward.
“As restructurings comes to an end, industrial investors starting to eye the double digit returns and with the present industry outlook, for OSV prices, it looks like the only way is up.”