Finally...The Comeback of The OSV Market
I've been waiting to write about this for a long time, but have never found a good reason to do so for the past 5 years. We once thought that the market for Offshore Support Vessels (OSV) would take another 2 to 3 years from now, before it could recover.?Finally, things seem to have landed on a more positive note now, and it seems that the worse could be over, with stars finally pointing in a right direction after the longest downturn in any human's living memory.
Looking Forward
Market uncertainty is pushing up energy prices and investments worldwide. With Energy companies increasing their capex spending in oil & gas and renewable projects, it drives higher fleet utilization and charter rates for OSVs. While some may argue that the market continues to suffer from the hangover of many old idling vessels, reality is that many of these vessels will never return to the market, as new vessels will need to be built to meet with new requirements for long term charters. This helps with a healthier, tighter?newbuilding market, and ensures more profitable days ahead in 2023 and beyond.
Top areas for investments remain at the north and southern region of Americas and The Middle East region. Higher investments from energy majors trigger strong demand for drilling rigs and offshore production facilities, leading to the increasing needs for offshore construction and logistical support. This helps to boost term and spot charter rates for the likes of pipes or cable-laying vessels, AHTS, PSVs and other related OSVs. While there could still be oversupply for PSVs in the market, not the same could be said for AHTS, DSVs and Subsea Construction vessels. It has become clearer in recent year that this is where the newbuilding market is heading, and there is no better place than Chinese yards for owners to go to for newbuilds.
Go Clean, or Go Home.
Nations without shallow continental shelves will be looking for solutions and alternatives for domestic renewable energy supply. As the search for offshore renewables chart its way into deeper water, floating facilities are needed, leading to more complex engineering skills and offshore installation techniques. Apart from all other geopolitical impact, and similar to its merchant vessel family, OSVs' biggest challenge to remain competitive depends largely on its ability to meet demanding requirements for clean energy operations and reduced emission. Reacting to the requirement, shipowners have not only turned to biofuel and alternatives gases to power the vessels. Battery operated OSVs, supported with offshore power charging stations has also become a reality with the first of such vessel expected to operate in 2024 to cut greenhouse gas emission. Yes, our very own version of Tesla at sea. Finally… we can expect some very exciting days ahead in the OSV market.
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Jason Tay
Dated 13 March 2023
Regional Managing Director
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