Page 19: of Offshore Engineer Magazine (Nov/Dec 2022)

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As we are coming towards the end of 2022, it brings commercial supply as this matter has become all the more us considerable pleasure, and perhaps even some degree of important due to the persistently large number of units relief, to report a market that is closer to a global recovery in layup. than at any point since the market turned sour. As it stands, around 20% of the ?eet is still cold-stacked,

While there are admittedly some regional differences, with the vast majority of these assets now more than 20

Fearnley Offshore Supply is quite ?rm in its view that the years old, the bulk of which for at least ?ve years.

OSV market, overall, has made tremendous strides to- Considering costs associated with the re-activation of wards both higher vessel utilization and dayrates. such units, including their 20-year special survey after

Going forward, Fearnley expects the market recovery to such a long idle period, and the potential earnings left improve even further driven by increasing offshore activity in their economic lifetime, it is becoming dif?cult to and tighter vessel supply. justify the ?nancials regardless of how cheaply they can

The increased market activity has already started to ma- be acquired.

terialize for large parts of the offshore supply chain. When we adjust the supply in light of the above by re-

After hitting a de?nite trough in 2020 at around USD moving units with limited commercial life, the OSV mar- 110 billion, the global offshore upstream CAPEX has since ket immediately looks a lot healthier, and, depending on grown signi?cantly and is set to further increase in the im- how one measures it, we could argue a recovered market mediate future. overall sometime during 2023 and 2024.

Developments in deepwater and ultra-deepwater espe- Utilization rates, to use a familiar metric, are on par cially are expected to see yearly double-digit growth in the with historic averages for AHTS already next year, whereas coming two years. And while the support vessel element PSVs will potentially see historical parity reached the year is but a fraction of this investment, it does speak volumes thereafter.

towards the offshore activity, and thus the OSV demand, Moreover, and speaking towards the validity of our rea- in that same period. soning, average dayrates have already started to materialize

When we zoom in a bit and analyze vessel spend by it- in a signi?cant manner. self, we get an even better, albeit still high-level, picture of In the North Sea region, June brought with it the sec- the market development as this perspective allows us to ond-highest AHTS dayrate ever recorded in the spot mar- compare different regions with each other. ket, and peak project activity occurring simultaneously in both O&G and offshore wind saw term rates at levels last seen in 2014.

Tree largest growth regions for OSVs

In total, we could see vessel spend increase by more than In the US GoM, PSV dayrates are breathing all-time- 30% in 2023 compared to 2022, a function of both higher high levels in the neck while total ?eet utilization is less dayrates and more working vessels going forward. than 50%, supporting Fearnley’s thesis that a large share

Herein, the largest growth is expected to occur in the of units of?cially included in the total ?eet is not ?t

Middle East, South America, and Africa at some 70-, 50-, for commercial life. Subsequently, the rates experience and 45% year-on-year growth respectively, with further substantial uptake without the utilization passing the double-digit growth into 2024. 50% threshold.

Perhaps unsurprisingly, within these three regions, we It would perhaps be naïve to not mention the current see increasing OSV demand as the main driver for the geo-political and macro-economic clouds on the horizon, improving market environment for shipowners operat- as many economies are now experiencing recession fears. ing therein. But in other key offshore regions, including However, the supply in many OSV segments looks suf- the US Gulf of Mexico and Northwest Europe, the real ?ciently tight to bring optimism in the sector regardless, driver for fast-improving markets was supply, or rather combined with the fact that years of underinvestment in lack thereof. the petroleum sector is likely to force increased invest- ments in the years to come. With further increasing off-

Total vs. commercial supply shore activity and, thus vessel demand, it is dif?cult to

In all our presentations concerning the OSV market, imagine 2023 as anything but a further strengthening to we ensure to make a clear distinction between total- and the already improving OSV industry.

november/december 2022 OFFSHORE ENGINEER 19