Page 15: of Offshore Engineer Magazine (May/Jun 2023)

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MARKETS SUBSEA CONSTRUCTION VESSELS ed feet growth between 2008 and 2014, with shipyards this decade, around or above 2014 levels for 8 of 10 years. churning out 18 newbuilds per year on average. The to- In addition to the O&G-derived vessel demand, signif- tal OCV feet thus tripled during those years. However, cant OCV demand has come from offshore renewables, a the subsequent stagnation since then was quite stark for trend that is expected to continue in the future.

OCVs, with only around fve such assets delivered per year While the vast majority of this demand comes from on average from 2015 onwards. offshore wind, some projects, such as tidal turbines have

The current orderbook for these vessels is virtually non- also required high-capacity assets from the OCV feet. A existent and only consists of a handful of theoretically substantially tighter supply of relevant and suitable assets is potential newbuilds that were all ordered during the last already apparent, and considering the forecasted activity in newbuild spree and still awaiting completion. the offshore wind segments going forward, the market for

Another point worth noting is that given the relatively OCVs is set to not only surpass the previous market boom high barriers to entry compared to other OSV segments but even eclipse it. due to the complexity of operations, Fearnley Offshore

Supply expects few, if any, future newbuilds to be ordered

A Show of Confdence from new ventures outside of the industry. Over the past 12 months, we have seen a real sentiment

Lead time for key maritime equipment, both high-end change in the market, and shipowners in the OCV seg- as well as core machinery, is also having an impact on the ment are now showing a confdence we have not seen for potential for OCV newbuilds. Recent yard quotes for such nearly a decade. vessels schedule delivery up to 36 months from agreement, With a severely limited number of available vessels at meaning that we are more than likely looking at 2026, at any time, owners are demanding far better terms such as the earliest, before any new capacity will hit the market. higher dayrates or longer frm periods, and some are even refraining from bidding on less lucrative vessel opportuni-

Surging OCV Demand from ties if terms are not satisfying.

For short-term or seasonal contracts in connection to

Multiple Directions

The market activity that drives OCV demand, on the specifc project developments and campaigns, dayrates are other hand, is not only surging, but is actually pulled in already well into six fgures, and multi-year frm contracts multiple directions simultaneously. The sheer number of have also re-emerged in the market. subsea projects set for development in the years to come, Better market terms, in combination with high replace- with its associated subsea trees, manifolds, risers, fowlines ment costs, has seen secondhand prices for OCVs increase and umbilicals, and other infrastructure, has seen vessel signifcantly. demand already this year exceed 2014 levels. This year we have recorded several units well into their

In fact, subsea technology has now matured to a point teens having been sold at more than or close to newbuild cost. where it is sometimes seen as a preferred technology, even in Moreover, with rising geopolitical tensions and increasing shallow water regions. This is especially true for the host of importance of subsea infrastructure such as fber optic cables, developments that will tie into and beneft from existing in- a number of high-end units have been picked up by non- frastructure. A good example of this effect can be observed in offshore and governmental buyers at signifcant premiums.

the number of subsea components expected to be installed in The scene is now set for subsea vessel owners, especially the Persian Gulf, a region that has seen very limited subsea those with assets not tied up on long-term contracts with developments historically on account of its benign waters. yesterday’s rates.

Moreover, this effect can be measured in that subsea in- We see the bargaining power already returning, leading frastructure has recently seen and is expected to continue to solid cash fows and likely reversal of impairments from to see its market share increase compared to conventional the prolonged downturn. offshore O&G infrastructure. In a somewhat normal market, we could argue that the

Additionally, we expect the growth in offshore E&P in- current market conditions would trigger supply additions. vestment to predominantly take place in deep- and ultra- However, the current balance sheets of most traditional deepwater regions, thus adding tremendous vessel demand players prohibit any action as of today. As such we expect going forward. Specifcally, for OCVs Fearnley Offshore the market to not only further improve but also remain in

Supply forecasts demand levels to remain high throughout the owners’ favor for years to come.

MAY/JUNE 2023 OFFSHORE ENGINEER 15