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    Brakes are off in the North Sea says Fearnleys

    News // October 1, 2004
    Fearnleys Offshore Supply, the well known brokers, says in its latest report that it is now "generally agreed" that "the brakes are off."

    "As anticipated, offshore spending is on a steep increase. The oil price peaked in August, astonishingly close to US$46/bbl (Brent spot) and has shown tendencies towards being highly volatile since. Future trade for oil indicates a healthy basis for activity offshore in the next six year period, and the oil companies are revising their budgets and activity plans accordingly. Basedon these facts, it is no longer a matter of predicting improved market conditions, rather establishing what "shape or form" the opportunities will be in."

    "The year 2004 has so far not lived up to expectations for the supply vessel owners. The market balance, however, seems fine here in the North Sea, as a brief flurry of activity at the end of August doubled the rates for large AHTS, despite the ongoing strike in Norway which has left several rigs inactive," said Fearnleys.

    "Whether we will have a bonanza in our North Sea market at the end of 2004 and the time beyond depends heavily on whether or not more rigs can be quickly added to the offshore rig-count. Those units which are left inshore require considerable upgrades before making their come-back. Another important factor is the subsea construction activity which is expected to increase considerably from this summer's level."

    "The days of large tow out/hook-up projects seem to be coming to an end here in the North Sea, but work involving subsea structures, pipes and umbilicals will make up for this<" said Fearnleys, noting that a number of speculative newbuildings (predominantly PSVs) have been placed recently in Europe and it would be a valid question to ask whether the number of newcomers align with the forecasted increase in demand for this type of tonnage.

    "Great expectations were placed on the Statoil pipehaul requirements for 2005-2006. It must be said that the contract volume awarded by Statoil was considerably less 'market driving' than anticipated - (two sublets, one newbuilding, one from Statoil's term fleet and only two PSVs from the open market - all with exceptionally high pipe capacity). When market was at its peak in the North Sea a few years back, one of the main characteristics was that the market was almost completely "sold out" on PSVs. This is going to be a bit more unlikely in the year ahead."

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