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    Day rates fall offshore West Africa - owners could struggle to obtain finance

    News // May 15, 2015

    Broker Chart Shipping says that despite a modest recovery in the oil price, the offshore support vessel sector offshore West Africa has deteriorated over the past month.

    "Extremely weak demand across the region, coupled to continued availability at historic levels, has caused a collapse in spot rates of mid-sized PSVs," said Chart Shipping.

    "These rates plummeted to as low as US$12,500, while average rates were at US$ 13,750. This represents a decline of almost 17 per cent in one month.

    These are the lowest rates recorded for West Africa by Chart Shipping since it bean compiling data in 2000.

    Interestingly, term rates are now higher than spot, with average rates in April hovering uneasily around US$14,000/day. Spot rates for large PSVs were also hit, but the decline has so far been gentler with average rates dropping by about 6.25 per cent to a level now of US$ 18,750. In contrast to PSVs, rates on small, medium and large AHTSs were essentially unchanged.

    However, Chart Shipping said there was a small spike in spot rates of very large AHTSs hitting US$ 30,000, and a rise in average rates of 12 per cent to US$ 27,500. This sector remained with extremely limited availability of just 2.6 units.

    "The cuts in capital expenditure are now being evidenced by the steady drop in the number of working rigs in the area," said Chart Shipping. "It is without doubt a deeply perturbing time for vessel owners, with very little prospect of any increase in oil company budgets for at least the next six months or so.

    "In the meantime, charterers, many of whom are suffering devastating haemorrhage of income, are pressing owners for rate reductions, in many cases of up to 30 per cent on existing contracts. A potential unforeseen side effect of this is that owners in future may struggle to raise financing even where they hold signed contracts."


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