Offshore vessels - growth in prospectNews // September 7, 2000
There are about 88,000 commercial vessels in the world and the 3,500 offshore vessels form less than 4 per cent of this total. But due to the highly specialised roles of offshore vessels they generally represent a higher investment than many other vessel types.
Over the past five years (measured by year of delivery) Douglas-Westwood analysis shows that annual expenditure on offshore vessels has grown from about $500 million to nearly $1.4 billion and a large part of this has been spent in Europe, in particularin Norway.
Looking back over the years, Westwood stated that: "There have been three distinct peaks in vessel deliveries - 1975, 1982 and 1998.
"The 1975 peak followed the first major oil price rise and the beginnings of North Sea oil production.
"The 1982 peak was associated with the large surge in offshore
activity following the 1979 oil price rise.
"The 1998 peak, although it followed two years of rising oil prices, was probably also associated with the considerable growth in deepwater and subsea activity during that period.
"It can be seen that the market reacts, or perhaps over-reacts, to change (in this case in oil prices) and the more rapid the change, the more dramatic the rise in vessel orders. This is not something that is specific to the offshore vessel deliveries asthe effects can be seen in other ship building markets.
"The result of the peaks in vessel deliveries is that the average age of the total offshore vessel fleet is 20 years and nearly 30 per cent of the fleet (over 1,000 vessels) is more than 25 years old.
"One result is that much of the existing fleet probably has a fairly limited economic lifetime and is not well suited to operation in the future growth sectors of the industry such as deepwater and subsea operations.
"The next five years will probably see firm oil & gas prices. As activity moves into deeper waters and the existing fleet ages, there is likely to be an increased requirement for new offshore vessels.
"The competition to build them will intensify and the concentration of European yards on special vessels will be even greater. Globalisation offers great opportunities for European companies, but great threats for European jobs. In an increasingly globalmarketplace cost effective designs carrying recognised brand names will be a key to continuing success," concluded Westwood.