High oil prices continuing to drive OSV ordering says FearnleysNews // May 10, 2006
Shipbroker Fearnleys Offshore Supply says the continued high price of oil "is the dominant driver in our market," but says contractors are beginning to worry that the market is over-heating.
Owners are responding to the high oil price and demand for rigs and support vessels with newbuild orders and long term charters being secured "at a tempo we never have experienced," said Fearnleys in the latest issue of its monthly report.
"The oil price will have to make a major dive before the industry will have to get really worried, however there are a few issues to take note of," said Fearnleys.
"High oil prices could hurt the world economy and reduce the demand for oil, which will reduce offshore spending. The current support vessel orderbook, which is extended almost every day, may in some segments create an over-supply situation," said the broker, noting that, in current market conditions, there is virtually no scrapping taking place at all.
"We note that offshore contractor Technip expressed concern that the offshore industry currently is 'overheating,' with increased costs as a consequence," said Fearnleys.
"Point taken," said the company, "however, this condition does not immediately seem to put a lid on things. Activity remains high on a worldwide basis and the strong demand for seismic capacity confirms that exploration levels are still on the rise."
The most recent awards of licenses (19th round) in Norway proved the considerable interest, with 17 companies being awarded interest in 13 production licenses in 33 blocks or parts of blocks on the Norwegian continental shelf.
As Fearnleys also noted, availability of suitable rigs will decide what the full impact of the awards will be for North Sea vessel operators.
"Fleet sales, corporate deals and a series of newbuild orders, are all indications of optimism and dynamics in our market segment. We do not expect that we have seen the end of the newbuild orders quite yet, although yard delivery time is stretching towards early 2009- unusual for support vessel owners who are used to getting their ships 12 months from order," Fearnleys noted, highlighting that the the focus of the newbuild orders in Europe remains on advanced MSVs with crane and helideck as well as medium size PSVs, whereas in the Far East orders are a mix of medium/large AHTS and medium PSVs.