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    Strong quarter for southeast Asian operators

    News // June 27, 2008

    Fearnley Offshore Supply says the last quarter saw what it called "very strong earnings for southeast Asian offshore vessel owners."

    In its latest report on the market, the broker said that with the oil price remaining exceptionally high, exploration budgets are on
    the increase and construction activity remains intense.

    "Newbuild activity has slowed somewhat since the turn of the year, as many owners are sitting back in anticipation that better delivery slots may be released from cancelled options," said Fearnley.

    "Indications from some of the Asian yards are that as a result of options not be declared, main components from A1 manufacturers are somewhat easier to come by and delivery times may improve."

    "Requirements for small and medium sized vessels remain at a very high number with demand outstripping supply on any given day. Day rates for the southeast Asian Market as a whole, remains at about 3.5 dollar per bhp for the small AHTS and about 3.8 dollar per bhp for the medium sized AHTS."

    "The Indonesian and Malaysian market seems to be running on about 25 per cent lower rates, but in turn the average term contract is of a longer duration," said the broker.

    "For the larger vessels the rates remain healthy for both spot and term contracts, although we have in recent weeks witnessed that supply has exceeded demand in the short term market. However, with a number of term contracts excepted to be awarded in the next few weeks, we expect that this will change. At the time of writing there are in India and Australia alone, six or more outstanding tenders for vessels in excess of 150 tons bollard pull. This coupled with more than a dozen outstanding requirements for 60 to 80 ton bollard pull vessels, should pave the way for a healthy number of fixtures, come July," said the company.

    Market consolidation is also a ‘hot’ topic in southeast Asia, and fleet acquisition is seen by many as the most sensible way to grow a company. "There are companies out there that are willing sellers, and there are companies that are willing buyers. However closing the gap between the parties expectations can at times prove daunting. With the increased focus on consolidation we will expect to see one or two larger transactions take place in the near term," the broker concluded.


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