Broker provides update on North Sea marketNews // March 19, 2004
In December, Farstad Shipping was awarded charter contracts for Far Strider and Far Superior for one year with two one-year options for each of the vessels. The contracts are for Team Marine in Aberdeen for whom the vessels have operated for five and twoyears respectively. The existing contracts ended in December (Far Superior) and January (Far Strider). The new contracts started in January 2004. Both vessels are platform supply vessels.
Far Strider was built in 1999 and Far Superior in 1990. In addition, Farstad also reached an agreement to extend the contract for Far Fosna for three years from October 2005 until October 2008. This vessel has operated for Shell in Norway since 1993, butin connection with the extension, the contract for Far Fosna has been transferred from Shell Norway to Shell UK. Far Fosna is an anchor handling vessel of 14,400bhp built in 1993 to operate on the Draugen Field.
Far Grimshader's contract to Peterson Supplylink was extended for one year with options. Farstad's five vessels in the North Sea traded the spot market for shorter or longer periods during the fourth quarter 2003, but only the Far Scout has traded the spot market for the whole quarter.
Farstad reports that generally the demand for supply vessels in the North Sea has furtherdecreased during the fourth quarter and the number of vessels on long-term contracts was by the end of the year down to 122.
The spot market has varied between 27 and 39 vessels, which resulted in a total demandin the fourth quarter of an average of 161 vessels. The average for the year was 179 vessels. The supply side in the North Sea has seen a continuing departure of vessels and even though a number of new vessels were delivered from yards in the North Sea area during this quarter, the fleet still ended up at 182 vessels.
The average utilization ratio was as low as 86 per cent and this resulted in a low rate level during the quarter. The prospects for the North Sea remain uncertain for the rest of 2004. If the rate level is to recover, the activity has to increase and thefleet will have to be reduced.
Solstad Offshore ASA and Statoil ASA entered into a Letter of intent for hiring the supply vessel Normand Flipper for 18 months from April 2004. Further Statoil has an option to keep the vessel for one more year. The contract value for the firm period isabout US$ 7.46 million.
Statoil has also declared their option to extend the contract on the Normand Draupne for one year from June 2004. The option is declared on the existing terms. Solstad does not expect the North Sea market to improve significantly during the second quarter of 2004.
Based on approved development projects as well as signals of increased activity both on the Norwegian and British continental shelf after the previous license distributions, it is expected that the North Sea market will improve from the summer of 2004.