ith more than a third of the global offshore service vessel fleet stacked, the offshore oil and gas market “is suffering from the worst downturn in history, and despite some players calling it the bottom, no one really knows,” says VesselsValue’s Head of Offshore Charlie Hockless. While he does see some positivity in firming oil prices, Hockless says there is an “issue of oversupply within almost every subtype of offshore asset.” To address that, OSV owners are now coming around to the idea of ridding their fleets of older tonnage. According to data compiled by VesselsValue, which assesses the current values of ship and vessel tonnage, OSV scrapping jumped 153% this year over the same period last year. Forty-three OSVs were sold for scrap thus far this year as compared with just 17 for the same period last year. Tidewater scrapped 13 this year alone. “This increase shows owners are biting 34 Marine Log // April 2018
By Nick Blenkey
the bullet and realizing that if they are to survive these poor market conditions, they need to think of the future market rather than the market of the past,” says Hockless. While current owners are wringing out older tonnage to address the question of oversupply, some new players are also positioning themselves for a market recovery. “I suppose the difference in the general market situation between now and last year,” says Hockless, “is that we’ve seen activity increase and new money enter into the market. The vessels that are being transacted are no longer just old useless tonnage, but modern tonnage with a future in the market.” A good example is Germany’s familyowned Hartmann Group, which recently expanded its fleet to 13 with the acquisition of two relatively young UT 786 CD design Anchor Handling Tug Supply (AHTS) vessels from E.R. Offshore. “There is some positivity,” notes Hockless, “but it is hard to tell how the next 12 months will pan out. In my opinion, market players
are facing up to the reality of the situation, and some are diversifying and banking on renewables growth, but the orderbook overhang and the huge quantity of vessels in lay up could be the greatest obstacle facing full offshore market recovery.”
Harvey Gulf Files For Chapter 11 Challenging market conditions have forced Harvey Gulf International Marine, Inc., New Orleans, LA, to file a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S, Bankruptcy Court for the Southern District of Texas. As a result of the decrease drilling activity in the Gulf of Mexico, vessel utilization and day rates continued to spiral downward, leading to overcapacity and shrinking operator margins. When the downturn persisted into 2017 with no signs of imminent recovery, management realized that their cost-cutting efforts to date could no longer adequately shield Harvey Gulf from the pressures facing the rest of the sector.
Positive signs emerge in North Sea, but OSV sector will remain challenged