Peter Döring* reflects on a difficult year for the West African market and on the potential for improvement
2017 has seen some of the most difficult trading conditions that shipowners in the West Africa market have had to face during the three-year downturn, with class deadlines for special surveys often determining whether vessels would face layup.
It is now perhaps widely accepted that quarters one and two of the year represented the low point in offshore support vessel (OSV) rates in the region. As a broker, we are routinely asked when vessel rates might start to increase, and it does appear that this is now, tentatively, starting to happen. Despite recent narrative suggesting that vessels out of layup would see their vessels prioritised for awards, there has been evidence to the contrary, discussed below.
The experience of the platform supply vessel (PSV) and anchor-handling tug/supply (AHTS) vessel fleets in West Africa have been different, the former dominated by chronic oversupply, which has driven rates below opex levels in many cases, whilst the latter (historically, a more fragmented sector anyway) has of course suffered, but not quite to same extent.
Work opportunities for AHTS vessels have presented themselves more readily in 2017. Rig and barge tows and routine tanker liftings have offered short-term contracts, and the larger segment of the AHTS fleet has seen sporadic, at times consistent, utilisation.
UOS (now GH) vessels were engaged with heading control for Eni’s floating production, storage and offloading (FPSO) unit John Agyekum Kufour in Ghana and are now similarly engaged in Cameroon for the installation of Golar’s floating liquefied natural gas (FLNG) unit, Hilli Episeyo. Term contracts have been forthcoming with jack-up programmes in Gabon and DRC with Perenco, Bourbon being the main beneficiary with their Liberty series AHTS vessels, some of which were reactivated from layup.
PSVs continue to suffer with a dearth of deepwater drilling programmes. With a few exceptions, programmes have been limited to one or two wells. Cairn’s five-well campaign with Stena Drillmax in Senegal, supported by Bourbon Clear, Bourbon Sapphire and Bourbon Topaz, and Exxon’s six-month programme in Nigeria that provided work for Tidewater’s Fanning Tide and Davis Tide represent a couple of term contract bright spots.
Siem Offshore’s PSVs Siem Sasha and Siem Louisa were on the cusp of a six to nine-month job when Anadarko terminated the contract for drillship Bollette Dolphin just a few weeks into the drilling programme in Côte d’Ivoire.
Whilst it was welcome to see the return to deepwater drilling of Africa exploration stalwart Ophir Energy after a three-year absence, their single well in Côte d’Ivoire’s block CI-513 took just 22 days to drill. An economical result for Ophir but limited utilisation for the large Solstad Farstad and Swire Pacific Offshore PSVs allocated to the project (Far Starling, Far Sitella and Pacific Heron). The Repsol project on Gabon’s E-13 block and the Petronas project on adjacent block F-14, both with drillship West Capella, and the Statoil well in Tanzania’s Block 2 with Ocean Rig Poseidon are also underwhelming one-well examples.
The aforementioned FLNG Hilli Episeyo, the first of its kind in West Africa, is a reminder that, despite the downturn, there is a steady demand for a core of OSVs.
The FLNG unit will produce from the Sanaga Sud and Ebome fields for Société Nationale des Hydrocarbures and Perenco Cameroon SA. In this case, work has been found for a small armada of boats from towage (Alp Striker) to installation and heading control and the spread to handle the diving for Jumbo Offshore/N-Sea. Lastly, there have been term contracts awarded for supply and crew transfer services.
It is likely that the core of actively trading boats having secured, among others, the charters included in this article will continue to move from charter to charter and will be at the forefront of a gentle recovery in daily hire rates in the year to come.
*Peter Döring is a broker with Mercers Offshore