Consolidation and scrapping will see the offshore accommodation vessel market return to balance over the next couple of years, a leading player suggests.
Although the North Sea market has been severely affected by the downturn and is likely to remain difficult and volatile in the near-term, Prosafe said international markets – including Brazil and Mexico – will be increasingly important when activity recovers.
Prosafe noted that the supply side has experienced sizable growth from 2012 to 2016 with the entry of a number of accommodation support vessels. However, the growth has been lower than earlier anticipated because of the extended downcycle, leading to both scrapping of existing vessels and delays in completion of newbuilds.
“More scrapping is anticipated, as well as further consolidation,” said the company, which anticipates that, by 2020 the market will have rebalanced and there will be “adequate supply in most or all regions.”
Reductions in the oil majors' spending plans have led to a significant reduction in demand for oilfield services, including accommodation support vessels. Prosafe said 2017 saw a continued slowdown in contracting activity with the gross value of charter contracts, including clients’ extension options, reducing by approximately 68.5%.
“Although macro indicators continue to show positive development, this is yet to materialise in activity pick-up in the offshore accommodation market,” said the company. “Consequently, Prosafe continues to anticipate a volatile market for the foreseeable future. Positioning for upcoming tenders remains a near-term priority.
The accommodation support segment is late cyclical by nature. Historically, a majority of the work has been related to existing producing fields, whereas the remainder has been related to hook-up and commissioning of new developments. Accommodation support vessels are also used during decommissioning.