North Sea area report
Eidesvik acquisition points to strong North Sea summer
The North Sea spot market looks set to be busy from a vessel owner’s perspective this summer, if the recent acquisition of a supply vessel by Eidesvik is anything to go by
N
orwegian offshore support vessel (OSV) owner Eidesvik has shelled out US$24 million to acquire Malaviya
is not uncommon for supply vessels to change hands, it is something of a change of pace to see the buyer state that it has made the purchase to take advantage of favourable conditions from a vessel owner’s perspective in the North Sea spot market this summer.
Nineteen – a 2004-built PSV of UT755L design – which it intends to trade specifically on the North Sea spot market. While it
In a statement to the Norwegian Stock
Exchange, Eidesvik said: “The supply vessel will be used in the spot market in the North Sea for the summer season 2012. We expect this market to be strong this summer. When the summer season is over, the company will consider in which region the vessel will be traded further.”
The significance of this statement is the faith being shown in the North Sea spot market, which in
recent years has
been an extremely challenging environment for
vessel owners and managers, due to volatile conditions which change quickly and constantly.
Figures from market intelligence experts
IHS Petrodata, however, show that overall North Sea utilisation is expected to remain above 90 per cent for much of the rest of 2012, which should provide market conditions to
favour vessel owners over chartering
companies in some cases. Eidesvik’s newly acquired PSV – which was renamed Viking Nereus ahead of joining the spot market in May – should therefore be able to take advantage of these conditions by pulling in satisfactory day rates. According to IHS, fixtures in April for mid- to large-size PSVs were being recorded at an average of approximately £20,000 (US$32, 300) per day, rates which look set to improve
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as heightened activity during the summer on the rig-move and cargo-run front keeps demand for OSVs high.
Eidesvik’s purchase may well turn out to be a shrewd one, although it remains to be seen how the vessel will be traded come November/December, when activity on the spot market traditionally quietens down. Ironically, at the same time as acquiring a new PSV to trade in the North Sea, Eidesvik has opted to sell two of its PSVs currently operating on long-term deals in Brazil. An undisclosed buyer has acquired Viking Surf and Viking Thaumas – built in 2002 and 2005 respectively – for US$64 million. The reason for the sale, according to Eidesvik, is that the two vessels were not earning as much as expected despite the fact that they were engaged in multi-year contracts for state- owned oil giant Petrobras. Virtually all of the major vessel owners in the North Sea have been bidding for contracts with Petrobras in Brazil in recent years, thanks to the length of contract on offer (usually four years firm plus four years of options). Therefore, it is something of a surprise to see a vessel owner actively turn its back on a long-term deal in Brazil which it already had in place, instead opting to take on a new vessel to trade the OSV spot market a little closer to home.
Crewing and regulatory issues have long been a sufferance for vessel owners in terms of getting their tonnage into the
South American country in the first place, and this move by Eidesvik may perhaps encourage more of the major players to look closer at the North Sea for work as opposed to bidding for all the Petrobras work on offer. Farstad Shipping is another example of a vessel owner which has had to consider the fortunes of one of its vessels in Brazil. The Norway-based OSV owner has opted to mobilise a 2008-built anchor-handling tug/ supply (AHTS) vessel back to the North Sea from South America. The vessel had been trading the spot market in Brazil, but the owner has now brought it back to trade the spot market from the UK, as it seeks to secure more lucrative short-term contracts for the UT712L design. It should be noted, however, that Farstad still has a number of vessels operating for Petrobras in Brazil on long-term deals, which of course will be providing a profitable and consistent income for the owner.
Striking that balance between the two regions could therefore be key for Europe- based owners in the future – picking up the long-term deals in Brazil when the rates and conditions are favourable, and picking up short-term contracts closer to home when market conditions allow – and, in Eidesvik’s case, going as far as to acquire a vessel specifically to trade one of the markets
in anticipation of a particularly busy season. OSJ
Malaviya Nineteen as it was – the vessel is now owned by Eidesvik Offshore Support Journal I June 2012 I 23
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