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Offshore slump may drag on for up to four years: Rainbow Heavy Industries

Offshore slump may drag on for up to four years: Rainbow Heavy Industries
The offshore marine market downturn may persist for up to four years, as oil majors stepped back from committing to exploration expenditures amid oil price volatility and the OSV supply glut lingers on, according to China’s Jiangsu Rainbow Heavy Industries (RHI).

“According to latest consensus gathered, this downturn looks like it will last another three to four years, and next year could be worse,” said Roy Yap, assistant president of RHI.

Yap told Seatrade Maritime News that with global oil prices going through a volatile period, it has been difficult for oil majors to find a stable oil price as a threshold to do their budgeting. At the same time, some 180-200 OSVs are on order and scheduled for deliveries, putting pressure on the already quiet OSV market.

“We are a OSV builder and we’ve got four PSVs under construction at the moment,” Yap said, but admitted that the buyer has already requested to reschedule the delivery dates due to the lack of demand.

Earlier this year, Nantong Rainbow Offshore & Engineering Equipments Co (ROC), subsidiary of RHI, secured an order from Dutch firm Royal IHC to build a 4,000-tonne heavylift crane barge, to mainly serve the marine heavy lifting and wind farm installation and maintenance in the European market.

“We are diversifying into non-oil related sectors such as wind turbines installation vessels, IMR vessels, dive support vessels, cable laying vessels – all of which offer better margins,” Yap shared, adding that the shipbuilder has participated in those tenders.

ROC is also venturing into building specialised and high-specification vessels that can carry out exotic welding and specialised coating.

“The liftboat market is seeing a lot of enquiries now but this segment will also soon be overbuilt, perhaps within the next one to two years’ time,” Yap noted.

In the more common AHTS vessel and PSV markets, shipyards especially those in China have resorted to underquoting to win orders – a loss-making deal in a bid to keep operations going and building up an increasingly hostile business environment, according to Yap.

The offshore marine sector has been hit hard since oil prices nosedived during the final quarter of last year, silencing offshore exploration activities and dragging down charter rates for oil rigs and OSVs.