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Gulf offshore fleet forges on in difficult times

Gulf offshore fleet forges on in difficult times
Although suffering a downturn like the rest of the global offshore industry, the Gulf OSV sector, under the protective wing of some of the world’s biggest NOCs, is grinding out a difficult year.

Seatrade Maritime News spoke to Fazel Fazelbhoy, ceo of consultancy Synergy Offshore, who led Topaz Energy and Marine’s Middle East and Caspian Sea marine and engineering fleet of 100 OSVs until 2011, to learn more of his views on the current state of the industry in the region, and also his global take.

Fazelbhoy estimates that the global OSV industry faces outstanding bond repayments of $6.3bn in the next five years. About $250m is from the Middle East (Polarcus), prior to any restructuring to be undertaken there. Topaz, Zakher and Stanford Marine bring regional debt into the $750m range.

“This would need to be added to the figure of $6.3bn, taking the total global OSV company bond debt to about $7.0bn, with Middle East bond debt being in the $1.0bn range,” he said.     

Topaz announced last week a net profit of $20.8m before charges, a fall of 63% on the 2014 figure, but a profit nonetheless. Topaz operates 21 vessels in Azerbaijan today and won a new contract last month from BP to operate 14 vessels there for at least another five years.

Elsewhere in the Gulf region, he says Damen Shipyards Sharjah is going to remain busy due to the need for mandatory repair and maintenance work. “No one is doing any elective work these days and it is very unlikely that they will get much newbuild work over the next year or so,” he said.

Gulf Marine Services signed a contract with Abu Dhabi Ports for lease of a new yard facility at Port Zayed in Abu Dhabi last year. It claims to be the largest provider of self-propelled, self-elevating support vessels (SESVs) in the world. It announced adjusted net profits up 4% to $84.9m March 22.

“GMS has a pretty closed model. They do no third-party building so remain busy fabricating the legs and doing the ancillary equipment installation on the deck that they have fabricated in China. I guess that accommodation and inspection maintenance and repair work will be the first requirements in Iran, so things could look good for GMS and their accommodation/workover liftboats,” he said.

Both Tidewater and Bourbon are active in the Middle East, with Tidewater having more than 15 vessels at Aramco and Bourbon also active in the UAE, Qatar and Saudi Arabia. “Generally, the international players are faring on par with the local heavyweights and now beginning to see utilisation drop as the surge of low bidding South-East Asian vessels hits Gulf shores,” he said.

Singaporean owner Miclyn Express Offshore (MEO) has been active in the Gulf for over 10 years. “They have over 40 vessels here, many of them crew boats. Aramco are their biggest regional client, while they are also active in Qatar-UAE. “MEO is managing well, with utilisation in the upper 80's.

“Qatar’s Halul Offshore has several advantages, as a 100% local Qatari company, but they too are facing stiff competition from the low-bidding Singaporean contractors. Utilisation would probably be in the 75-85% range,” he said.

The strategy of the NOCs continues to push for renegotiation of existing contract rates, not awarding options, but re-tendering so as to get the lowest prices. “They are still opting for relatively short-term contracts, thereby implying that they believe rates may [keep falling]. There is a major oversupply issue here and there is no pressure on the NOCs in terms of finding replacement vessels.”