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INSA sees huge potential for cabotage OSVs in Indonesia

Investment in Indonesia's offshore marine services is set to grow between 50% and 100% a year, the Indonesian National Shipowners Association (INSA) was quoted as saying in local media.

With at least 18 new oil and gas blocks set for exploration in the coming years, INSA offshore marine division head Nova Mugijanto told local media that 15 of the new blocks would need offshore drilling and high-sea operations, which would result in increased demand for offshore support vessels.

“Business players working in this sector will enjoy growth because the new blocks will create opportunities. This will also attract new investors to enter the offshore marine industry,” Nova said. “It is because we have seen significant advances in offshore shipping service performance over the past eight years, since we implemented the cabotage principle,” he said.

According to data from INSA, investment in offshore support vessels, such as Anchor Handling Tug (AHT) and Anchor Handling Tug Supply (AHTS), grew from nil in 2005 to $1.25bn by the end of June this year, comprising 45 AHT and 87 AHTS vessels, respectively.

In addition, the number of management and owning companies that deal with offshore marine operations rose from none in 2005 to 130 as of today.

Nova noted however, that the offshore sector still faced challenges including the short-term nature of contracts in this field and limited maintenance facilities in eastern Indonesia.

Based on the data, each firm secured between a one-to-three-year contract, which slowed down the return on investment and discouraged firms from bigger investments. In a few cases, companies only secured six-month contracts.

“We need a long-term contract to make business more sustainable because it needs a lot of investment,” he added.

He also said that maintenance facilities and services, which were only available in western and central Indonesia, meant the maintenance of vessels that operated in the east suffered.

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