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Middle East bucking downward trend in offshore supply vessel market

Middle East bucking downward trend in offshore supply vessel market
The Middle East is the only region to buck the downward trend in offshore supply vessels (OSV) over the last two years, according to IHS Markit analysis.

Demand in the region has remained steadfast since the decline in the price of oil in 2014 and outpaced South East Asia, the Gulf of Mexico and the North Sea.

Demand for OSV in the Middle East was 2.6% higher in December 2016 than in January of 2016 – an increase from an average of 270 vessels secured on term charters at the start of the year to almost 278 during the final month.

“The increase may appear modest at first, but all other regions reported significant drops in activity across 2016,” said David Hunter, senior marine analyst at IHS Markit.

West Africa saw a 30% reduction, the US side of the Gulf declined 31% decline and Mexico lost 53% of term work during last year, according to data.

New short to medium term opportunities are expected to open in the Middle East offshore oil and gas market in the next 24 months.

According to the Global Offshore Supply Vessel Forecast issued by Petrodata, OSV demand in the region will remain firm and stable given the pipeline of drilling and field development projects, with an anticipated growth for OSV term demand from 118 vessels in the first quarter of 2016 to 145 vessels in the fourth quarter of 2018.

“The Middle East offered some of the only bright spots and growth opportunities in the OSV market in 2016,” said David Manuel, senior marine specialist from IHS Markit.

“Spending levels in the Middle East have been the least affected by the oil price slump because of relatively low break-even prices, many large ongoing projects, and the dominance of national oil companies, which have the long-standing pledge to keep production capacity in line with their market share.”