Sponsored By

Lack of OSVs may delay Middle East offshore projectsLack of OSVs may delay Middle East offshore projects

Demand for offshore support vessels is rising globally, but the orderbook is bare, which could lead to projects being delayed due to lack of ships.

Gary Howard, Middle East correspondent

May 22, 2023

3 Min Read
The OSV supply and demand panel at SMLME23
Informa Markets

Players in the offshore marine market in the Middle East were upbeat at Seatrade Maritime Middle East 2023 Offshore Marine and Workboats Forum, as shipowners and operators benefit from tight vessel supply and demand and rising rates. But looking ahead, the expert speakers noted a lack of new tonnage entering the market and a number of hurdles to addressing the situation.

After a prolonged period – around seven years – of very low shipbuilding, new orders are the only real option left open to owners and operators, panellists agreed, but financing, logistics and yard space challenges apply. A lack of vessels could have real impacts in the region, with multiple speakers warning that they foresee delays to offshore project development without new tonnage to serve demand.

From the shipyard side, Lars Seistrup, Managing Director, Albwardy Damen said operators are dragging their feet and he expects yard slots to be filled by the end of 2023.

“You have to take the supply chain into the into the equation as well, that's still not back to normal, pre-pandemic levels. At the moment, in my yard, I'm not the one who decides how long it takes me to build a vessel.”

A standard tug build could take four months, said Seistrup, but supply chain delays mean it can take up to 16 months. “Tell me when I can get the main propulsion, then I can tell you when I can deliver,” he said.

Related:Empowerment, education, knowledge, and 'doing your best' - Women in Maritime Day

Explaining why the orders are not yet flowing, Martin Helweg, CEO, P&O Maritime Logistics, said different types of companies had been burned in various ways by the previous offshore downturn, leaving some holding debt, some with weak balance sheets, and others that simply lost a lot of money in the offshore marine market.

“I think there's structural issues on the ownership side, where the owners have had bad experiences, and they want to see better times before they start throwing money into the market.

“We are looking at it every day but the dynamics of the market, financially, are not there. We're not seeing a return that our shareholders are satisfied with, and I would argue our shareholders are fairly lenient when it comes to returns. I think for most people, the price, the rates, are not quite there yet,” said Helweg.

While there may appear to be some pent up PSV capacity in cold lay-up, those vessels may not ever return to the market. “We have seen a lot of laid up PSVs, but I have to be honest, most of them I believe are going to a scrapyard but the owners cannot afford to scrap them because then they have to write them off in their books,” said Seistrup.

Related:LEO providers disrupting maritime satellite communications giants

Session moderator Fazel Fazelbhoy, Chief Executive Officer, Synergy Offshore asked why no market player was taking the leap to invest in newbuilds with signs of such a strong market on the horizon.

“We could do it,” said Helweg. "But I'm not going to my board at this point. They will look at me and say, ‘God, Martin, for once we're making a little bit of a return, and now you want to put more capital into it?”

About the Author

Gary Howard

Middle East correspondent

Gary Howard is the Middle East Correspondent for Seatrade Maritime News and has written for Seatrade Cruise, Seatrade Maritime Review and was News Editor at Lloyd’s List. Gary’s maritime career started after catching the shipping bug during a research assignment for the offshore industry. Working out of Seatrade's head office in the UK, he also produces and contributes to conference programmes for Seatrade events including CMA Shipping, Seatrade Maritime Logistics Middle East and Marintec. 

Gary’s favourite topics within the maritime industry are decarbonisation and wind-assisted propulsion; he particularly enjoys reporting from industry events.

Conferences & Webinars

Gary Howard regularly moderates at international maritime events. Below you’ll find a list of selected past conferences and webinars.

Get the latest maritime news, analysis and more delivered to your inbox
Join 12,000+ members of the maritime community

You May Also Like