Nam Cheong favours outlook for PSVs

“In the 3,000-4,000 dwt PSV segment, there has been a lot of supply but it amazes us that no matter how many of them are being churned out, they will all get absorbed and charter rates are also maintaining,” said Leong Seng Keat, group ceo of Nam Cheong.

The firm demand for PSVs was noted by Leong despite a strong orderbook backlog amounting to some 30% of the vessel type’s current operating capacity. “Going forward, PSVs will surprise the industry with their ability to get absorbed even at this high rate of supply,” Leong believed.

He added that Nam Cheong will continue to build PSVs even amid no signs of a reduction in the overall supply of the vessel type.

Nam Cheong’s build-to-stock business model saw the company with five unsold PSVs as at 31 March 2014. Eight were sold and five of them have been delivered to the new owners so far this year.

Leong further commented that the outlook for the OSV sector, especially in Malaysia’s shallow waters, is bright due to strong activities coming from national oil firm Petronas.

Malaysia’s Petronas has pledged $14bn alone on enhanced oil recovery projects and will rejuvenate mature assets and develop marginal fields. Malaysia is also starting its aggressive oil exploration with the government lowering petroleum income tax to 35% from 38%, and seeking $43bn gross income to the state from Petronas by 2020.

The increased investments by oil majors will also drive demand for anchor handling tug supply (AHTS) vessels for jobs in shallow waters, according to Leong. He said that demand for small-sized AHTS vessels remains firm as offshore service prodivers replace older vessels with new and higher specification vessels.

As at 31 March 2014, Nam Cheong’s orderbook stood at 23 vessels worth MYR1.4bn ($434.2m) for recognition up to 2016. The 23 vessels comprise of three 5,150 bhp AHTS vessels, three 6,000 bhp AHTS vessels, two 3,000 dwt PSVs, four 4,500 dwt PSVs, one 5,000 dwt PSVs, eight ERRV (emergency response and rescue vessel), one accommodation work barge, and one workboat.

“With oil majors focusing more on production rather than exploration, they will need more maintenance and repair work barges across a large geographical area – West Africa, Middle East, Southeast Asia and Australia. Workboats are also very well received in Malaysia, West Africa and Mexico,” Leong said.