Q&A: Offshore market in Dubai

In 2023, you said at both Seatrade Maritime Middle East and Saudi Maritime and Logistics Conference that the offshore supply vessel (OSV) market was on the cusp of a supercycle. Has the market moved as you expected it would?

It is really nice to be able to say, for once, that “I told you so”... and be right!

Yes, we are in the supercycle now. There was a steady increase in rates and utilisation throughout 2023 and a big bump in regional occupancy/utilisation at the end of 2023, going into 2024, as per data from my colleagues at the Westwood Global Energy Group. Anchor-handling tug supply vessels (AHTSs) were up to 94% and platform supply vessels (PSVs) were up to 89%, which is very healthy indeed.

While PSVs are expected to stabilise at this level, AHTSs could still see better utilisation. Rates have seen a similar movement and have also risen, with AHTSs jumping up 24% and PSVs up by about 16%. These are positive signs as the market is not oversupplied at this time and these rates and utilisation percentages look set to be stable at these levels, with an upside potential on rates. Further, while there has been some newbuilding, it is nowhere near the speculative levels that we saw 15 years ago.

Offshore activities in the Middle East are driven by national oil companies. What are current NOC investment levels like in the offshore sector, and how healthy is the pipeline of projects?

The UAE and Qatar are well on track to meet their expansion targets by 2027-2030. The UAE is still expanding capacity from 4 mbpd to 5 mbpd, and Qatar is expanding both its oil and gas fields. In terms of gas, Qatar is going from 77 mtpa to 142 mtpa. The only disappointment is the cancellation or rather suspension of Aramco’s plans to expand capacity to 13 mbpd from the current maximum sustainable capacity of 12 mbpd. This has led to a suspension of 22 drilling rigs, as well as the cancellation of approximately 35 supporting OSVs. There may be another few rigs being suspended - and their support vessels as well - over the next few months. However, Saudi is still utilising well over 350 OSVs at the moment and their inspection, maintenance and repair (IMR) activity continues.

At the CERA conference in Houston in March this year, Aramco CEO Amin Nasser said: “We should abandon the fantasy of phasing out oil and gas, and instead invest in them adequately, reflecting realistic demand assumptions.” He added that oil and gas will linger in our energy mix far longer than end-of-decade peak predictions and the current transition strategy is not workable. This clearly demonstrates the Saudi Arabian commitment and belief in the oil and gas sector.

Continue reading the full article here

This article is part of the Seatrade Maritime Middle East Report 2024