26
vessels indian Pacific
16
Vessels North-west europe
15
vessels brazil
the market
for offshore
supply vessels
Farstad Shipping is currently among the six largest companies in the market for large
and medium sized supply vessels. About 62% of this world fleet is in North-West
Europe, Brazil and Indian Pacific where our activities are mainly concentrated. We
have a market share measured in the number of vessels of about 7% in these markets.
8
newbuilds
7
Offices
1
vision
THE market in GENER AL
With the current price level of oil, high activity in the offshore markets is to be expected
also in the future. The current oil price stimulates the oil companies to increase their
­search activity in the coming years. In addition, when large discoveries are made, this
­gives a long-term need also for supply services in connection with field development
and production as well as service/maintenance of subsea wells and subsea installations.
The subsea segment shows a positive trend, while the supply vessel segment is still characterized by low tonnage and too much newbuild activity.
The North Sea market was disappointing in 2012. An
Since then, growth has largely taken place in other markets.
improvement depends on a net departure of tonnage to other
This is connected to the fact that petroleum activity has
markets. The Indian Pacific market is also characterized by
increased in other regions, and that activity in these regions
an excess tonnage capacity. The Brazilian market has in
have taken place at greater depths and in more challenging
2012 had a net departure of tonnage mainly due to Petro-
waters. Increased subsea activity has also contributed to
bras temporarily reducing its need for vessels. The markets
this development.
in West Africa and the Mexican Gulf show positive development. In the second half of the year, contracting activity in
Since the beginning of 2000, the supply vessel fleet has
traditional supply tonnage has been declining, although PSV
increased with 950 vessels, which is more than a tripling of
tonnage is still contracted. The order book does not give
the fleet. 820 of these vessels (87 %) have gone to markets
grounds for optimism in the short term with regard to the
outside North-West Europe. Thus only 23.5 % (290 vessels)
development in the PSV market.
of the total fleet is now operating in this market at the beginning of 2013. Especially the growth in the AHTS fleet has
Traditionally, Farstad Shipping has concentrated its activity
been large outside North-West Europe. In the beginning of
in the segment of large and medium sized supply vessels
the 2000’s, there were 61 AHTS in North-West Europe. This
defined as AHTS with an engine power above 10,000 BHP
constituted 41 % of the world fleet. Today, the number is 64,
and PSV with a load capacity larger than 2,000 DWT. Today,
but now the share of the world fleet is down to about 13%.
this segment constitutes about 43% of the total service vessel fleet, equivalent to 1,240 units. The total number of supply vessels worldwide is about 2,900.
We have seen a similar development for the PSV fleet. At the
beginning of the 2000’s, 102 out of 140 PSV (73%) were in
North-West Europe. Despite an increase in the number of
Within the segment large and medium sized supply vessels,
units to 226 units, only 30% of the PSV world fleet is in this
the vessels are distributed over 178 operators. This number
market.
has increased significantly these past few years. The number
of operators with 10 vessels or more (including newbuilds) is
The largest customer group is petroleum companies and
43. These operators control 75 % of the fleet including new-
petroleum service companies which in turn have contracts
builds. At the turn of the year 2012/13, there were a total of
with petroleum companies. The length of contracts and car-
368 large and medium sized supply vessels ordered.
rier category varies both with regard to the type of market
and geographical location. Focus on health, environment,
The most important markets are North-West Europe, Brazil,
increasing both in number and complexity, it is a challenge for
time, the market in North-West Europe was the most impor-
the industry to man the vessel with crews having the neces-
tant market for large and medium sized supply vessels. Back
sary competence and experience.
in 2000, 56% of the fleet was associated with the activity in
North-West Europe.
52
safety and quality has increased significantly. With a fleet
West-Africa, the Mexico Gulf and Indian Pacific. For a long
business review 2012
-
farstad shipping asa
AHTS >10 000 BHP AND PSV >2 000 DWT AND NEWBUILD SORTED BY OWNERS
Number of vessels
(20 largest)
150
120
90
60
30
HAVILA
CBO
SAVEIROS
AHTS > 10000 BHP PER REGION
SIEM OFFSHORE
EZRA HOLDING
ISLAND OFFSHORE
SEACOR
NAM CHEONG
SOLSTAD OFFSHORE
HARVEY
DEEP SEA SUPPLY
DOF
SWIRE
HORNBECK
MÆRSK
FARSTAD SHIPPING
GULF OFFSHORE
BOURBON OFFSHORE
TIDEWATER
EDISON CHOUEST
0
Number of vessel
160
120
80
40
JAN. -13
JAN. -12
JAN. -11
JAN. -10
0
NORTH-WEST
EUROPE
SOUTH/
CENTRAL
AMERICA
INDIAN
PACIFIC/
CHINA
WEST
AFRICA
GULF OF
MEXICO
CANADA
JAN. -09
MEDITER./
BLACK SEA
PSV > 2000 DWT PER REGION
Number of vessel
250
200
150
100
JAN. -13
50
JAN. -12
JAN. -11
JAN. -10
0
NORTH-WEST
EUROPE
GULF OF
MEXICO
SOUTH/
CENTRAL
AMERICA
INDIAN
PACIFIC/
CHINA
WEST
AFRICA
MEDITER./
BLACK SEA
JAN. -09
CANADA
the market
-
in general
53
Newbuild activit y
Market development has led to the construction of larger and more complex vessels, both
with regard to engine capacity, manoeuvrability and mechanized handling equipment.
ROV and other subsea functions have to a greater extent been integrated into the vessels.
The deck area has become larger, and flexible tank solutions have enabled transport of
various types of cargo on the same vessel.
Newer and more modern vessels are more environmentally
The maritime industry in Norway still has a central position in
friendly since fuel consumption is reduced. There is a lot of
the development of new offshore vessels, and Norwegian
focus on working environment on board, among other things
shipyards still have a leading position in the construction of
through efforts to reduce noise. The increased underwater
the more advanced offshore vessels. At the beginning of
activity has also led to building a large number of advanced
2013, 52 supply and subsea vessels were under construc-
construction and subsea vessels.
tion in Norwegian shipyards (49 a year ago). These are distributed on 5 AHTS (2), 28 PSV (44) and 19 (3) subsea vessels.
In 2012, the world fleet of large and medium sized supply
Norwegian shipyards now supply about 12% of the order
vessels increased with 12 AHTS (2.5%) and 63 PSV (9%).
book (13% at the beginning of 2012).
The corresponding numbers for 2011 were 26 AHTS (6%)
and 29 PSV (4%). At the beginning of 2013, the order book
Shipyards in other regions, especially in Asia, have these past
contained 368 (333) units. This corresponds to 30% (29%)
few years increased their focus on offshore vessels. Several
of the existing fleet. Of these, 64 (78) are AHTS and 304
western operators have therefore contracted vessels from
(255) are PSV. About 65 % of the vessels are scheduled to
Asian shipyards. Local operators have also largely contributed
be delivered in 2013. It is not realistic to expect that all these
to the increased contracting activity in this region. These ves-
are delivered in 2013. Only a few of the newbuilds have long-
sels are primarily built for operation in their home markets, but
term employment as per today.
increasingly also for other markets (Africa, Brazil).
The order book for subsea vessels has increased these past
Chinese shipyards have 122 (80) vessels under construction,
few years and is now well above 50 vessels. About half of
and is now the country with the most of this type of orders.
these are so-called ROV support vessels. Especially Norwe-
These are distributed on 12 AHTS (11), 96 PSV (5) and 14
gian shipyards and shipping companies have been active in
(14) subsea vessels. Indian shipyards have 28 (38) vessels
this field in 2012.
under construction. These are distributed on 13 AHTS (15),
NEWBUILDS BY CONSTRUCTION PLACE
Number of vessels
120
NEWBUILDS BY DELIVERY TIME
Number of vessels
80
business review 2012
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farstad shipping asa
VIETNAM
SPAIN
POLAND
INDONESIA
JAPAN
MALAYSIA
KOREA
PSV (304)
SUBSEA (51)
54
SINGAPORE
INDIA
BRAZIL
NORWAY
USA
CHINA
90
AHTS (64)
60
60
40
30
20
0
1Q
13
2Q
13
3Q
13
4Q
13
1Q
14
2Q
14
3Q
14
SUBSEA (51)
4Q
14
1Q
15
2Q
15
3Q
15
4Q
15
0
AHTS>20000 BHP (13)
AHTS<12500 BHP (24)
PSV<4000 DWT (112)
12500 BHP<AHTS<20000 BHP (27)
PSV>4000 DWT (192)
Number of contracted newbuilds at year end 2012
(number of vessels and percentage distribution)
AHTS
PSV
SUBSEa
73%
304 VESSELS
TOTAL
15%
12%
64 VESSELS
50 VESSELS
10 PSV (13) and 5 (10) subsea vessels. Shipyards in other
418
VESSELS
tations for the region, these newbuilds are assumed to remain
Asian countries have a total of 72 (81) vessels under con-
in the Mexican Gulf to a larger degree than what was the case
struction. These are distributed on 16 AHTS (34), 52 PSV
after the Macondo accident in 2010.
(36) and 4 subsea vessels (11). Asian shipyards have a 53%
share of the newbuilds, up from 50 % a year ago.
The contracting activity has declined at Brazilian shipyards.
At Brazilian shipyards, there are 40 (37) vessels of this type
American shipyards have had a significant contracting activ-
under construction. These are distributed on 3 AHTS (4), 36
ity throughout 2012. There are currently 68 (56) vessels
PSV (33) and 1 subsea vessel (0). The vessels are being built
ordered at shipyards in this region. The newbuilds are distrib-
for work on the Brazilian continental shelf and mainly for long-
uted on 8 AHTS (4) and 60 PSV (52). Based on market expec-
term contracts with Petrobras.
the market
-
newbuild activity
55
the INDIAN PACIFIC MARKET
The region was characterised by the continuing modernisation of the OSV fleet with the
less fortunate consequence of supply still out-weighting growing demand. Owners have
continued to face a very competitive market and a further decline in operating margins.
The older AHTS vessels have been the worst affected in terms of time charter rates and
second hand values. Farstad Shipping itself improved its overall trading performance on
the back of its modern market relevant fleet in the region.
Although overall economic growth in the region has slowed
largely due to setbacks suffered in advanced economies, the
region (in particularly South-East Asia) is expected to continue to lead global GDP growth in the short and medium term.
Despite slowdowns in growth in China and India as well as
continued low growth in Japan, the ASEAN nations experienced higher GDP growth than other global regions. Considerate risks still remain based on the recovery or otherwise of
advanced economies and global financial markets. Going forward, the demand for oil and gas is expected to continue to
increase, although developments around the world (gas and
oil finds/developments in the US, East Africa, Brazil, the
­Arctic as well as local flag preferences and territorial ­disputes
in the South China Sea) all raise questions about which areas
will be the most attractive towards new oil and gas expenditures.
South East Market alone built 41 vessels (34 AHTS) in 2012.
The active fleet of OSVs (AHTS vessels over 10,000 BHP and
PSV over 2,000 DWT) in the region rose slightly to 258 vessels in the 2012. There was another 187 OSVs (49 AHTS
and 138 PSVs) on the building blocks (including options)
therefore the abatement of oversupply will rely on the continued absorption of these vessels in to other markets (the
­markets of the South Atlantic have to date been the main
relief valve). In the second half of the year it was evident that
OSV operators were turning to South-East Asia for better
employment prospects which added uncertainty as to when
the market will bottom out from the broader ongoing decline
in charter rates.
56
business review 2012
-
farstad shipping asa
OFFSHORE SERVICE VESSELS IN INDIAN PACIFIC SORTED BY OWNERS
OFFSHORE SERVICE VESSELS
Number of vessels
AHTS > 10 000 BHP and PSV > 2 000 DWT (20 largest)
Number of vessels
25
200
20
150
15
100
10
50
5
0
HUAWEI
CH OFFSHORE
GAZFLOT
BOURBON OFFSHORE
JAYA OFFSHORE
SHIPPING CORP INDIA
DOF
JASA MERIN
GREAT EASTERN
MÆRSK
SINOPEC
INTRA OIL
GREATSHIP
GULF
0
FEMCO
2012
COSL
2011
SWIRE
2010
TIDEWATER
PSV
AHTS
2009
FARSTAD
2008
EZRA HOLDINGS
2007
PSV > 2000 DWT (90)
AHTS > 10000 BHP (165)
the market
-
the indian pacific market
57
Overall rig utilisation improved from 79% in 2011 to almost
In 2012, Farstad Shipping won the tender to assist Shell
82% last year with the improvement being mainly in the jack-up
Development (Australia), providing short and long term OSV
segment which numbered 132 of 192 rigs in total at year end.
services to the Prelude and Palta projects including contracts
for two of the newbuild PSVs from delivery. The first of these
Farstad’s Shipping has 26 vessels in the region (16 AHTS and
vessels, the Far Skimmer, has been met with high level of sat-
10 PSVs) which continue to be highly suitable to market
isfaction from our clients. Contracts such as these demon-
requirements. The fleet continues to be modernised through
strate Farstad Shipping’s commitment to long term charter-
the addition of modern vessels and the sale of older tonnage.
ing strategy of large advance vessels.
2012 saw sale of the 1980’s built AHTS the Lady Cynthia,
Lady Gerda, Lady Audrey and Lady Valisia. It also saw the
The Farstad Shipping Offshore Simulation Centre in Perth
arrival the AHTS Far Sabre (2008) and the newbuild PSV Far
continues to grow from strength to strength. The centre is the
Skimmer. In 2013 we have taken delivery of one sister new-
first offshore specific simulation centre in Australia and the
build, PSV Far Sitella. In May we will take delivery of another
largest integrated centre of its kind in the world. As an inte-
sister newbuild, PSV Far Starling. Both newbuilds have been
gral part of the Group, the centre plays a key role in building
constructed at Vard shipyard in Vietnam. These develop-
staff competencies and total team performance.
ments continue to underpin Farstad Shipping’s commitment
to being a leading OSV supplier of larger and more advanced
vessels in this region.
INDICATOR MODEL FOR ASIA: PROJECTED VS. ACTUAL REAL GDP GROWTH
In percent; quarter-over-quarter annualized rate
Actual growth rate (PPP weighted)
Confidence interval (1 standard deviation)
Model forecast
WEO forecast
12
9
6
3
0
-3
2012:03
2012:01
2011:03
2011:01
2010:03
2010:01
2009:03
2009:01
2008:03
2008:01
2007:03
2007:01
2006:03
2006:01
2005:03
2005:01
-6
Sources: IMF staff calculations
58
business review 2012
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farstad shipping asa
the market
-
the indian pacific market
59
THE BR A ZILIAN MARKET
2012 was a challenging year for the Brazilian economy, the GDP growth was just 0,9 %,
making the per capita income stable in 2012. It was the worse result since the 2008 international economic crisis, however, the expectations for 2013 are positive, and a growth
from 3% to 3,2% in terms of GDP is expected.
Petrobras, has announced the 2013-2017 business and
Petrobras has announced that they will give emphasis to the
management plans, involving total investments of USD
installation of new platforms, with eleven new production
236.7 billion over the next five years. The 2013-2017
units expected to come on stream between 2013 and 2015.
investment plans are still some of the world’s largest corpo-
Crude-oil output is expected to reach 2.75 million barrels a
rate spending plans, and the E & P segment will receive nearly
day by 2017. By 2020, crude-oil output is expected to hit 4.2
two-thirds of it (USD 147.5 billion), which represents an
million barrels a day. This means a significant increase as the
increase of the E&P segment in the total budget of 12%
2012 average domestic crude-oil production was 1.98 mil-
(approximately USD 16 billion) compared to the previous
lion barrels a day (short of the 2.02 million barrel-per-day tar-
business plan (2012-2016). The increase is mainly driven by
get), and expects this output to keep stable in 2013.
projects scheduled for 2017. Exploration will account for
60
16% of total spending, while 73% is related to production
In 2012 Petrobras received six additional ultra-deep water
development. Petrobras plans to have positive cash flow in
drilling rigs. The company remains one of the world’s largest
2015 under the new business plan. The budgeting for the
charterer of offshore drilling rigs, with a total of 74 units
investment plan was based on Brent crude at around USD
under term charter. By the end of 2013, Petrobras shall have
100.00 a barrel over the 2013-2017 period.
a fleet of approximately 40 ultra-deep water drilling rigs.
business review 2012
-
farstad shipping asa
Petrobras ended 2012 with 57 exploratory wells drilled, nine
Another very important player in the IOCs market in Brazil is
less than the 66 originally planned. But, according to the com-
Statoil. The company is evaluating the development of the
pany, this is still a very good result, if compared with 2011,
“Peregrino Sul” field, and will probably confirm its strong posi-
when 54 wells were drilled. ANP (Brazilian National Petroleum
tion in Brazil by expanding its oil production in the next years.
Agency) estimates that not less than 80 offshore exploration
“Peregrino Sul” is an extension of the “Peregrino Field”. The
wells will be drilled during 2013 in Brazil, from which approx.
company has reached record levels of 90 000 barrels per day
50% will be drilled in Santos Basin (pre-salt area).
at “Peregrino Field” in 2012, making Brazil the largest Statoil
operating area outside the North Sea.
There was an increase in the activities of the International Oil
Companies (IOC’s) and the Brazilian Private Oil Companies,
By the end of 2012 there were 429 offshore support vessels
which ended 2012 with ten drilling units doing services for
working in Brazilian waters (196 of Brazilian flag and 233 of
these companies.
international flags). Approximately 87% of this fleet is under
long term charter to Petrobras, 9% is working for the IOC’s
Shell, one of the main players in this market, has one DP drill-
and private companies and the remaining vessels are trading
ship and one anchored semi-submersible under a three-year
the spot market. Regarding Petrobras’ OSV fleet, 215 vessels
charter. To support these two drilling units, and also its two
are PSVs with a DWT over 3000t and AHTS of 10 000 BHP or
production fields, Shell has under term charter ten offshore
greater. The IOC’s and private oil companies market (36 ves-
supply vessels. Farstad had the PSV Far Swift working for
sels) is divided among eight owners.
Shell in the first quarter of 2012.
Farstad Shipping ended 2012 with a fleet of thirteen vessels
Shell has shown interest in further investments in Brazil
trading in the Brazilian market, being twelve under long term
through the 11th ANP block auction, that is scheduled to May
contracts with Petrobras (10 AHTSs, 1 PSV and 1 subsea),
2013.
and one PSV working for an Australian oil company named
Karoon. It is expected that the number of Farstad vessels
trading the Brazilian market will increase in 2013.
OFFSHORE SERVICE VESSELS BRAZIL – SORTED BY OWNERS
AHTS > 10 000 BHP and PSV > 2 000 DWT (20 largest)
OFFSHORE SERVICE VESSELS
Number of vessels
Number of vessels
40
200
35
30
150
25
20
100
15
10
50
5
VARUN
SEACOR
HAVILA
BOURBON OFFSHORE
OLYMPIC
AUGUSTA
FINARGE
SIEM OFFSHORE
E.R.OFFSHORE
SOLSTAD
HORNBECK
ULTRAPETROL
DEEP SEA SUPPLY
FARSTAD
SAVEIROS
TIDEWATER
DOF
CBO
MÆRSK
EDISON CHOUEST
0
0
2007 2008 2009 2010 2011 2012
PSV
AHTS
PSV > 2000 DWT
AHTS > 10000 BHK
the market
-
the brazilian market
61
62
business review 2012
-
farstad shipping asa
THE North-west EUROPE AN MArket
In 2012, 21.3 % of the revenue in Farstad Shipping came from this region (21.9 % in 2011).
This is equivalent to a revenue of NOK 792.3 million (NOK 792.7 m
­ illion). The activity
in the region shows continued growth. The demand for supply vessels increased by 6.1 %
(3.5 % in 2011) in 2012, and ended at a year average of 294 (277) boat-years.
The average demand per quarter was: 1st quarter 280 boat-
The demand is traditionally split between term and spot con-
years (262 in the 1st quarter of 2011), 2nd quarter 299 boat-
tracts. Of the total demand in 2012, 76% were term con-
years (279), 3rd quarter 305 boat-years (290), and 4th quar-
tracts, which is at the same level as in 2011. An average of
ter 291 boat years (277). In the same period, the average
222 vessels were on this type of contracts in 2012, com-
number of supply vessels in North-West Europe increased by
pared to 211 in 2011. The tighter the market is, the greater
about 7% (4%). Thus the average utilization rate was only
the part of the fleet is expected to be on term contracts.
90% (91%). For each quarter, the utilization rate was: 1st
quarter 90% (86%), 2nd quarter 92% (94%), 3rd quarter
The largest part of term contracts (about 63%) are associ-
90%, (96%), and 4th quarter 87.5% (90.5%). Although the
ated with fields in production. In 2012, an average of 139
beginning of 2012 showed a positive trend, the inflow of ton-
boat-years was related to this type of activity (134 in 2011).
nage gradually became too large to be able to maintain a rea-
Forecasts for the activity in 2013 do not indicate growth in
sonable market balance despite the increase in activity.
production-related activity. The demand connected to drill-
Especially, the increase in the number of PSV was detri­
ing activity was in average 34 boat-years (23). The demand
mental to the market balance. As shown in the figures on
connected to this type of activity is expected to increase
page 65, rate development in 2012 became significantly
­significantly also in 2013. The activity connected to the
worse than for the same period last year.
­development of fields and infrastructure (pipelines, pumping
the market
-
the north - west european market
63
stations and buoys) represented a demand of 16 boat-years
this region. In that case, this implies that the fleet in the
in 2012 (27). A further decline in activity is expected in this
region must be reduced by 20 units in order to see a signifi-
area in 2013. Another 33 (27) service vessels on average
cant improvement in the market situation. Statoil, BP, Shell,
have been engaged in activities related to subsea, cabling
ConocoPhillips and Peterson SBS are the operators with the
and salvage/coastguard in 2012. The same level is expected
most supply vessels on term contracts. Gulf Offshore, DOF,
for 2013.
­Møkster, Havila Shipping, Island Offshore and Solstad are
the shipping companies which together with Farstad Ship-
According to research company IHS, only a minimal increase
is expected in 2013 of the total demand for supply vessels in
64
business review 2012
-
farstad shipping asa
ping have the largest number of term contracts.
OFFSHORE SERVICE VESSELS NORTH-WEST EUROPE – SORTED BY OWNERS
AHTS > 10 000 BHP and PSV > 2 000 DWT (20 largest)
OFFSHORE SERVICE VESSELS
Number of vessels
Number of vessels
25
250
20
200
15
150
10
100
5
50
0
K-LINE
2007
ØSTENSJØ
VROON
SEALION
TROMS OFFSHORE
SIEM OFFSHORE
ATLANTIC OFFSHORE
OLYMPIC
BOURBON OFFSHORE
EIDESVIK
MÆRSK
REM OFFSHORE
VIKING
SOLSTAD
MØKSTER
ISLAND OFFSHORE
DOF
FARSTAD
GULF
HAVILA
0
2008
2009
2010
2011
2012
PSV
AHTS
PSV > 2000 DWT (226)
AHTS > 10000 BHP (64)
NORTH SEA – AVERAGE WEEKLY SPOT RATES
AHTS 16,000+ BHP
GBP ‘000
NORTH SEA – AVERAGE WEEKLY SPOT RATES
PSV 900+ BHP
GBP ‘000
150
30
120
25
20
90
15
60
10
30
1Q
2Q
3Q
4Q
1Q
2Q
3Q
0
4Q
2013
2012
2011
2013
2012
2011
5
0
Source: Platou
Source: Platou
NORTH-WEST EUROPE FLEET SUPPLY - DEMAND - UTILISATION
Boat-year
%
50
58
0
51
TERM DEMAND
SPOT DEMAND
TOTAL UTILISATION
TERM UTILISATION
DEC. 12
E-DEC. 13
65
E-JUN. 13
100
JUN. 12
72
DEC. 11
150
JUN. 11
79
DEC. 10
200
JUN. 10
86
JAN. 10
250
JUL. 09
93
JAN. 09
300
JUL. 08
100
JAN. 08
350
FLEET SIZE
the market
-
the north - west european market
65