Mosva: Good times await offshore support vessel segment

MARCH 4, 2019 BUSINESS



KUALA LUMPUR: As the activities in the oil and gas (O&G) industry pick up pace on the back of rising benchmark Brent Crude oil price which has hit US$66 per barrel, the offshore support vessel (OSV) segment is upbeat of more tender offers, especially from Petronas.

In the dark days of oil price in 2016, when the price slumped to US$28 per barrel, barely 100 vessels were chartered.

With the stabilisation of the oil price at the current US$66 per barrel, the Malaysian OSV Owners’ Association (Mosva) foresees full utilisation of the industry’s capacity of 300 vessels, said its president, Mohamed Safwan Othman.

“Stability in oil price creates stable demand, be it from the national oil company or other oil majors in Malaysia such as ExxonMobil, Shell and Repsol,” he told Bernama.

Petronas, for instance, has kicked off maintenance work, hook-up commissioning drilling and exploration, disclosing that there would be about 20 greenfield and 30 brownfield projects between 2018 to 2020 that would have the potential for future oil projects.

Mohamed Safwan said for the past three years, since end-2014, Petronas had stopped all of its activities except for production, which resulted in a sharp decline in OSVs needed, culminating in only 170 vessels being occupied from 300 previously.

“Since July 2018, when the oil price reached US$70 per barrel, we saw the activities picking up. And imagine for 20 greenfield projects, they would require up to three OSVs, it is a simple calculation on how much vessels are needed, especially for three years until 2020,” he added.

According to Mosva, under the OSVs requirement for 2019 to 2021, Petronas has contracted out 107 vessels under the Integrated Logistic Control Tower packages.

“The most widely required OSVs for development projects are

• anchor handling tug supply vessel, 
• platform supply vessel, 
• straight supply vessel and 
• fast crew boat,” he said.

Mosva has 24 members in the country, with accumulated tonnage of 540,000 dead weight tonnage (DWT), representing 90 per cent of Malaysian-flagged OSVs.

Asked about the challenges ahead, Mohamed Safwan said the OSVs owners were facing issues with low charter rate, which could go as low as 50 per cent of its operating expenses.

“Whereas for Petronas, its profit margin is US$35 per barrel and for them to embark on the exploration activities, they require oil price to be at US$55 per barrel. But we are actively engaging with Petronas on this matter,” he said.

Meanwhile, the total Malaysian fleet as at 2018 stood at 10.23 million DWT, with oil tankers made up 31 per cent (3.2 million DWT), bulk carrier (eight per cent), general cargo (three per cent), container ships (two per cent) and other types of vessels (the remaining percentage). — Bernama