In a build-up to next month’s SEA ASIA conference and exhibition in Singapore, Geir Sjurseth, Managing Director & Global Head, Offshore Support Group, and General Manager, DVB Group Merchant Bank (Asia) Ltd, who will sit on a specialist offshore marine forum at the event, has given this bullish outlook on the sector for 2013 and beyond.
“I believe we can subscribe to good prospects for the offshore markets, backed by a high oil price and continuous 7-9% annual E&P capex spending by the international oil majors. A larger market dominated by nationals also tends to decrease implicit volatility in spending patterns.”
However, Sjurseth added that while the offshore markets were much less impacted by the financial crisis and subsequent downturn in 2009/10, it is legitimate to ask whether they can stay completely disconnected from lasting crises in sovereign debt, banking and shipping.
“Oil has never been in so much abundance while new finds, in shallow and deep water, look good for future exploration and oil production. Simultaneously, large amounts of shale gas and oil are rapidly influencing onshore versus offshore oil exploration needs,” he said.
Large PSVs overbought
Pointing out that most OSV markets and sub-segments are moving slowly towards a very fine market equilibrium which has seen utilisation rates and charter levels rise, Sjurseth identified that possible exemption is the market for larger PSVs which are currently overbought.
“Another real threat to a sustainable and healthy market going forward is the massive yard capacity now focusing on building various offshore equipment and vessels – at slightly falling and very competitive prices,” he added.
The Asia-Pacific region in particular saw “reasonable” utilisation in 2012 but rates did not increase much, he said. “Some tenders are out for mid-2013 already. This suggests an improving market. While oil majors prefer sophisticated tonnage, national oil companies still regularly employ vessels from local owners with smaller and older fleets.”
He noted Malaysian shipyards were gaining ground in the construction of offshore vessels but considered that “local and state-owned shipyards in Indonesia have yet to be accepted in the international market.”
Sjurseth said that prospects are good overall for the offshore industry in the Asia region. “Still, a cautious approach to newbuild contracting, focus on longterm employment, and a prudent financial asset liability management have never been more important!”
Sjurseth’s comments were echoed by Mr Tor Svensen, President – Oil & Gas, DNV, who will chair the panel. “Technology developments are opening new frontiers and we see that this trend will continue but with a backdrop of increased focus on safety and protection of the environment. A gas revolution is taking place on the back of shale gas developments and development of large offshore gas fields,” said Mr Svensen. “Overall, this means that the offshore sector presents a very positive outlook compared with the current situation in many other parts of shipping.
Geir Sviggum, Managing Partner, Wikborg Rein, will also be one of the panellists.
In the afternoon of the same day, Wednesday 10 April, other senior industry figures will discuss pertinent matters such as China’s domestic and overseas investment in offshore exploration, the dynamics of regional offshore development, and how regional exploration activities will drive demand for fixed, floating and subsea units.
The panel will include Mr Paul Aston, Managing Partner at Holman Fenwick Willan Singapore, Mr YY Chow, Chief Operating Officer at Keppel Offshore & Marine, and Mr Lionel Lee, Managing Director of Ezra Holdings Ltd.
”Increasingly, the global shipping industry recognises the central importance of the Asian economies for building its sustainable longterm future,” said Chris Hayman, Chairman of Seatrade. “Backed by a growing percentage of the world’s leading maritime firms, SEA ASIA is now the place to make business connections, do deals, and acquire critical knowledge and opinions.”
SEA ASIA is open for three days, 9-11 April 2013, at Marina Bay Sands in Singapore.
SEA ASIA 2013 is principally sponsored by Anglo Eastern, DNB Bank ASA, Executive Ship Management, Keppel Offshore & Marine, Lloyd’s Register, NOL Group, and PSA Corporation Limited.
March 8, 2013