Interview: North Sea OSV market headed for a slow but certain recovery

As almost everyone in the offshore oil and gas industry, offshore support vessel owners have felt the pang of mostly the huge oil price downturn since mid-2014, but also an oversupply of tonnage, and a lack of demand for all the vessels available.

Offshore Energy Today has spoken to Inger-Louise Molver, a senior shipbroker with Westshore, a Norwegian shipbroking agency, hoping to learn a thing or two about the current state of the OSV industry in the North Sea, and what the future holds for the OSV players there.


Q: Can we say that the North Sea OSV market has improved since 2016? Is there a reason for optimism, or would you describe the market conditions as still depressed?

I do believe there is reason for optimism, but it’s still very much a fine line. We will likely have periods where the market drops and nerves are tested yet. But in general the market is headed for a slow but definite recovery. The number of ships in layup has fallen steadily since January this year. This is of course positive but it adds the the fine line I was talking about because, of course, if too many vessels come out at once – particularly on a speculative basis to trade the spot, or for shorter term contracts which then conclude and those vessels return to trade the spot market, we could quickly find ourselves totally over supplied again.


Q: How many vessels are there currently in lay-up in the North Sea docks (UK and Norway), and what needs to happen to have them come back to work?

I have 36 AHTS and 70 PSVs, these are Norwegian and European owners with vessels that have traded North Sea before. What needs to happen is more offshroe activity. That means more drilling and more new fields being put into production. There are however a number of problems that will create bottlenecks and are preventing a huge rush of activity and consequently any immediate recovery.


Q: Statoil has recently taken several PSVs on long-term charters? Is this a sign that the activity is picking up in general, or is there some other interpretation here?


Molver: “Some of those charters were extensions and some were to replace tonnage that they will let go. It was a positive sign in the market as so many were announced at once but if statoil has increased its term tonnage then it is only slightly. Statoil has been through a process of taking a serious look at what they need and optimising their usage of vessels on term contracts.

It is therefore not an indication that Statoil has dramatically started contracting loads of vessels or that the rest of the market will start doing so. It is positive, however, that Statoil is choosing to take vessels on term rather than spot. It would suggest that they believe that the spot market will become increasingly volatile so the smart money is on getting vessels on term.”

Q: Can you comment on the dayrates of those? How do they compare to those „pre-June 2014“ rates?

“Lower, I don’t think that comes as a shock to anyone.”

Solstad Farstad


Norway in June got a new OSV player after Solstad Offshore, Farstad Shipping, and Deep Sea Supply merged into one new company named Solstad Farstad.

With the completion of the merger transactions announced on February 6, Wednesday marked the effective conception of the world’s largest offshore service vessel (OSV) company, Solstad Farstad. The new company has a fleet of 152 OSVs of which 33 are CSVs, 64 PSVs and 55 AHTS.

Asked for a comment on the merger, Ms. Molver said consolidation in the market is largely welcome from a market perspective, as the vessels will theoretically be able to be run at a lower unit cost and the organization as a whole can cover more ground in attracting new clients in new geographical areas.

“The previous entities of Solstad Farstad all had their own specialities. Farstad had a good footprint in Australia, Solstad in subsea, and they will all benefit from this. It’s never the end of the story though, as some companies merge others emerge and new outfits pop up. I expect we will see more of this. The role of private equity is still very much present. Money from non traditional offshore players looking for a home in an industry that may have reached its bottom is attractive to some and we will likely see more M&A, new companies etc cropping up.”

Q: Granted, there are fewer competitors right now as this is now one company. However, the tonnage is still there, and one needs to find work for it?


Molver: “Yes but you see the success that companies with larger chartering departments have for example. They are able to cover more ground, solidify relations with a broader range of clients in different areas and sometimes industries. This will be of critical importance I think. Plus they have merged some of the best Norwegian and therefore global tonnage into one shipping company, there is much scope to create a powerful brand there.”


Q: Have you spotted any winning traits when it comes to the owners who have managed to get solid contracts recently? Any pattern? What is it that sets OSV contract winners apart from the „losers“?


Molver: “Winning strategies have in some cases been dependent on having the financial muscle to carry them out. NAO and DOF choose to avoid layup as much as possible and have ships out trading and in the long run have a higher market share. Not all owners were in a position to do this even if they had wanted to. But it’s paid off for them as now the market is starting to improve, they have less worries of reactivation costs etc.

Otherwise, as I mentioned, a far reaching chartering department goes a long way.  Aside from that the vessels themselves and a solid crew with decent experience will become increasingly important as although cost is still an issue for operators, they can also still afford to be picky if the market is still over supplied.”


Q: According to Westshore’s latest spot market update, vessel availability has been tight for weeks for both PSVs and anchor handlers. Can we expect to see more vessels brought back from layup to fill in?


Molver: It’s very much possible, if for example an owner had 5 vessels trading and 2 in layup. Say all those 5 secured term work, there is a strong argument to bring a vessel out of layup to trade the spot in order to ‘keep their hand in, continue having a presence on the spot market, and experience with a broad range of charterers.

Similarly if a vessel has another 12 months before its class survey is due, there’s a strong argument there to get it out of layup and earn some money now while the market is decent before the decision to class it has to be made.

But the stronger the feeling of optimism is, the more likely it is vessels will be taken out speculatively. I think more will, but not a huge amount. Owners have had their fingers burned badly the past 2 years, few are in the mood for hasty decisions.


Q: How do you see the rest of the year developing for the offshore vessel owners in the North Sea?


Molver: In Norway the rig count looks like a slow but steady increase. Couple this with other offshore activity and I think the Norwegian sector gives me hope that recovery will continue nicely.

On the UK side however there is a large number of rigs that will come off hire coming into the winter months. They will likely go out again into spring as there is a big amount of drilling activity planned for 2018.

However this gap of around 3-4 months could well spell a ‘double dip’ scenario in the UK segment where utilization drops, there is very little activity and rates go down. The question will be will there be just enough activity with rigs being moved into port for warm stacking, coupled with the usual weather complications, to keep things ticking over? Or will we be in for another rough winter?


Interview prepared by Bartolomej Tomić, Senior Editor at Offshore Energy Today.

Share this article

Follow Offshore Energy Today


<< Sep 2019 >>
26 27 28 29 30 31 1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 1 2 3 4 5 6

Offshore Energy Exhibition and Conference (OEEC)

The three-day event features an exhibition where over 600 companies will showcase their products and services…

read more >

Argentina Oil and Gas Expo 2019

The Argentine Oil and Gas Institute (IAPG) organizes the Argentina Oil & Gas Expo bringing together the most…

read more >

OEE Conference & Exhibition 2019

OEE2019 is organised by Ocean Energy Europe, the industry association representing ocean energy in Europe.

read more >

Africa Oil & Power 2019

The Africa Oil & Power conference will bring together an elite class of ministers and senior-level government…

read more >


Looking to fill a job opening?

By advertising your job here, on the homepage of, you'll reach countless professionals in the sector. For more information, click below...


Looking to fill a job opening?

By advertising your job here, on the homepage of, you'll reach countless professionals in the sector. For more information, click below...