After seven long years of depressed conditions, marked by too many ships chasing too few jobs at too low rates, market sentiment is good; globally, there are fewer OSVs in deployment, rates are increasing, and usage is also increasing. By all accounts, the offshore oil and gas market is on the rise.
The oil resurgence was the focus of many discussions and presentations at the annual Offshore Support Log conference, awards and exhibition in London in June. There, many key players in the OSV community gathered to network with old and new friends, discuss the strong recovery in the offshore oil and gas sector, learn about new technologies and celebrate the best of the year.
While clearly excited about the positive developments in the offshore oil and gas sector and the expanding offshore wind market, past and present winners of the OSJ Industry Leader Award have noted several challenges posed by this rapid growth.
After years of capital discipline during the prolonged market downturn, OSV owners must now reactivate OSVs and hire and train new crews, said Seacor Marine Managing Director John Gellert, 2019 OSJ Industry Award winner Leader Award.
Mr. Gellert said that over the past seven to eight years, OSV owners have managed shrinkage, managed costs and “tried to do the maximum with the least cost and resources, and now we’re entering into a time when things are really developing”.
It is difficult to get out of decommissioned ships and hire new crews in a tight market. Like everyone else, OSV owners are affected by inflation, leading to higher shipyard costs for maintenance and reactivation, high fuel costs, and increased crew wages. Finding funding isn’t easy either, he noted.
“The overall challenge is how do we manage growth using current assets”
To address labor market shortages and the difficulty of finding, training, and certifying new crew, Seacor Marine kept its fleet fully utilized and increased seafarer wages.
“The overall challenge is how do we manage growth using current assets,” Gellert said.
Inflation and supply chain challenges were slowing the approval of offshore oil and gas projects, Westwood Global Energy pointed out, noting that some operators had to reshape project economics due to inflationary pressures from the supply chain. supply that can range from 10% to 15% for underwater equipment and production platforms. .
But on a positive note, Tidewater Managing Director Quintin Kneen, winner of OSJ’s 2022 Industry Leader Award, sees the pendulum swinging back in favor of OSV owners and positive market fundamentals for 2023. and 2024. “The worst downturn the industry has ever seen is largely behind us and all factors point to even better times ahead,” Kneen said.
Indeed, better times are ahead according to Westwood Global Energy’s five-year market forecast. Engineering, procurement and construction spending for offshore oil and gas will reach US$276 billion between 2022 and 2026, up 71% from the previous five-year forecast period.