Category description

Anchor Handling Tug Supply Vessels (AHTS) are an essential feature of the offshore oil and gas industry specializing in the towing, positioning and mooring of drilling rigs and other marine equipment. Equipped with powerful engine and specialized winches the duties of an AHTS vessel may include;

  • Tugging/Towing rigs, vessels are barges to location or assistance during berthing
  • Retrieving and deploying anchors

In addition to these duties AHTS are required to perform supply duties replenishing other vessels and drilling rigs in the field with operational supplies such as mud, other drilling fluids, cement, fresh water, fuel oil and miscellaneous equipment.

The wide diversity of the vessels duties also means it is often suitable to perform tasks traditionally undertaken by Platform Supply Vessels (PSV's), Multi-Purpose Supply Vessels (MPSV's), Diving Support Vessels (DSV's) or Emergency Rescue and Recovery Vessels (ERRV).

Risks & Opportunities

Value opportunities and risk are features or requirements that may add or detract from the overall value offered.

To ensure value is maximized attention should be given to the following areas;

Technology - Advances continue to be made in AHTS vessels allowing operations to be carried out safer, more reliably, more efficiently and at a lower cost. In all circumstances it is not imperative to have access to the latest technology and a balance must be struck between the higher cost of new technology and the operating environment the AHTS is required to function within.

Crew Experience - Even with the latest technology, without an experienced crew all efficiencies can be wiped out and affect the AHTS vessel ability to meet demand. With the failure of meeting demand often costing hundreds of thousands this is an important factor.

Fleet Selection - Offshore oil and gas operations commonly feature multiple AHTS vessels. It is therefore important to determine the optimal number of vessels to be contracted in the field considering the vessels available in the market, the service cost, the opportunity cost and the cost of failing to meet demand.

Supply & Demand Dynamics

Global Supply and Demand

The demand for AHTS vessels, and offshore service vessels (OSV's) in general, continues to be driven by the world's increased energy demands. Although over the long term global energy consumption will see a significant shift away from oil and gas, oil and gas remain a major source of consumption representing more than 50% of market share. Gas growth is expected at 1.9% p.a. and oil 0.8% p.a. through to 2035. Furthermore it is anticipated that a greater reliance on offshore resources will be seen as onshore production declines and technologies open the door to more difficult offshore resources.

Another important factor is the price of oil which strongly affects the CAPEX and OPEX spending patterns of E&P companies. As of June 2015 the decline in oil prices has significantly slowed global E&P spending. Analysts remain bullish on the Middle East where growth is expected driven largely by the large Nationals such as ADNOC and Saudi Aramco. 

As of 2014 OSV count was estimated at 3,100. It is also estimated that of these 20-25% are 25 years of age or older the majority of which are out of service already. An estimated 450 new AHTS &PSV vessels are planned for construction through 2016.

With 2015 and 2016 growth OSV growth expected to be marginal across the globe increases in global fleet size is likely to place downward pressure on prices.


Regional Supply and Demand

The calm benign waters of the Arabian/Persian Gulf permit are mainly operated by small to medium size AHTS vessels. The water are also shallow and therefore rig count as well as oil price is an important indicator of demand. Despite the reduction in oil price rig count remain stable and as such it likely that AHTS's prices will remain stable as supply demand balance remains stable relatively stable. Initially, vessel owners have indicated no more than a 5-10% reduction in prices as a result of the oil price. This will likely further reduce depending on the length of time oil price remains down.

A number of vessels owners and operators are moving their fleet from Southeast Asia to Middle East, due to very low utilization levels in SEA, creating a large oversupply of vessels in the Middle East. In addition, continues efforts of regional oil companies to reduce costs and renegotiating charter rates, resulted in significant reduction in charter rates reaching up to 50% (Source: OSJ).  

At current it is estimated that 262 AHTS work within the Middle East. Looking forward to 2018 this is estimated to rise to circa 500 driven by increased rig activity and increase project activity. The dominance of the large NOC's, such as ADNOC, QP, and Saudi Aramco ensures the prices are some of the lowest around the globe.

Key Players

The AHTS market within the Persian Gulf is highly fragmented. A small number of vessel owners control circa 31% of the market whilst the remainder is distributed across 100+ vessel management companies. 

The main regional vessel owners are: Tidewater, Zamil Offshore, Halul Offshore, Bourbon Offshore and Topaz Marine.

External Scanning

The market place is strongly favored towards buyers within the region. The market is characterized by a large buyer and supplier imbalance, high standardization in vessel specifications resulting in relative ease in switching to alternatives.


Supplier Power is low

  • Lots of alternative vessels and suppliers,
  • Easy to switch vessel and supplier,
  • Suppliers are almost exclusively reliant on oil and gas industry,
  • High utilization is required to cover cost

Potential of new entry is high

  • Market has high degree of standardization
  • Chartering practises make it relatively easy for companies to manage vessels with bareboat charters
  • Vessels can move across regions easily


Competitive Rivalry

  • No one dominant company within region due to similar specifications and number of suppliers
  • High fixed costs

Threat of substitution is low

  • Main function of AHTS vessel is to support towing and tugging actvities therefore no real suitable alternatives exist

Buyer Power is high

  • Few buyers in region all of which tend to be large NOC's or IOC's
  • Cost of switching is low
  • Lots alternate similar specification vessels

Portfolio Positioning

Portfolio positioning is essential in guiding strategy within the category. The category is positioned based upon three factors; 1) supply risk, 2) profit/value risk, and 3) power structure.

Based upon a detailed analysis the AHTS category is positioned as a LEVERAGE category (ie. low supply risk, medium to high profit/value risk).

  • Low supply risk is supported by; 1) the large selection of suppliers and vessels, 2) the ease of switching, 3) the standardization of fleets across suppliers, 4) low competitive demand with regional buyers.
  • Medium to High Profit/Value is determined by; 1) the relative high levels of expenditure (the sub-category should also be considered with sub-categories such as Platform Supply Vessels (PSV's) and Emergency Rescue and Recovery Vessels (ERRV's) given the commonality of suppliers and similar sub-category characteristics), 2) High costs of failing to meet demand requirements, in particular rig time.
  • Power is strongly favored towards the Buyer (See External Scanning section)

Total Cost of Ownership

It is common practise to procure the services of AHTS vessels, both short and long-term, using a standard time charter. Additional costs will be assumed by the Buyer, other than the hire rate, based on standard time charter practises. These shall include:

  • The cost of mobilization and demobilization (to/from home port to work location port).
  • Structural alterations as required for the operation and the re-instatement of the vessel back to its delivered condition at the end of the hire
  • Accommodation and meals are charged at an agreed rate as stated in the contract (on a per night and per meal basis) for the Buyer's personnel on board
  • Maintenance Days are accrued by the supplier at a rate of 24 hours per 1 month of operational service. Should the supplier wish to leave the field to carry out maintenance, subject to having accrued enough days, the buyer would be required to pay the hire rate during this period. As well at the end of the charter the Buyer is responsible for paying the hire rate for each unused maintenance day
  • Fuel - The Buyer is responsible for the provision of fuel oil that will be consumed throughout the vessel operation. The fuel efficiency of the vessel can have a significant effect on the overall cost of ownership. In calculating the fuel consumption consideration must be given to the typical operating conditions, vessel specific fuel consumption during those conditions and the cost of fuel.
  • Other items - All lubricants, water, port charges, expenses related to cargo are for the Charterer's account and may need to be factored into the TCO.


The sub-category analysis carried out presents a strong case for a strategy that maintains or further maximizes the power of the buyer. 

There are a number of ways in achieving this however the items should be considered;

  • Vessel Specifications - Specifications should be “generic” - it should apply to as many possible vessels whilst remaining fit for purpose - to ensure competition amongst suppliers and the ability to switch,
  •  Aggregate Spend - Buyer's should look to leverage regional spend across the sub-categories of vessels given the commonality of suppliers in the category,
  • Competitive Tender - Tenders should be conducted to ensure maximum competition and followed with negotiations,
  • Negotiation Style - Supplier should be approached with direct and hard (slightly aggressive) negotiations. The buyer should capitalize on market intelligence and seek to target prices based upon their understanding of costs and market conditions. Buyer's should target profit margins
  • Hire Periods - Maintain relatively short commitments (1-3 years) with full flexibility to terminate for convenience at no cost on 90 to 120 days

In general the sub-category strategy is focused upon a traditional arm length relationship with the suppliers.

Technical Insights

Specification Considerations

The defining feature of an AHTS vessel is its ability to handle anchors and tow/tug other marine equipment from one location to another. As such the bollard pull of the AHTS vessel should be a central consideration.  The bollard pull is a measure of the vessels pulling/towing power and should be considered against any proposed rig/marine moves. During rig/marine moves a “lead” AHTS and will handle the course, any alterations and will liaise with the Tow Master onboard the rig as well as other AHTS's supporting the move.  Typically, the lead AHTS will feature a larger bollard pull to the other AHTS vessels supporting given the greater forces it will be required to overcome.

As the AHTS will be also required to carry out supply duties deck space (for the transport of equipment and cargo) and tank capacity (for the transport of essential operational consumables such as cement, mud, fuel oil, and fresh water) should be considered against the operational needs of the buyer.

The nature of the AHTS operation involves working within close proximity of other marine vessels and structures. As a result it has become more common for AHTS vessels to feature dynamic positioning systems, computer system that automatically maintains the vessel's position, minimizing the risks of working in and around other marine vessels and structures.

All of the features identified have the potential to add cost and thus careful consideration should be given to them as not to over specify what is needed against the actual requirement.