Category description

Multi-purpose Support Vessels (MPSV's) are designed with flexibility and versatility in mind. They are capable of performing a range of activities including: supply duties, lifting operations, ROV and survey activities, platform and SPM maintenance, diving, light well intervention and accommodation support. 

To ensure flexibility MPSV's typically feature: a dynamic positioning system, cranes, a open deck area, tank capacity for liquids, large accommodation. 

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 MPSV 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 MPSV 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 MPSV vessel ability to carry out the work scope. Failure can often lead to significant costs therefore crew experience must be carefully considered. 

Scope of Work - The specification of the MPSV should be aligned to the work scope to ensure the most cost-effective MPSV is selected. 

Supply & Demand Dynamics

Global Supply and Demand

The demand for MPSV, 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.


Key Players

The MPSV 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.


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 MPSV 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 MPSV 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.

Strategy

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.