Category description

Overview

Platform Supply Vessels (PSV) specialise in the logistical support required to operate in an offshore field. Typically PSV's work between an onshore supply base and the various offshore work locations, including drilling rigs, oil platforms and construction vessels transporting essential supplies (such as drilling fluids, cement, mud, fuel and water) within its tanks, equipment (including casing, drill pipe, and various miscellaneous pieces) as well as personnel.


Vessel Sizes

PSV’s can be summarized into 3 broad categories; small, medium or large, calculated based upon deadweight or cleardeck area.


Supply & Demand Dynamics

Global Supply and Demand Overview

The demand for PSV's, 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.

The PSV market is highly cyclical. Utilisation and rates are quick to react to oil price due to the influence oil price plays on E&P spending patterns. As of mid 2017 with oil prices stabilised around US$50 per barrel the short to mid term is likely to remain challenging for vessel owners as new investment levels remain low and offshore rigs continue to be stacked. Without a sustained period of stability at higher oil prices increased activity is unlikely. 

Regional Activity Summary

A summary of regional activity levels is provided below:


Key Players

 Company Name Main Operating Regions
TidewaterMiddle East, W. Africa, Americas
Topaz Marine
Middle East, W. Africa, Caspian Sea
Halul OffshoreMiddle East
Edison ChouestAmericas
Swire PacificW. Africa, S.E. Asia
Seacor HoldingsAmericas, W. Africa
POSHAmericas, W. Africa
Hornbeck OffshoreAmericas
Gulf MarkNorth Sea, Americas
Solstad FarstadNorth Sea, Americas, S.E. Asia
Siem OffshoreNorth Sea, Americas, W. Africa
Bourbon OffshoreNorth Sea, Americas, S.E. Asia
Harvey GulfAmericas

Note: Based on operating PSV's

External Scanning

Porter's Five Forces Analysis
Buyer's Power



Portfolio Positioning

Kraljic Matrix


Cost & Price Analysis

Due to the low oil price and the competitive nature of the market PSV owners are operating at close to breakeven with most owner's recording loses since the  downturn. The breakeven point of a mid to large size PSV is US$8,000 to US$10,000 per day depending on region. This is broken down as follows:

Current day rate trends are as follows:

Description
Small to Mid
Mid to Large
Low Daily Hire Rate (US$)6,0008,000
High Daily Hire Rate (US$)12,00021,000
Target Daily Hire Rate (US$)6,000 to 8,0008,000 to 14,000
Price PressureDownDown

Total Cost of Ownership

Parameter
Service Cost
Fuel Cost
Performance Cost
Cost Visibility
High
Medium
Medium
Description
The rates and charges agreed in a contract for the performance of the service
The cost of fuel used by the vessel in performance of duties
The cost of inefficiency in performing duties

Cost Driver
  • Daily Hire Rate
  • Type of operation
  • Type of propulsion
  • Fuel Consumption
  • NPT (breakdown)
  • Learning Curve
Commercial Impact
HighMediumHigh

Strategy

Procurement Strategy

In the current market environment buyers are in a dominant position. The huge oversupply of Platform Supply Vessels, the regional mobility and low demand place power firmly in the buyers hands. Buyer’s should look to take advantage of this position securing cost reduction and higher specification vessels (fuel economy & safety). Where possible Buyer's should look to aggregate spend to further improve leverage. In summary the strategic objectives should be focused around:

  • Maximising cost reductions
  • Securing high specification vessels that yield performance improvements
  • Maintain flexibility

When approaching the market DALEEL recommend the approach outlined below:

In preparation for any tender or negotiation Buyer's should ensure they have:

  • The latest market intelligence in the region including utilisation and indicative rates
  • The latest supplier intelligence including vessel availability, utilisation and rates
  • Information on other regions vessel availability and rates. Given PSV's are highly mobile Buyer's should look globally and try to take advantage of lower demand in other regions.

Contracting Strategy

Typical oil field PSV operations are managed via a Time Charter. Below is a summary of the avialble contacting methods, where responsibilities lie for each and how payment is calculated.  

Parameter
Time
Voyage
Bareboat
DescriptionPer day or duration of timePer trip/voyageVessel hull & machinery only 
Operational PreferencePreferredNot preferredNot preferred
Vessel Owner ResponsibilityVessel
Crewing
Maintenance
Insurance
Vessel
Crewing
Maintenance
Insurance
Port Charges
Bunkers
Vessel only
Charterer ResponsibilityPort Charges
Cargo Loading & Discharge
Bunkers
Cargo Loading & Discharge
Crewing
Maintenance
Insurance
Port Charges
Cargo Loading & Discharge
Bunkers
Calculation of ChargesDaily hire rateLump sum per voyage or based on cargo volumesMonthly lump sum payment
Standard Form Contracts (BIMCO)SUPPLYTIMEGENCONBARECON

Technical Insights

Dynamic Positioning Explained

A DP system automatically triangulates between GPS satellites and/or other positioning systems to maintain the vessels position within a 1m to 3m radius allowing the vessels to be maneuvered very close to platforms and rigs. When engaged the DP system simultaneously and continuously controls bow thrusters and main propulsions to hold position irrespective of current, wind or wave action. This allows for greater accuracy and safety when manoeuvring removing a large portion of human error risk. DP Systems have 3 classes each representing a greater level of redundancy in the system. 


Diesel Electric Propulsion Explained

Diesel Electric Propulsion differs from traditional propulsion systems in that multiple diesel engines each drive an electrical generator producing electrical power that energizes a motor connected to the propellers. This provides efficiency (fuel & emissions) benefits as when loads are low not all diesel engines will be turned on. In addition, even where one engine fails power can still be transmitted to both shaft lines.

Performance Management