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.
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:
|Company Name||Main Operating Regions|
|Tidewater||Middle East, W. Africa, Americas|
|Topaz Marine||Middle East, W. Africa, Caspian Sea|
|Halul Offshore||Middle East|
|Swire Pacific||W. Africa, S.E. Asia|
|Seacor Holdings||Americas, W. Africa|
|POSH||Americas, W. Africa|
|Gulf Mark||North Sea, Americas|
|Solstad Farstad||North Sea, Americas, S.E. Asia|
|Siem Offshore||North Sea, Americas, W. Africa|
|Bourbon Offshore||North Sea, Americas, S.E. Asia|
Note: Based on operating PSV's
|Porter's Five Forces Analysis||Buyer's Power|
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$10,000 per day depending on region. This is broken down as follows:
Current day rate trends are as follows:
|Description||Small to Mid||Mid to Large|
|Low Daily Hire Rate (US$)||6,000||8,000|
|High Daily Hire Rate (US$)||12,000||21,000|
|Target Daily Hire Rate (US$)||6,000 to 8,000||8,000 to 14,000|
Total Cost of Ownership
|Parameter||Service Cost||Fuel Cost||Performance Cost|
|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|
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.
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.
|Description||Per day or duration of time||Per trip/voyage||Vessel hull & machinery only|
|Operational Preference||Preferred||Not preferred||Not preferred|
|Vessel Owner Responsibility||Vessel|
|Charterer Responsibility||Port Charges|
Cargo Loading & Discharge
|Cargo Loading & Discharge||Crewing|
Cargo Loading & Discharge
|Calculation of Charges||Daily hire rate||Lump sum per voyage or based on cargo volumes||Monthly lump sum payment|
|Standard Form Contracts (BIMCO)||SUPPLYTIME||GENCON||BARECON|
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.