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Global Offshore Overview June 2014
June 2014
Marine Money China Offshore Finance Forum By Piers Middleton
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AGENDA
June 2014
Offshore Market Developments
The Macro Picture
Newbuilding Overview
Supply, MDU and Subsea Overview
Potential Growth Areas
Summary and Conclusions
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Estimated E&P Spending
Data Source: Barclays E&P Survey/Various
E&P Spending Growth
Barclays December forecast of 6% now likely to be optimistic.
DNB recently projected 1% due to cutbacks by International Oil
Companies.
National Oil Companies in
developing economies still pushing
ahead with spending plans
One fifth of global energy needs met
by Offshore
June 2014
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Offshore Oil & Gas Production Forecast
Data Source: Clarkson Research Services
Long-Term Oil Production Long-Term Gas Production
June 2014
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Global Discoveries & Start ups
June 2014
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Offshore Discoveries Getting Deeper
June 2014
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Deeper Water, Further From Shore
Data Source: Clarkson Research Services
June 2014
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World Offshore Oil Producing Regions (2013)
June 2014
North America
Offshore Production 3.5m bpd
Annual Growth -5.4%
South & Central America
Offshore Production 2.7m bpd
Annual Growth 3.2%
Asia Pacific
Offshore Production 2.7m bpd
Annual Growth 1.0%
Middle East & India
Offshore Production 7.5m bpd
Annual Growth 5.1%
Mediterranean/Caspian
Offshore Production 1.6m bpd
Annual Growth 7.2%
Europe
Offshore Production 2.9m bpd
Annual Growth -11.6%
West Africa
Offshore Production 4.4m bpd
Annual Growth 5.9% WORLD
Offshore Production 25.4m bpd
Annual Growth 0.0%
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World Offshore Gas Producing Regions (2013)
North America
Off Prod (cu.ft/day) 6.3 bn
Annual Growth -1.3%
South & Central America
Off Prod (cu.ft/day) 6.9 bn
Annual Growth 4.0%
Asia Pacific
Off Prod (cu.ft/day) 25.3 bn
Annual Growth 2.9%
Middle East & India
Off Prod (cu.ft/day) 34.6 bn
Annual Growth 3.8%
Mediterranean/Caspian
Off Prod (cu.ft/day) 10.2 bn
Annual Growth 10.9%
Europe
Off Prod (cu.ft/day) 17.6 bn
Annual Growth -2.7%
West Africa
Off Prod (cu.ft/day) 3.0 bn
Annual Growth 3.4% WORLD
Off Prod (cu.ft/day) 103.8 bn
Annual Growth 2.7%
June 2014
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Newbuilding Overview
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Offshore & Marine Orderbook Value by Type
Offshore (US$186 billion)
Shipping (US$185 billion)
Source: World Shipyard
Monitor, Offshore Yard
Monitor (May 2014)
June 2014
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Activity
Fleet
Nos.
Order
book OB %
Fleet
Value OB Value NB Orders
S+P Sales
(2013)
Tankers 5,817 747 13% $179bn $32bn 428 308
Bulkers 9,981 1,970 20% $238bn $59bn 1075 491
Containerships 5,095 477 9% $101bn $35bn 242 145
Gas 1,641 324 20% $77bn $32bn 151 65
Offshore 12,514 1,334 11% $500bn+1 $186bn 568 258
1. Illiquidity of many offshore S+P markets makes assessment of total fleet value outside the OSV/MDU markets subjective.
Key Fleet Indicators
June 2014
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Activity
Fleet
Nos.
Order
book OB % OB Value NB Orders
S+P Sales
(2013)
Recorded
Fixtures (2013)
Survey 689 25 3.6% $2.7bn 10 6 121
MDUs 1,030 255 24.8% $101bn 116 63 376
Constrn/IRM 2,419 200 8.3% $20bn 86 64 589
MOPUs 330 50 15.2% $34bn 17 5 55
Logistics 815 37 4.5% $2.5bn 17 2 74
AHTS 2,873 185 6.4% $5.7bn 82 36 2,344
PSV 2,193 452 20.6% $15.8bn 184 62 1,752
Rescue 578 44 7.6% $1bn 14 2 92
Utility Supp. 1,587 86 5.4% $2.1bn 42 21 -
Offshore 12,514 1,334 11% $186bn 568 258 c6,000 1
Offshore Key Fleet Indicators
1. Reported Fixtures only: not comprehensive.
June 2014
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Newbuild Activity: Contracting Totals
Data Source: Clarkson Research Services
June 2014
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Top Yards and Fabricators (by Orderbook Nos.)
Rank Name Country Total Value
($bn) Development Production Supply Fixed
Hull Topside Jacket Topside
1 Fujian
Southeast China P.R. 58 1.9 3 0 0 55 0 0
2 Fujian Mawei China P.R. 52 2.1 4 0 0 48 0 0
3 Zhejiang S.B. China P.R. 42 1.5 6 0 0 36 0 0
4 Samsung H.I. South Korea 40 27.8 24 16 1 0 0 2
5 Keppel FELS Singapore 31 8.5 31 0 0 0 0 0
6 Daewoo South Korea 28 17.6 23 5 0 0 7 11
7 ABG S.Y. India 27 1.7 7 0 0 20 0 0
8 Hyundai H.I. South Korea 25 14.6 13 12 2 0 0 5
9 Dalian
Shipbuilding China P.R. 25 5.5 24 1 0 0 0 0
10 Dayang S.B. China P.R. 25 0.3 0 0 0 25 0 0
11-20 182 64 0 0 118 0 0
21-50 320 90 16 0 214 13 13
51+ 505 197 42 89 266 240 229
TOTAL 1,360 486 92 92 782 260 260
June 2014
Data Source: Clarkson Research Services
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Vessel market share (output) by region
June 2014
Data Source: Clarkson Research Services
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The number of Chinese yards taking Jack-Up drilling unit contracts has risen from two in 2004 to
32 in 2013 -accounting for 50% of global contracts.
Chinese yards have made significant progress in gaining market share in this sector.
10 Chinese yards took a Jack up contract in 2013. Dalian took 12 contracts in 2013 most consistent yard. Good track record of export orders.
Chinese global market share
June 2014
Chinese Yards Get A Jack-Up
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Offshore Supply Vessels
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AHTS Fleet Growth now slower, after a rapid period.
OSV: Fleet Size Growth
June 2014
Data Source: Clarkson Research Services
Start Year
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Global Fleet
The orderbook for the largest PSVs stands at 60% of the fleet. However, this is
partially the result of an upsizing trend:
vessels are being constructed to serve the
rigours of distant-from-shore, deepwater
supply duties which did not exist in
previous decades.
The AHTS orderbook as a % of the fleet is much smaller following more limited
ordering over the past three years.
However, previous deliveries produced a
level of fleet over-supply which the market
is in the process of absorbing.
Orderbook as a % of the fleet
June 2014
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Age Profile
Current Fleet and Scheduled Orderbook Delivery
June 2014
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Asset Prices: Larger PSVs
June 2014
Data Source: Clarkson Research Services
Asset prices fell sharply from previous heights in the aftermath of the global financial crisis.
Prices recovered somewhat over the course of 2010 and 2011 as E&P activity picked up again.
Asset Prices have remained relatively stable over the last couple of years. Signs of softening recently.
Note that the graph to the right shows benchmarks for European Designed vessels, although trends may be similar for vessels built in other regions.
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Asset Prices: Large AHTS
June 2014
Data Source: Clarkson Research Services
Asset prices fell sharply from previous heights in the aftermath of the global financial crisis.
Prices recovered somewhat over the course of 2010 and 2011 as E&P activity picked up again.
Asset Prices have remained relatively stable over the last couple of years. Early signs of softening recently.
Note that the graph to the right shows benchmarks for European Designed vessels, although trends may be similar for vessels built in other regions.
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Asset Prices: Asian versus European Builders
June 2014
Data Source: Clarkson Research Services
A divergence in pricing between Asian and European built OSVs (of European designs) has become evident.
Asian-built is cheaper, but may face issues in terms of build speed and potential chartering opportunities.
North Sea operators still prefer Norwegian built vessels, but slowly changing, but Norwegian designs definitely remain Best in Class.
Recently, Norwegian yards have concentrated on MSV orders, meaning PSV ordering has been more heavily weighted towards Asia.
Ice class premium
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Demand Drivers
Number of Rig Moves by Type Number of Rig Moves by Region
*2014-Q2 only April and May *2014-Q1 only April and
May
June 2014
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OSV Dayrate Evolution
PSV Global 12-month T/C AHTS Global 12-month T/C
Data Source: Clarkson Research Services
June 2014
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Mobile Drilling Units
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Rig Fleet Growth
June 2014
Current strong drillship fleet growth is causing some rate softening.
Orderbook is now equivalent to 25% of total MDU fleet
Fleet growth is expected to accelerate for jack-ups from 2015. Potential short term softening for the jack-up market, but could be
positive for OSVs.
Source: Clarkson Research Services
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Rig Orderbook
Contract Status of the Rig Orderbook
June 2014
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Jack-Ups
Rig Asset Values & Sales
Data Source: Clarkson Research Services
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Ja
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SH Standard Jack-Up
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$m
NB Ultra-Deep Semi-Sub
NB Ultra-Deep Drillship
SH Ultra Deep Floater
Floaters
June 2014
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Jack-Up Rates
Dayrate Evolution
Data Source: Clarkson Research Services
Floater Rates
Averaged dayrate
June 2014
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OSV and Drilling Unit Supply/Demand Index
OSV Supply/Demand Global MODU Demand
June 2014
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Subsea Support Vessels
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Subsea Tree Installations
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of
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bse
a S
tru
ctu
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Historical Start-ups
Trees Under Construction
Potential Future Requirements
June 2014
Data Source: Clarkson Research Services
Subsea installation demand is becoming an ever
more important driver for support vessels.
Graph shows units under construction and
announced future requirements: actual installations
are likely to be higher than shown for more distant
years.
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Subsea Vessel Age Profile
Current Fleet and Scheduled Orderbook Delivery Schedule
This year is expected to see particular growth in the 150-250t fleet.
After a dearth of new
contracting in 2H 2013, there are signs that owners are thinking of further orders.
MSVs/Subsea construction is a newbuild market still dominated by Norwegian
yards, but could be an area in which Asian yards can attempt to build market share.
June 2014
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MSV Contracting
Current Fleet and Scheduled Orderbook Delivery Schedule
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Subsea Rates & Prices
IRM (100t) NB Contract Prices IRM (100t ) and ROV Support (
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Potential Growth Areas
June 2014
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Boosting requirement for large BHP/ large DWT OSVs from NW Europe
Growth Areas: Barents Sea/Arctic
June 2014
Data Source: Clarkson Research Services
Hammerfest
Murmansk
Yamal
Peninsula
Dikson
Novaya
Zemlya
Kara Sea : Exxon-Rosneft campaign 2014/15.
Will absorb 10% of high-spec North Sea AHTS fleet???
Risks: Heavy Ice. Russian Nuclear Waste. Polar bears!
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PROREFAM III: 146 vessels 2008-17, 75%
local content
Growth Areas: Brazil (1)
June 2014
Data Source: Clarkson Research Services
Petrobrass PROREFAM III programme for acquiring newbuild vessels on eight year timecharters has reached Round 7, which was launched in mid-March 2014.
Local content provisions apply: the focus is on Brazilian-built, however seeing some Govt softening on this stance for more technically advanced Vessels.
Round 5 contracts were signed at the same time. Round 6 contracts were signed in early May, delayed by Round 5s over-run.
110 newbuild vessels were ordered in connection with Rounds 1-6. Only 15 of a planned 64 AHTS orders signed so far.
Contracting activity is ongoing for AHTS vessels in all three categories, for PSVs of 4,500 and 5,000 DWT, and for oil spill response vessels. Petrobras is confident it will sign deals for the remaining 36 units this year, though others are doubtful.
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Estimated Vessel Supply : South America
Growth Areas: Brazil (2)
June 2014
Data Source: Clarkson Research Services
In addition to newbuild vessels, other OSVs have gradually been brought into the
region from other areas, notably the North
Sea. In general, these vessels are larger
units.
There is not much of a spot market in Brazil: perhaps no more than 5-7% of vessels
in the region. Spot fixtures do occur (e.g.
when a rig move is needed and the intended
OSV suffers problems). However, most
vessels coming off timecharters either fix
another term charter, or mobilise out of the
region.
The declaration of non-commerciality for several of OGXs fields leaves the future of
OSV chartering in Brazil even more in the
hands of Petrobras.
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PSVs 3-4,000 dwt, Current Deployment
Growth Areas: West Africa
June 2014
Data Source: Clarkson Research Services
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According to the annual Barclays E&P
Survey, spending on E&P in Asia Pacific is
expected to be up by 3% in 2014.
This is down from figures in the teens in recent years, as spending on Gorgon in
Australia tapers off. Likely to increase into
the medium term as other Australian gas
projects move forward.
Around half of spending in Asia-Pacific is by Chinese state-owned companies.
Currently, state-owned service companies
take the lions share of this, but this market
is expected to open up more over the next
decade.
Estimated E&P Spending- Asia/Pacific
June 2014
Data Source: Barclays E&P Survey
Asia Pacific Investment
* Barclays projection as of start-2014. Could prove optimistic given recent negative sentiment over E&P growth.
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Cabotage Spurring Fleet Growth
Growth Areas: South East Asia (1)
June 2014
Data Source: Clarkson Research Services/ SKK Migas
Indonesia is phasing in a cabotage law of 51%
domestically owned, plus Indonesian flagged & crewed.
Hence, foreign companies now need minority-stake JVs to work in Indonesia.
Supply/Demand imbalance means some dayrates have been 20% up on other SE Asian countries.
Type Deadline
AHTS >5k BHP DP Start 2013
PSV Start 2013
DSV Start 2013
MSV/Pipe/Cable Start 2014
Seismic/Geo Start 2014
MDUs Start 2016
Indonesia Cabotage Phase-in
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Malaysian Investment
Growth Areas: South East Asia (2)
June 2014
Data Source: Clarkson Research Services
Malaysian NOC Petronas has increased
investment levels substantially to arrest
decline in oil and gas output.
Deepwater projects, Enhanced Oil Recovery, marginal field tie-in projects are all
ongoing. Use of Risk Service Contracts
This has soaked up a large amount of the domestic-owned fleet.
Additional requirements have helped to create further demand for non-Malaysian flag
vessels.
Most recently, Petronas boss has been warning about domestic OSV oversupply &
short-term rates downside.
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PEMEX Capital Expenditure
Growth Areas: Mexico
June 2014
Data Source: Clarkson Research Services
The end of 75 years of PEMEXs monopoly in Mexico over Christmas poses the possibility that private investment will begin to gain a foothold in Mexican waters.
PEMEX was already planning to grow CAPEX strongly (see left).
This is generating existing rig requirements, which will need support.
PEMEXs tendering activity for OSVs has already been increasing.
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Summary
4 June 2014
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Offshore Sector Summary
June 2014
Recent newbuild ordering has focused on Jack-ups and PSVs. New speculative investors evident in Jack-ups in particular.
Rigs : Jack-up rig rates steady for the moment but caution remains over size of orderbook; softness evident in floater rates and concerns building.
OSVs : AHTS and PSV timecharter rates improved year-on-year in 2013. Outlook
seems more stable and sentiment is cautiously positive, particularly as jack-up fleet
expansion next year increases demand.
Other more niche sectors such as accommodation and some areas of subsea construction may offer potential with the right partners.
View on E&P spending growth has turned more negative in early 2014 though this is restricted to IOCs. National Oil Companies are still spending.
Positive long-term view on offshore oil and gas production; gas production growth is
forecast to be stronger than oil. Move to deeper, more distant fields increasing
requirement for complex units.
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June 2014
Disclaimer
The information supplied herewith is believed to be correct but the accuracy thereof is not guaranteed and the
Company and its employees cannot accept liability for loss suffered in consequence of reliance on the
information provided. Provision of this data does not obviate the need to make further appropriate enquiries
and inspections. The information is for the use of the recipient only and is not to be used in any document for
the purposes of raising finance without the written permission of Clarkson Research Services Limited.
The statistical and graphical information contained herein is drawn from the Clarkson Research Services
Limited ("CRSL") database and other sources. CRSL has advised that: (i) some information in CRSL's
database is derived from estimates or subjective judgments; and (ii) the information in the databases of other
maritime data collection agencies may differ from the information in CRSL's database; and (iii) whilst CRSL
has taken reasonable care in the compilation of the statistical and graphical information and believes it to be
accurate and correct, data compilation is subject to limited audit and validation procedures and may
accordingly contain errors; and (iv) CRSL, its agents, officers and employees do not accept liability for any loss
suffered in consequence of reliance on such information or in any other manner; and (v) the provision of such
information does not obviate any need to make appropriate further enquiries; (vi) the provision of such
information is not an endorsement of any commercial policies and/or any conclusions by CRSL; and (vii)
shipping is a variable and cyclical business and any forecasting concerning it cannot be very accurate.
