Challenging times ahead for OSV segment

AS a function of the price of oil, naturally the offshore supply vessel (OSV) market has taken a hit as well. "The OSV market is going through a very challenging period with both vessel utilisation and daily charter rates declining. Operators are under pressure from clients to cut costs while ensuring safety, quality and clients' expectations are not compromised," said Neil Glenn managing director of Swire Pacific Offshore Operations. "The impact of the falling oil prices has impacted demand and day rates in every vessel segment across all geographic markets and I think it will be a challenging year for the industry globally," he added.

"With a lower budget, oil majors have turned their focus on cost management efficiencies as a strategy. In the short-term, this has been reflected in the lower charter rates and the shorter charter duration in the contracts being awarded," said Nam Cheong CEO Leong Seng Keat.

Mr Glenn noted that this creates a range of challenges for the OSV industry, especially the duration of the current uncertainty. "With demand reducing and new vessel deliveries continuing, there will be increased competition for available work as owners seek to secure sufficient cash to cover their operating and financing expenses. Older, less well specified vessels will find it harder to secure employment amid the increased competition and falling utilisation and day rates will result in reduced revenues for operators," he said.