Global Offshore Overview
June 2014
Marine Money China Offshore Finance Forum
By Piers Middleton
June 2014
www.clarksons.com
www.clarksons.com
AGENDA
Offshore Market Developments
The Macro Picture
Newbuilding Overview
Supply, MDU and Subsea Overview
Potential Growth Areas
Summary and Conclusions
June 2014
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Estimated E&P Spending
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
Data Source: Barclays E&P Survey/Various
June 2014
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Offshore Oil & Gas Production Forecast
Long-Term Oil Production
Long-Term Gas Production
Data Source: Clarkson Research Services
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)
Europe
Offshore Production
2.9m bpd
Annual Growth
-11.6%
North America
Mediterranean/Caspian
Offshore Production
3.5m bpd
Annual Growth
-5.4%
Offshore Production
1.6m bpd
Annual Growth
7.2%
Middle East & India
South & Central America
Offshore Production
2.7m bpd
Annual Growth
3.2%
Asia Pacific
Offshore Production
7.5m bpd
Offshore Production
2.7m bpd
Annual Growth
5.1%
Annual Growth
1.0%
West Africa
June 2014
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)
Europe
Off Prod (cu.ft/day)
17.6 bn
Annual Growth
-2.7%
North America
Mediterranean/Caspian
Off Prod (cu.ft/day)
6.3 bn
Annual Growth
-1.3%
Off Prod (cu.ft/day)
10.2 bn
Annual Growth
10.9%
Middle East & India
South & Central America
Off Prod (cu.ft/day)
6.9 bn
Annual Growth
4.0%
Asia Pacific
Off Prod (cu.ft/day)
34.6 bn
Off Prod (cu.ft/day)
25.3 bn
Annual Growth
3.8%
Annual Growth
2.9%
West Africa
June 2014
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%
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Newbuilding Overview
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10
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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Key Fleet Indicators
1.
Activity
Fleet Order
Nos. book OB %
Tankers
5,817
Bulkers
9,981 1,970
747
Fleet
Value
OB Value
NB Orders
S+P Sales
(2013)
13%
$179bn
$32bn
428
308
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
Illiquidity of many offshore S+P markets makes assessment of total fleet value outside the OSV/MDU markets subjective.
June 2014
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Offshore Key Fleet Indicators
Activity
Survey
MDUs
Constrn/IRM
MOPUs
Logistics
AHTS
PSV
Order
book
25
255
200
50
37
185
OB % OB Value
3.6% $2.7bn
24.8% $101bn
8.3%
$20bn
15.2% $34bn
4.5% $2.5bn
6.4% $5.7bn
2,193 452 20.6% $15.8bn
NB Orders
10
116
86
17
17
82
S+P Sales
(2013)
6
63
64
5
2
36
184
62
1,752
Rescue
578
44
7.6%
$1bn
14
92
Utility Supp.
1,587
86
5.4%
$2.1bn
42
21
12,514 1,334 11%
$186bn
568
258
c6,000 1
Offshore
1.
Fleet
Nos.
689
1,030
2,419
330
815
2,873
Recorded
Fixtures
(2013)
121
376
589
55
74
2,344
Reported Fixtures only: not comprehensive.
June 2014
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13
Newbuild Activity: Contracting Totals
Data Source: Clarkson Research Services
June 2014
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14
Top Yards and Fabricators (by Orderbook Nos.)
Rank
Name
Country
Total
Value
($bn)
Development
Production
Hull
Topside
2.1
42
1.5
South Korea
40
27.8
Keppel FELS
Singapore
31
Daewoo
South Korea
ABG S.Y.
Supply
Fixed
Jacket
Topside
55
48
36
24
16
8.5
31
28
17.6
23
11
India
27
1.7
20
Hyundai H.I.
South Korea
25
14.6
13
12
Dalian
Shipbuilding
China P.R.
25
5.5
24
10
Dayang S.B.
China P.R.
25
0.3
25
Fujian
Southeast
China P.R.
58
1.9
Fujian Mawei
China P.R.
52
Zhejiang S.B.
China P.R.
Samsung H.I.
11-20
182
64
118
21-50
320
90
16
214
13
13
51+
505
197
42
89
266
240
229
TOTAL
1,360
486
92
92
782
260
260
Data Source: Clarkson Research Services
June 2014
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15
Vessel market share (output) by region
Data Source: Clarkson Research Services
June 2014
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16
Chinese global market share
Chinese Yards Get A Jack-Up
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.
June 2014
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17
Offshore Supply Vessels
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18
OSV: Fleet Size Growth
AHTS Fleet Growth now slower, after a rapid period.
Start Year
Data Source: Clarkson Research Services
June 2014
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19
Orderbook as a % of the fleet
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.
June 2014
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Age Profile
Current Fleet and Scheduled Orderbook Delivery
June 2014
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Asset Prices: Larger PSVs
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.
Data Source: Clarkson Research Services
June 2014
www.clarksons.com
22
Asset Prices: Large AHTS
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.
Data Source: Clarkson Research Services
June 2014
www.clarksons.com
23
Asset Prices: Asian versus European Builders
A divergence in pricing between Asian
and European built OSVs (of European
designs) has become evident.
Ice class premium
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.
Data Source: Clarkson Research Services
June 2014
www.clarksons.com
24
Demand Drivers
Number of Rig Moves by Type
*2014-Q2 only April and May
June 2014
Number of Rig Moves by Region
*2014-Q1 only April and
May
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25
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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26
Mobile Drilling Units
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27
Rig Fleet Growth
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.
June 2014
Source: Clarkson Research Services
www.clarksons.com
28
Rig Orderbook
Contract Status of the Rig Orderbook
June 2014
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Rig Asset Values & Sales
Floaters
Jack-Ups
NB Ultra-Deep Semi-Sub
NB High Spec Jack-Up
SH High Spec Jack-Up
NB Ultra-Deep Drillship
SH Standard Jack-Up
300
900
SH Ultra Deep Floater
800
250
200
$m
$m
700
600
500
150
400
100
300
200
50
100
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
0
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Data Source: Clarkson Research Services
June 2014
www.clarksons.com
30
Dayrate Evolution
Jack-Up Rates
Floater Rates
Averaged dayrate
Data Source: Clarkson Research Services
June 2014
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31
OSV and Drilling Unit Supply/Demand Index
Global MODU Demand
June 2014
OSV Supply/Demand
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32
Subsea Support Vessels
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33
Subsea Tree Installations
400
Historical Start-ups
Trees Under Construction
350
Number of Subsea Structures
Potential Future Requirements
300
250
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.
200
150
100
50
2019
2014
2009
2004
1999
1994
1989
1984
1979
1974
1969
1964
1959
Data Source: Clarkson Research Services
June 2014
www.clarksons.com
34
Subsea Vessel Age Profile
Current Fleet and Scheduled Orderbook Delivery Schedule
This year is expected to see
particular growth in the 150250t 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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35
MSV Contracting
Current Fleet and Scheduled Orderbook Delivery Schedule
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Subsea Rates & Prices
IRM (100t) NB Contract Prices
500
IRM (100t ) and ROV Support (<50t) T/C
,000$/day
90
M NOK
450
80
400
70
350
60
MSV
300
ROV
50
250
40
200
30
150
20
100
10
50
Apr-14
Nov-13
Jun-13
Jan-13
Aug-12
Mar-12
Oct-11
May-11
Dec-10
Jul-10
Feb-10
Sep-09
Apr-09
Nov-08
Jun-08
Jan-08
Aug-07
Mar-07
Oct-06
2014
2013
2012
2011
2010
2009
2009
2008
2007
2006
2005
May-06
Data Source: Clarkson Research Services
www.clarksons.com
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Potential Growth Areas
June 2014
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38
Growth Areas: Barents Sea/Arctic
Boosting requirement for large BHP/ large DWT OSVs from NW Europe
Kara Sea : Exxon-Rosneft
campaign 2014/15.
Will absorb 10% of high-spec
North Sea AHTS fleet???
Novaya
Zemlya
Risks: Heavy Ice. Russian
Nuclear Waste. Polar bears!
Dikson
Hammerfest
Yamal
Peninsula
Murmansk
Data Source: Clarkson Research Services
June 2014
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39
Growth Areas: Brazil (1)
PROREFAM III: 146 vessels 2008-17, 75%
local content
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.
Data Source: Clarkson Research Services
June 2014
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40
Growth Areas: Brazil (2)
Estimated Vessel Supply : South America
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.
Data Source: Clarkson Research Services
June 2014
www.clarksons.com
41
Growth Areas: West Africa
PSVs 3-4,000 dwt, Current Deployment
Data Source: Clarkson Research Services
June 2014
www.clarksons.com
42
Estimated E&P Spending- Asia/Pacific
Asia Pacific Investment
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.
* Barclays projection as of start-2014. Could prove optimistic given
recent negative sentiment over E&P growth.
Data Source: Barclays E&P Survey
June 2014
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43
Growth Areas: South East Asia (1)
Cabotage Spurring Fleet Growth
Indonesia is phasing in a cabotage law of 51%
domestically owned, plus Indonesian flagged &
crewed.
Hence, foreign companies now need minoritystake JVs to work in Indonesia.
Supply/Demand imbalance means some dayrates
have been 20% up on other SE Asian countries.
Indonesia Cabotage Phase-in
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
Data Source: Clarkson Research Services/ SKK Migas
June 2014
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44
Growth Areas: South East Asia (2)
Malaysian Investment
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.
Data Source: Clarkson Research Services
June 2014
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45
Growth Areas: Mexico
PEMEX Capital Expenditure
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.
Data Source: Clarkson Research Services
June 2014
www.clarksons.com
46
Summary
4 June 2014
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47
Offshore Sector Summary
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.
June 2014
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48
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.
June 2014
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