Operators start to see signs supply is tightening.
Our analysis shows positive signs for the saturation diving market in Western Europe.
Diving contractors have reasons to be cautiously optimistic for 2021, according to new research from energy market intelligence firm Archer Knight.
The saturation diving market is starting the year in a position of strength, with signs that diving service vessel (DSV) companies are well-structured and well-funded, vessel utilisation rates are improving, while recent major contracts are having a large influence.
Archer Knight Executive Director David Sheret said: “The cyclical nature of the industry, together with the pandemic, mean the market has been difficult. A lower oil price has resulted in reduced investment and, subsequently, opportunities and rates have been depressed.
“While contractors have performed well in 2020, the ability to make attractive returns was limited. However, going into 2021, there are a number of reasons for contractors to be cautiously optimistic.”
In its report, the company analysed Western Europe’s main saturation diving contractors and their vessel activities.
Activity levels: more of the same?
In 2020, Aberdeen Port saw the greatest level of activity for mobilisation and demobilisation activities, with around 137 days logged for the period. Aberdeen and Peterhead accounted for around 61% of all Western Europe DSV mobilisation and demobilisation activity for 2020.
Leith Port in Edinburgh saw the highest level of activity for other types of port visits, but the majority of this was due to the stacking of the Rever Sapphire and Seawell by Rever Offshore and Helix respectively.
Fleet utilisation levels are likely to improve in the year, with the number of available vessel days falling and the DSV fleet in Western Europe remaining the same at approx. 11 vessels. This implies a more cost-efficient industry for 2021.
One major influence on the year ahead is the Dutch company Boskalis and its acquisition of subsea specialists Rever Offshore. Boskalis now takes possession and operatorship of two additional diving support vessels, the Rever Polaris and Rever Topaz, now renamed. The deal propels Boskalis into the top three contractors with a fleet of four vessels and approx. one third of the market based on collective activity.
Meanwhile, another set of deals which are impacting 2021 are Chrysaor’s acquisition of Conoco Phillips’ North Sea assets and its scheduled merger with Premier Oil. Together, the combined deals provide a huge saturation diving prize.
Where will the balance of power lie in 2021? Will the pendulum swing back to the contractors, or are operators going to stand fast?
Mr Sheret added: “We believe most of the contractors have a good level of secured or highly probable backlog, certainly more than they’ve had over the past few years. The skill as always will be determining how to increase profitability, while delivering to clients and growing market share.”
He added: “From the operators’ perspective, it’s going to be an interesting year. The DSVi collective will probably welcome three strong bidders, as this would usually point to prices being driven down.”
But he said: “Lack of supply raises demand, and it could well be a year where the contractors are a little more bullish than the market has allowed them to be for a while.
“Barring another severe global event and a massive drop in oil price, the likelihood is Operators will be booking their days sooner rather than later as the supply demand equilibrium starts to shift.”
Read the full report for a breakdown on vessel-by-vessel utilisation figures, a detailed 2020 summary and a look ahead to 2021. Contact us for more information.