OSV investors set to reactivate decade-old newbuild contracts
Offshore Vessel Orders Rise as Oil and Gas Industry Recovers from Past Setbacks
In 2024, the demand for offshore support vessels (OSVs) is growing again, and many investors are picking up old contracts that were left unfinished in the past. This trend comes after a long period where new orders for these ships were mostly on hold. According to a report by the UK-based market analyst MSI, 17 new OSVs have been delivered so far this year. Interestingly, 13 of these vessels were actually ordered more than 10 years ago, showing how old contracts are finally being fulfilled. But there are still over 50 vessels from the previous upcycle that haven’t been delivered yet.
The offshore oil and gas industry has struggled in recent years, but it is now seeing more interest in newbuild vessels. After a slow period from 2015 to 2023, there has been a small recovery in orders. Since November 2023, new orders for ships have started to rise again. However, between 2015 and 2023, only 77 new OSVs were ordered. This includes 29 anchor-handling tug supply vessels and nine platform supply vessels, which were added in 2023 alone.
One reason for this slow recovery is the lasting effects of the 2015 downturn in the oil and gas market, which hit hard before the Covid-19 pandemic caused even more disruptions between 2020 and 2022. Many shipowners, especially those in the offshore oil and gas sector, were hesitant to invest in new ships. There were concerns about the energy transition, high costs for building new ships, and debt issues.
MSI also reported that while vessel orders for offshore wind farms have been strong, owners in the oil and gas sector have been more cautious. Those who are still focused on traditional energy markets now see an opportunity to use the vessels that were delayed or abandoned before placing new orders. These older ships offer a solution before spending money on building new vessels with similar capabilities.
Interestingly, MSI also noted that no older OSVs have been scrapped in recent months. This shows that many shipowners are still holding onto their older vessels, even though the market is changing.
