“Cautious optimism” for diving contractors in the year ahead as Operators start to see signs supply is tightening
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10 February 2021
Analysis of vessel activity shows positive signs for saturation diving market.
Diving contractors have reasons to be cautiously optimistic for 2021, according to new research from Aberdeen-based energy market intelligence firm Archer Knight.
Detailed research on the five main saturation diving companies in Western Europe and their vessel activity in the region in 2020, shows the sector is starting the year in a position of strength.
Archer Knight Executive Director David Sheret said: "The cyclical nature of the industry, together with the pandemic, means 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.”
The report shows that 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 the stacking of the Rever Sapphire and Seawell by Rever Offshore and Helix respectively.
Archer Knight believes 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 at approx. 11 active 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 four vessel fleet and around one third of the market based on combined activity.
Meanwhile, another set of deals which may impacting 2021 are Chrysaor’s acquisition of Conoco Phillips’ North Sea assets and its scheduled merger with Premier Oil. Together, the combined entity will provide a huge saturation diving prize.
Mr Sheret added: "We believe that 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, especially the smaller ones, 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.”
