DNV on OSV Tear in Middle East

Wednesday, May 28, 2008
Eivind Grostad, DNV’s Senior Vice President & Regional Manager for DNV Maritime

 

"The high oil price has created a boom market for offshore support vessels and we expect the oil market will remain high for the foreseeable future,” said Eivind Grostad, DNV’s Senior Vice President & Regional Manager for DNV Maritime. According to the classification society, DNV Maritime has captured 50% of the Middle East and Indian market in classification of new vessels on order or being built. This figure represents 39% of the total tonnage of vessels currently operating in the region.

 

With windfall profits, cash-rich oil companies are also driving the demand for Offshore Support Vessels (OSVs) of various types, of which DNV has classified 300 currently on order worldwide.

“The regional offshore sector is exceptionally buoyant,” said Dubai-based Eivind Grostad, DNV’s Senior Vice President & Regional Manager for DNV Maritime. “We have 125 offshore service vessels currently being built to DNV class, in ‘local’ shipyards such as Drydocks World, Seaspray and Nicocraft as well as Hindustan, Bhrati, Mazagon on the Subcontinent.”

According to Grostad, the orders emanated from owners all over the world, including the burgeoning number of OSV owners operating in the Gulf countries, such as ESNAARD, Irshad, Zami, Zakhair Marine, Valetine, Emdad, Al Mansoury, Abraag, KBM & KOC.

Besides the OSVs, DNV has received recent orders from local owners that include Very-Large Crude Carriers (VLCCs) for Vela International, chemical carriers for United Arab Chemical Company and bulk carriers for Shipping Co-operation of India. Abu Dhabi National Tanker Company (ADNATCO) has also ordered several Aframax tankers (those with capacity between 80,000 and 120,000 metric tons of deadweight).

The OSV market has experienced several years of sustained growth on the strength of high global demand for oil exploration and development. Limited vessel availability and high day rates has led to an unprecedented order book with over 600 offshore support vessels of various types globally.  

“With oil trading at $130 a barrel and speculation that it will reach $150 before August, the OSV market is booming and will remain so for the foreseeable future. Indeed some market sources are predicting that the day rates, for such vessels could well remain at or near historically high levels through to 2015,” said Grostad. 

Scott Jervis, DNV’s new-building manager in Dubai, said that the exploration and development drive by major oil companies operating in the Middle East and India is gaining momentum. “This will undoubtedly create more opportunities for DNV. Oil companies with stronger balance sheets and improved cash flows, combined with new regulatory regimes with a strong focus on robust ship designs and environmental protection will support our projected business growth.”

He added, “Shipyards in Middle East and India are not only winning more new-building orders, they are moving up in vessel size and complexity too, brought on mainly by strong market demand and the lack of capacity at Far Eastern yards.”

With the advent of DNV’s eApproval system, owners can choose the design of vessels from Europe, with approval support centres set up locally to support the client. “This is proving to be extremely popular with many of our regional clients,” added Jervis.

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