The global subsea vessel operations expenditure is set to reach $97.7 billion between 2016 and 2020, said a report by Douglas-Westwood (DW), a leading provider of market research and consulting services to the energy industry worldwide.

The report, titled 'The World Subsea Vessel Operations Market Forecast 2016-2020', analyses the main factors driving demand for Multipurpose Support Vessels (MSV), Dive Support Vessels (DSV), Flexlay, Light Well Intervention Vessels (LWIV) and Pipelay Vessels, supported by analysis, insight and industry consultation.

Mark Adeosun, author, said: “This represents an increase of 29 per cent compared to the preceding five-year period.

“Low hydrocarbon prices, coupled with vessel oversupply will result in low utilisation impacting expenditure over the forecast period. Despite these near-term concerns, subsea vessel demand is set to grow at a 5.2 per cent compound annual growth rate (CAGR) over the next five years,” he said.

“Africa, Latin America and North America are expected to account for 47.5 per cent of global subsea vessel expenditure between 2016 and 2020. The ‘golden triangle’ remains vital to subsea vessel demand over the forecast period despite falling oil prices, project delays and the political instability associated with Africa.

“The development of East African gas basins in the Indian Ocean will contribute to subsea vessel demand in the latter years of the forecast period,” he added.

Hannah Lewendon, research team leader and assistant editor, said: “Vessel supply has increased in recent years due to the current build cycle, which was originally driven by high oil prices and increased demand for higher specification vessels.

“Recent order intakes have been relatively low and this is not expected to pick up for some time, marking an end to the current new build cycle. Among the various vessel types, MSVs have the highest order book to existing fleet ratio, whilst the proportion of LWIVs in the global fleet will remain low,” she said.  

“As a result of the continued challenging market conditions, subsea vessel providers have been taking additional measures to help strengthen their financial position and stem oversupply in the market by defer¬ring the delivery program of newly built vessels.

“We believe that it is unlikely that day rates have bottomed out. Across the global subsea vessel fleet, a 2014-15 decline of at least 30 per cent in day rates is not unlikely before prices stabilise. However, many tier one contractors are joining forces to ensure utilisation and maintain track record,” she concluded. – TradeArabia News Service