Bright future ahead for high-spec flotels
The image below shows a model of Axis Offshore’s new-building Axis Nova semi-submersible accommodation rig, displayed at the company’s stand during the last week’s Rio Oil & Gas Expo in Brazil.
Axis Offshore, a company established in 2012, exhibited at the Rio Oil & Gas Expo 2014 held between 15-18 September, and according to a statement on their website the exhibition served as an excellent opportunity to connect with a wide range of stakeholders in the Brazilian offshore oil & gas sector.
Worth noting, the company’s accommodation and support vessel Dan Swift is currently on a contract with Petrobras, Brazil’s state-run oil company.
As for the Axis Nova flotel, the unit is currently under construction in China. It is scheduled for delivery in the first quarter of 2015. Its sister flotel, Axis Vega, also being built by Cosco in China, will follow at the end of 2015. The flotels will offer high safety standards and comfortable solutions for offshore accommodation for up to 500 crew and guests.
When ordering the first flotel, back in 2012, Axis Offshore said it would target “the strong demand for modern units to operate in the harsh environment in the North Sea, especially in the Norwegian and UK sector.”
Contract talks ongoing
However, this year has seen a slowdown in the Norwegian Continental Shelf market, as well as in the global drilling market, as oil companies have reduced capital expenditure, pressured by investors who are increasingly calling for bigger dividends and a better rate of return from oil firms.
Offshore Energy Today contacted Michael Kristensen, Axis Offshore Chief Operations Officer to ask about the outlook for the Axis Nova and Axis Vega contracts.
“I can inform that we are in discussions for employment but we cannot give details at this stage,” Kristensen said in an e-mail to Offshore Energy Today.
“With regards to your question on the slowdown on NCS, we remain optimistic about the outlook for modern solutions in a market with a number of units with a high age-profile and outdated specifications. The Axis Nova and Axis Vega will be among the best specifications available in the accommodation market and that will be the key factor for contract awards in the market.”
Kristensen’s words are in line with a recent report by Douglas Westwood, a consultancy group, which actually predicts a bright future for the owners of high-specification semisub units.
In its release issued in July, Douglas Westwood affirmed that declining North Sea production and increasingly mature assets are expected to drive demand for offshore accommodation support, with the attributed maintenance, refurbishment and shutdown work requiring additional personnel-on-board and workshop capacity.
Industry screaming for hi-spec units
“However, the harsh met ocean conditions of the northern North Sea ultimately limit Operator choice to two types of accommodation – jackup barges and semisubs – due to the greater stability and safety offered. The industry is screaming for offshore accommodation capable of working in harsh conditions,” Douglas Westwood writes.
Although the market will see 11 new units delivered between 2015-2016, continued growth in demand for accommodation semi-subs, intensified by unit retirement, will further constrain supply, DW writes.
Chinese shipbuilder Cosco earlier this week announced it secured a flotel order with options for five more from a Singapore-based entity. Knowing that Axis Offshore has a Singapore office, Offshore Energy Today asked Kristensen if Axis was the client behind the order.
“No, the rig announced by Cosco yesterday is not ordered by Axis Offshore,” Michael Kristensen said.
Oil companies setting age restriction
According to the latest report by Floatel International, another offshore accommodation units provider, the advantage of newly built flotels is that several clients are specifying age restrictions to ensure no compromise on quality and safety, meaning that older flotels will not be invited to bid.
The average age of the 18 semi-submersible accommodation vessels delivered before 1987 is reaching 33 years, the Swedish company’s report reads. The worldwide operating semi-submersible accommodation fleet presently comprises 22 units. It is expected that several older units will exit the market place in the coming years.
Prosafe, the world’s largest provider of semi-sub accommodation units, with eleven active semi-submersibles and four new builds under construction, has in its 1H 2014 report noted the short-term slowdown in the North Sea highlighting “a lower activity level and fewer tenders and enquiries from clients than in the last three year period.”
However, the company said that the positive long-term demand outlook remains unaffected with prospects of increasing need for offshore accommodation services related to maintenance and upgrades of an aging production infrastructure, hook-up and commissioning of new facilities and decommissioning of old fields.
Prosafe also remarked that the recent energy reforms in Mexico, which are expected to encourage deepwater exploration, will eventually result in demand related to hook-up and commissioning projects and, ultimately, maintenance and modification work.