Clarksons Research has revealed just how badly the offshore support vessel (OSV) sector has been hit by Covid-19 - and more turmoil lies ahead.
Lockdowns led to an estimated 22m barrel per day drop in demand during April, down to a monthly level last seen in 2002.
This has picked up as restrictions eased, with the August figure showing a "smaller but still huge" drop of 7.9m bpd year on year, Clarksons said.
Demand is expected to recover towards late-2019 levels over the next 18 months, but this would still leave it about 2.5% below pre-pandemic projections, the company said.
Analyst Calum Kennedy added: "Covid-19 has had a major impact on global energy markets, and a range of knock-on effects across the shipping industry. The offshore sector has been hit hard, and now faces its third downturn in just over a decade."
Spending cut back
Weak oil prices mean capital expenditure commitments have stalled, to the detriment of the offshore markets.
"At start 2020, we expected $116bn of offshore capex in 2020," Kennedy said.
"By start August, our statistics showed just $16bn committed, down by 85% on 2019. Even with demand improving, built-up oil inventories will take time to wind down, and though tighter supply/demand has boosted prices (Brent up 70% across Q2) it is unlikely to result in much immediate improvement."
The company's offshore rate index is down by 14% since the start of March.
Utilisation of drilling units was at 70% at the beginning of August, seven points below March.
Utilisation declines
OSV utilisation stood at 59%, down a point from March, and four points from the end of 2019.
This is despite the fact that the second quarter would usually see seasonal gains.
At the start of the year, there were 18 offshore productions projects considered close to a final investment decision.
Of these, 10 of have subsequently been delayed, and others may slip during the second half, Clarksons said.
"Impacts vary, and some regions, such as the Middle East/Asia for OSVs, or Brazil for MOPUs and rigs, have so far shown a little more resilience, whilst demand from the renewables sector has been a relative bright spot," Kennedy added.
"However, in general, offshore utilisation is falling and further decline is still expected. Moderate improvements could come in 2021, but severe downside risks from Covid-19 exist."
Norwegian broker Westshore shows platform supply vessel (PSV) use at 46% in the North Sea on Monday, with anchor-handlers at 56%.
PSV rates are down to a dire £2,750 ($3,600) per day.
Anchor-handlers are much stronger at £35,000 per day for rig moves, as the fleet has shrunk to 20 working ships, compared to 40 PSVs.
A total of 51 PSVs remain laid up in North Sea ports, with 32 anchor-handlers stacked.
