Norwegian shipowner Ocean Yield may take advantage of hot oil storage markets to find work for a stubbornly unemployed FPSO weighing on its balance sheet.
Uncertainty has surrounded the 214,266-cbm Dhirubhai-1 (built 1979) since Reliance released it in India in 2018, and fresh firm work from within Ocean Yield's major shareholder Kjell Inge Rokke’s empire or outside has yet to materialise.
The floating production, storage and offloading unit is currently laid up in Sri Lanka, but Ocean Yield chief executive Lars Solbakken said the company is evaluating "several opportunities, in particular one in Ghana and one in the Far East".
Speaking on the company's first quarter conference call with analysts, he added: "We are considering storage projects. We are in discussion with potential charterers with respect to storage."
Asked about the lead time in getting the unit ready for storage work, he said preparation work is ongoing.
But he added: "We are of course concerned that the low oil price may delay these projects and it may not be realistic to have a final investment decision before the first half of next year."
In October, the Oslo-listed leasing company took a $68.4m impairment hit on the book value of the ship, which was valued at $150m at that time.
The vessel is now accounted for in discontinued operations and classed as an asset held for sale.
This means it will not face any ordinary depreciation accounting, but still has to be recognised at its actual value at the end of each quarter.
Scrapping an option?
When asked about potential scrapping of the vessel, Solbakken said there is also cost involved in demolition, but the value would be more than $10m for the steel.
There is also equipment on the unit that it may be able to sell, but it is "very difficult" to estimate the value of this, the CEO added.
"The best solution is if we could be able to find a project. That would give us the best price for the unit," he said.
Offshore hope for Ocean Yield
The company has 68 ships on long-term charters, but the FPSO is one of the four that are not.
One of the others is the 156-loa multi-functional offshore support ship Connector (built 2012).
In March, the formerly laid-up subsea construction and cable layer started a 175-day time charter with Ocean Installer for installation work in China.
The ship racked up a loss of $5.1m in the first quarter.
The final two ships without term deals are two anchor-handling tug supply (AHTS) ships leased to restructuring Solstad Offshore.
They lost $2.1m in the quarter as Ocean Yield received no charter payments due to a standstill agreement with the operator.
This has been extended to 8 May, when Solbakken said Solstad, Ocean Yield and other creditors hope to sign a final refinancing agreement that will see banks take over Solstad.
He expects improved bareboat earnings from the vessels in the second quarter through a new four-year variable-rate deal with Solstad that will see payments based on earnings from seven other ships in the Solstad fleet.
The 21,454-hp Far Senator (built 2013) and 21,457-hp Far Statesman (built 2013) have had no earnings for one and a half years.
They have been "absolutely negative" for results, Solbakken said.
Ocean Yield's existing claims against Solstad will be converted into shares, he added.
"We will of course consider for how long we will hold on to the vessels," he said.
