Offshore support vessel owners in the North Sea are facing the question of whether to operate ships as day rates drop to historic lows.
K Line's 5,000-dwt KL Barentsfjord (built 2011) has been reported fixed by Premier Oil for 21 days of supply duties at just £2,000 ($2,437) per day, down from the previous rate of £3,000 that was already seen as a rock-bottom level.
The platform supply vessel (PSV) was one of vessels booked by UK-based Premier Oil, and another eight by Equinor, Technip and DEME, among others, in the last few days. Utilisation stands at 67%.
Westshore broker Mikal Hovdal told TradeWinds: "There are some rumours in the market that even lower has been done recently."
The deals have left four PSVs open out of 25 in Norway, but 14 out of 35 are still charter-free in the UK.
Hagland Offshore lists six jobs open for anchor-handling supply (AHTS) vessels, but only one PSV requirement outstanding. AHTS rates have risen to £11,000 per day.
"The PSV market is challenging and has more or less dried up now due to the Covid-19 situatio," Hovdal said.
"With limited activity and the issue of marine assurance (vessels need to be vetted to be accepted for work), owners will accept a lower rate on the first job to be vetted and get out working. The alternative is to lay idle with no income."
A vexed question of vetting
He said that some vessels have come off term contracts with other clients and from other regions.
"So they will need to have a Marine Warranty Survey done by each specific charterer to get work for them," he said. "Of course not all clients require this, but the major charterers will need this to accept a vessel for work."
A total of 46 PSVs are laid up in Norway and the UK.
The latest of these is reportedly Eidesvik Offshore's 3,550-dwt Viking Athene (built 2006), which was idled last week in Bomlo, Norway.
Other ships have been sold out of the oil and gas sector for aquaculture or renewables work, or even charity and environmental projects, or powership conversions.
During the last crash, TradeWinds reported in May 2015 that rates of £1,700 had been seen for supply work, which was possibly the lowest since the prolonged downturn in the 1980s.
Hovdal confirmed there were some fixtures done in 2014 and 2015 between £1,000 and £2,000 per day.
"Yes, it has been this low before. Yes, rates can go lower, but it doesn’t make much sense for owners to operate at these levels. There seems to be a kind of market floor at circa £3,000 per day.
"We have seen some 30 PSVs being taken out off the market (either in warm layup/in-house) since the end of March."
He added that with such low activities levels and rates, idling vessels may be the most sensible thing to do.
"This will be required too if we shall have hope of reaching some kind of market equilibrium again soon," he said.
Seabrokers said this month that large PSV rates plunged 77% on average during April.
