The full recovery of the offshore engineering market is still missing the last link - Global offshore engineering market review in the third quarter of 2023
Release time：2024-08-21click：1
1. The supply side is exerting force, and international oil prices continue to rise
Since this year, international oil prices have generally fluctuated in the range of US$75/barrel. Entering the third quarter, although the fundamentals of international crude oil demand have not substantially improved, international oil prices have begun to rise with the support of positive supply-side factors. In July 2023, Saudi Arabia reduced production by an additional 1 million barrels and announced an extension of production reduction measures for two consecutive months. In September, Saudi Arabia extended production reduction measures until the end of 2023. Affected by this, international oil prices climbed from US$68/barrel in early June to US$95/barrel, a single-quarter increase of 28%.
2. Prices rise and downstream demand continues to improve
In terms of order transactions, Clarkson data shows that from January to September, a total of 92 offshore engineering equipment orders were transacted globally, with a transaction value of approximately US$10.2 billion. From the perspective of specific ship types, offshore wind power-related ships and floating production equipment are the mainstays of current market transactions. Specifically, 5 marine survey ships were sold for US$200 million; there was still zero transaction for mobile drilling equipment, but downstream demand was very active, and ship leasing activities were increasing; 50 engineering and construction ships were sold for US$3.1 billion, including offshore wind power construction Operation and maintenance related operation and maintenance mother ships, crane ships, wind power installation ships, cable laying ships, etc.; 13 floating production and storage and transportation equipment, worth 6.4 billion U.S. dollars; 24 offshore engineering support ships, worth 400 million U.S. dollars.
Offshore equipment prices maintain an upward momentum.
The price of new offshore engineering equipment continues to maintain a steady and improving trend. The prices of all major ship types have increased to varying degrees. Among the 13 major ship types with statistical records, the prices of 11 ship types have increased year-on-year, and the prices of 2 ship types have remained unchanged year-on-year. Mobile drilling equipment has experienced significant growth. The price of new ultra-deepwater drilling ships has increased by as much as 22% year-on-year, and the price of new 400-foot jack-up drilling platforms has increased by nearly 18%. The increase in offshore engineering support vessels was smaller, with year-on-year growth basically around 5%.
In terms of completion and delivery, from January to September, A total of 162 units/vessel of offshore engineering equipment were delivered globally, with a total value of approximately US$11.2 billion. In terms of value, it was close to the amount delivered for the whole of last year. Among them, the number of engineering and construction ships delivered was 89, with a total value of approximately US$5 billion. Offshore wind power-related ships are ushering in a wave of deliveries, with 20 wind power installation ships alone being delivered, a record high, which to a certain extent has eased the situation in the offshore wind power market.The paradox of shortage. 24 floating production and storage and transportation equipment were delivered for US$5.2 billion, accounting for 46% in terms of value, including FPSO, semi-submersible production platforms and self-elevating production platforms. Two mobile drilling equipment were delivered, both of which were jack-up drilling platforms, setting a record low. The overall delivery quantity of other types of offshore engineering equipment has not changed much.
In terms of on-hand orders, as of the end of September 2023, the global on-hand offshore engineering orders were 513 units/vessel, worth US$78.2 billion. In terms of quantity, it decreased by 18%, but in terms of amount, it increased by 11% year-on-year. Among them, there are only 46 mobile drilling equipment orders on hand, down 82% from the peak in 2014, and the inventory has been basically exhausted; there are 216 orders on hand for construction equipment. With the batch ordering of offshore wind power-related ships in the past two years, The number of ships under construction has declined; there are 57 floating production and storage and transportation equipment orders on hand, valued at US$37.5 billion, including 28 FPSO ships under construction, valued at US$30.7 billion. As offshore oil and gas development moves towards far-reaching waters , FPSO is being sought after by many oil companies due to its good economy and redeployability.
The equipment rental market continues to strengthen.
The continued high level of international oil prices has stimulated the enthusiasm of oil companies for development. Since this year, the offshore equipment leasing market has been very active. The Clarkson Offshore Market Index has reached 102.33, exceeding the peak level in 2014. The average global rent for jack-up drilling platforms reached US$121,700/day, an increase of 2.7% from the previous month, and an increase of 13.8% year-on-year. The average daily rental for floating drilling platforms reached US$311,600/day, an increase of 1.5% from the previous month, and an increase of 19.9% from the same period last year. .
3. The cycle has restarted, and the market still lacks a key link to fully recover
Past Over the past 20 years, the offshore engineering market has basically gone through a complete market cycle.
The first 11 years from 2003 to 2013 were an upward cycle. During the financial crisis, the market experienced a brief adjustment and then quickly recovered. From 2014 to the present, it has gone through a long adjustment period of 10 years. Judging from the current market supply and demand situation, the global offshore market has basically been adjusted in place. The current market has initially possessed many of the characteristics of the market peak period in 2014, such as a stable international oil price environment. , high equipment rentals and equipment utilization rates as high as about 90%.
From the perspective of shipyards, the number of offshore equipment orders is still at a low point in the past 20 years. Since this year, due to the increase in orders for offshore wind power-related ships, floating production equipment and other
Capacity issues are an important factor restricting the current level of offshore engineering orders. >
Since 2013, global shipbuilding production capacity has continued to decline, and the number of active shipyards in the world is now only more than half of that time. Since 2021, the global new shipbuilding market has taken the lead in recovering, and shipyards have accepted a large number of orders for conventional transport ships. Currently, shipyards around the world have taken the lead. The number of ship orders on hand is about 258 million deadweight tons, and the guarantee factor of on-hand orders is 3.57 years. The shipyard load will be very full in the next three years. In the current situation of tight supply, the global offshore equipment industry has entered a seller's market, and shipyards can choose when accepting orders. There is more leeway. Compared with conventional transportation ships, the priority of offshore engineering orders is relatively low. On the other hand, even if shipowners intend to place orders, delivery will still have to wait 2-3 years due to shipyard scheduling problems, so they are investing. More careful consideration is needed when making decisions.
The arrival of mobile drilling equipment orders may become an important sign of a comprehensive recovery of the market. At present, only Ship types such as floating production equipment and offshore wind power ships are difficult to support the overall recovery of the offshore engineering market. From the perspective of order structure, current orders for various types of offshore engineering equipment have rebounded to varying degrees, and some ship types are even close to historical peaks, such as in 2022. The order value of floating production equipment is as high as 17.4 billion U.S. dollars, while the highest value in history is only 18.4 billion U.S. dollars; the global construction ship order value in 2022 will be approximately 8.9 billion U.S. dollars, which has also ranked among the top 5 in the past 20 years. However, orders related to mobile drilling equipment are extremely scarce. Once upon a time, the annual turnover of mobile drilling equipment orders accounted for nearly half of the global offshore market. Since 2017, only 6 drilling platforms have been sold in the world. In terms of orders, the last time there was a drilling platform order was in September 2020. If this type of ship order, which once accounted for nearly 50% of the global offshore engineering market, does not resume growth, it will be difficult to say that the offshore engineering market will fully recover.
The performance improvement is coupled with the fleet renewal cycle, and new orders are expected to be landed.
At present, most of the inventory drilling platform orders have been completed and the leases of downstream equipment have been implemented. The demand is very active. Driven by the increase in rents, the financial situation of leading drilling platform operators has also begun to improve. In addition, the aging trend of mobile drilling equipment currently in service around the world is very obvious, and a high proportion of mobile drilling equipment is more than 20 years old.The average age of the fleet is more than 21.7 years. The demand potential for ship renewal is also not small, and the expectation of new orders is increasing. After experiencing a wave of orders for offshore wind power and floating production equipment, in the next few years, offshore drilling platforms may once again become the focus of the next wave of the offshore market cycle, and this is also likely to become an important symbol of the overall recovery of the offshore market.
Data source
Unless otherwise stated, the data in this article are all from China Official statistics and information channels released by the Shipping Association, Clarksons, and related companies.
