Several factors would need to be taken into consideration before a final decision was taken on whether to move ahead with OSV newbuilds, the head of one of the UAE’s largest offshore operators said in an interview.
In the eleventh in a series of interviews ahead of Seatrade Maritime Logistics Middle East, Martin Helweg, CEO, P&O Maritime Logistics (POML), Dubai, UAE, updated Seatrade Maritime News on developments in the offshore sector.
It was difficult to definitively say whether newbuilds were required in the OSV market without taking several factors into consideration. “Ultimately, the decision to build new vessels will depend on a complex mix of market conditions, financial considerations, and industry trends,” he said.
According to its website, POML’s existing operational fleet of around 400 vessels includes tugs, pilot, mooring and environmental craft, as well as OSVs, such as AHTSVs, PSVs, MPSVs, ERRVs, modular carrying vessels and smaller bulk carriers.
Demand, utilisation rates, and the age and condition of the existing fleet were all important factors. “If the trend remains for our current fleet to operate at high capacity, and demand is expected to remain strong in the region, then there may be a need for us to look into newbuildings to meet the demand and maintain service levels,” he said.
However, it was critical that customers also shared the burden by offering longer-term contracts at sustainable rates. Other factors also need to be considered, such as the cost of building new vessels, the availability of financing, and the potential for overcapacity in the future.
“Additionally, there may be other factors affecting the OSV market in the region, such as changes in regulatory requirements or shifts in the energy market that could impact demand for OSVs,” he said.
According to Helweg, finance for OSV newbuilds remained available from four types of institutions: private equity, traditional banks, specialised lenders and alternative financing sources, such as mezzanine lenders and venture capital firms.
As a global marine operator, POML has offices on six continents. Within the offshore segment, the Middle East, African and the Caspian markets remain important regions, providing clear growth opportunities. Additionally, the company is supporting the renewable energy sector in Asia.
“Another market where we see tremendous potential is the Caribbean. We are in ongoing conversations to grow our service portfolio there and announcements will be made in due course,” he said.
As to operations last year, despite industry-wide challenges, 2022 was a positive year for POML. “Across our focus areas of cargo transport, port services and offshore we made some great progress,” he said.
It added 23,000 nautical miles (42,596 km) to its route network and saw an increase of 17.2% in vessels serviced, with revenue higher in key areas of the business. It also took various environmental initiatives and achieved crew health and safety records.
“We saw an uptick in energy activity, meaning both rates and utilisation increased across our core markets in Africa, the Middle East and Caspian. In Asia we saw a continuation of activity in the renewables market, and are hopeful for the energy markets for the next few years,” he said.
“This year, we expect to grow cargo transport with a particular focus on our multi-carrying vessels and are involved in some exciting projects where we can apply that expertise. On the port side, we continue to look at how we can expand our portfolio further.”
On the question of decarbonisation, and in line with parent DP World’s sustainability strategy, Helweg said the company was exploring several innovations, including the use of alternative fuels, energy-efficient technologies to streamline operations, improved ship designs, and ongoing research and development.
Martin Helweg, CEO, P&O Maritime Logistics, Dubai, UAE, is speaking at Seatrade Maritime Logistics Middle East, on May 16-18, 2023, in Dubai.
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