It’s budget time, which means that all across the offshore industry, leadership teams are gathering in minimalist conference rooms to stare at spreadsheets on big screens, to make financial plans for next year.
Revenue must rise and costs must fall in the models, and bonuses for the leadership team should be bigger. But how?
The end of 2025 has been somewhat soggy for the industry, with drilling giant Noble reporting a loss of US$21 million for the third quarter and North Sea spot rates for platform supply vessels (PSVs) languishing around US$6,000 per day.
Valaris announced a bigger profit, but only because of a one-off gain of US$90 million on the sale of the jackup Valaris 247, and the company still has two brand new seventh generation drillships sitting in the Canary Islands completely unused. The market news is mixed and there’s not a lot of momentum at the moment.
Everyone is hoping for an increase in drilling demand in 2026, what with TotalEnergies finally lifting force majeure on their LNG project in Mozambique, and with Saudi Aramco finally rehiring some of the jackups it suspended in 2024.
Unfortunately, the timing of the recovery remains elusive, the oil price is still only in the US$60s, and the first newbuildings of the new cycle will be hitting the water soon in China. Don’t remind your CEO of these facts, as budget time is a time for fantasy, for carving out a brighter, simpler, better future in a spreadsheet, not to be interrupted by the harsh realities of this ugly world, or the sordid problems of 2025.
In between scrolling through your work emails whilst pretending to pay attention, discreetly trying to follow the Norwegian employment tribunal case of the unfortunate offshore shipbroker from SSY who took a selfie with a bare-breasted OnlyFans model on a plane and was fired for it (here), and wondering what Astro Offshore will buy next after acquiring the 2014-built subsea vessel formerly POSH Endurance now Astro Archenar, why not pass the time playing our fun 2026 Budget Bingo?
While listening to the CEO drone on about (typically) his new vision, and wondering how your colleagues in Asia are still awake, listen out for these budget buzzwords and phrases.
Score one point for each of the following:
1. “We have to reduce crew costs; these numbers are huge. What’s the minimum safe manning?”
Let’s face it. People are our most important asset. But those crew costs are the single biggest element in the vessel budget. So, something has to give. Do we really need a crew of 15 on this anchor handler, or indeed on any of the vessels in the fleet?
Fewer crew would equal lower costs, right? And that’s a good thing. Fatigue is a major issue in offshore and a major cause of accidents, and having fewer crew would increase fatigue.
But would it really? Do we know that? Fewer crew means fewer people to get hurt, surely? That was always Ocean Infinity’s allegedly altruistic justification for its “lean crewed” vessels, and how has that worked out? They are still not uncrewed, alas, and nor is Yara Birkeland.
Wait for the CFO (who has never been on a vessel, let alone to sea, and appears to wear a two thousand dollar watch) to chime in and tell everyone that the crew should be, “working smarter, not harder”. Score one point whenever anyone says this in the budget meeting, in any context.
Working smarter not harder is exactly why your company has rolled out yet more clunky online forms that are almost illegible and have to be filled in on a very fragile iPad because, “if we don’t measure it, we can’t manage it.” Score another point anytime anyone says that in the budget meeting.
While crewmembers on offshore vessels work 12 hour shifts seven days a week, often for two or three months at a time, top executives wake up in the night anxious that perhaps some slack exists in the crew that should immediately be culled.
If we removed just one cheap rating from all fifty ships in the fleet we would save at least two million dollars a year. What is there not to like about that? Why are safety and operations people always so negative?
Having fewer crewmembers might be possible on paper, because flag state safe manning certificates are based around the smallest crew for a voyage, but not a vessel performing anchor handling for a pipelay barge in Saudi Arabia, or providing supply of oil-based liquid mud at two in the morning to a drillship in heavy seas off Malaysia in the monsoon, as the vessel bucks in the swell. Let’s not get bogged down in the details now. That’s operational.
"No idea is a bad idea, right?" Score one point if anyone says that in the meeting. Actually, some ideas are bad ideas and reputable charterers (if that is not an oxymoron) should be saying “no” to owners who deliberately under-crew their vessels to save costs. And so should the crew themselves.
2. “How are Indian and Filipino crew so expensive? Have we looked at Bangladesh, Sri Lanka and Nepal?”
Have we indeed? If we can’t manage with fewer crew, maybe we can get cheaper crew? Those skilled, hard-working and capable Northern Europeans were canned years ago because they were too expensive… except in Norway and Australia, where national governments have selfishly blocked your CEO’s efforts to drive down costs.
How dare they? High crew costs are such a "low hanging fruit" (one point if you hear anyone using this orchard-focused cliché in the meeting).
After the Brits and the Danes were let go, the company cycled through Poles and eastern Europeans in its quest to maximise shareholder value. Now most of your officers come from India, Ukraine and the Philippines, but the greedy bastards offshore still want pay rises.
You can’t imagine how upsetting this is for your CEO. It is a personal affront. How can the company’s costs be cut if people expect their salaries to at least keep up with inflation?
So, let the quest begin to find the next untapped pool of cheaper manning for offshore. Sudan has a coastline and rich maritime tradition, as well as a civil war. Tanzania maybe, despite the recent riots and election unrest? More babies were born in Nigeria last year than in the whole of Europe combined, including Russia, so maybe some of them will make the next generation of seafarers.
Your CEO and your CFO are very interested in investigating this opportunity further and would like the head of crewing to go to Lagos/Mogadishu/Managua to explore a “pilot project”. Score one point for every bad idea that is proposed as a “pilot project” and score double if it involves crew from new and exotic nationalities.
You will note that the senior management did not fly to the budget meeting on a budget airline and most likely did not even fly in economy class, so they clearly recognise the fact that you get what you pay for in their own lives.
But when it comes to the company’s most valuable assets, its people, maybe cheaper ones from impoverished countries might just make the mark.
3. “On container vessels the crew only have a US$10 daily victualling allowance. Why are our food costs on board the PSVs so high?”
Let’s face it; containerships mostly serve main ports with abundant ship’s chandlers, where food is cheap. Stingy owners would be quite happy to have the crew subsist on rice and eggs, with the occasional bowl of noodles, and the charterers would never know or care.
Unfortunately, Balikpapan is not Rotterdam, despite a shared Dutch heritage, and the Sonils base in Angola is a world away from Singapore.
Many offshore vessels work out of remote locations with high logistics costs and few other vessels call at commercial ports near the supply base, often in countries where domestic food supplies are limited. You can’t compare food costs in Pemba in Mozambique or in Port Blair in the Nicobar Islands with food costs in Long Beach or Shanghai.
No bulk carrier or container ship or tanker has expensive divers or ROV crew onboard, let alone client representatives who are earning hundreds of dollars as a day rate and expect decent food.
Guess what? Annoying the clients is a great way to lose high-margin, high-value charters. Saving a few dollars a day on food might cost you thousands of dollars a day in lost charter hire. There’s a reason why penny-wise, pound foolish is a proverb.
By all means, scheme to serve your crew US$10 a day of gruel, rice and fish, but don’t expect the saturation divers to come back if you serve it, nor the captain and officers.
Remind me, why does nobody want to go to sea anymore?
4. “These engine overhauls are very expensive. Can we defer them?”
It is just so absurd that marine diesel engines require maintenance and, worse, extremely expensive overhauls every 20,000 hours, which cost hundreds of thousands of dollars and take the vessels out of service for several weeks.
If only there was a way we could overcome the laws of mechanical engineering and just not do the work to save on cost. A few thousand extra hours can’t make a difference and will push the problem into 2027 when maybe a new fudge workaround can be found.
At this point you might mention that if the CEO thinks engine overhauls are expensive, he might want to consider that catastrophic engine failures tend to be even more expensive.
Or perhaps this is a lesson that needs to be learnt with two months of offhire time, and huge hull and machinery claim?
5. “Do we really need to use OEM parts?”
If we have to do those darned engine overhauls, there must be a way of doing it cheaper, surely?
Sure, Caterpillar, Bergen and Cummins and their peers are hugely respected companies with long track records of manufacturing precision equipment that works. But those original spare parts are quite pricey, and your CEO would like to look at going to that supplier in China whose boast is that their parts are “non-genuine” but almost as good as the real thing. Trust me, they come from the finest knock-off factory in Guanxi province, a world leader in imitation spares.
Or there is that place in Gadani Beach with an array of reconditioned parts from scrapped ships sitting in a humid warehouse ready to ship once the rust is chemically removed. Yes! Genius!
Best of all, the CEO can use the budget meeting to publicly pressure the Technical Director to go down that road, too.
When this is suggested, harness the power of silence… and score a point.
6. “Can we plan our dockings better? 28 days seems an unnecessarily long time.”
Indeed, if only drydockings were like Formula 1 tyre changes, over in seconds, efficient and predictable. Unfortunately, starting a drydocking on a ship is like opening Pandora’s box, and the process is rarely amenable to your CEO’s wishful thinking or your CFO’s one-size-fits-all spreadsheet.
If we wish it and dream it and enter 28 days in the spreadsheet, then maybe it will happen? Maybe.
Unfortunately, as the two recent fatal explosions at ASL Marine’s yard in Batam show, shipyards are dangerous places, and vessels, crews and budgets enter at their own peril.
Until you do the steel gauging in the tanks, who can know exactly how much steel needs replacing in the forepeak tank? Until the ship is out of the water and on the blocks, who can realise that the indent on the bulbous bow is so deep?
And until the spare parts have actually cleared customs and are on the ship, who can be certain when they will arrive? What, we can’t undock for a week because the other ship in the dock as a big hole in the side? That’s not in the Excel budget file, either.
Hope is not a strategy, and whilst good planning, solid preparation and high-quality engineers on board can reduce uncertainty, there are always surprises in dockings, whether mechanical, logistical or human.
But when was the last time your CEO actually spoke to a docking superintendent about a docking? Yelling at the technical director is so much easier, and it respects the hierarchy of command in the organisation.
If your dockings are lasting longer than Liz Truss’ tenure as British prime minister (50 days) then yes, you have a problem. But if you can close a special survey in 28 days then by my book you are doing fine, especially when you have dynamic positioning trials to undertake, and a new bollard pull test to perform.
7. “Can we use AI here?”
CEOs note that investors love AI at the moment. Companies that are implementing AI are highly valued. Tragically, whilst Nvidia is worth US$5 trillion (with a “t”) and Microsoft has just surpassed a US$4 trillion valuation, these AI giants are completely unlike offshore ship owners.
But never mind. AI is hot, and your CEO wants the shareholders to know that your company has some nifty AI solutions to generate unprecedented stakeholder value. A few press releases on the topic and maybe the stock price will be turbocharged?
Tesla is not valued as a car company – it is valued at a mind-blowing US$1.5 trillion as a tech company. If only the everyday business of operating offshore support vessels was amendable to the magic fairy dust of AI. Voyage optimisation? Cargo planning? Crew rotations? Real time engine maintenance? There must be something… if you can’t find it, then you are not trying hard enough!
Clunky steel ships and a bunch of middle-aged men in oily coveralls are not exactly the image of futuristic techno-Utopia to which your board aspires, but again, do you have to be so negative?
If you can’t get a replacement fuel hose, the long-awaited gasket material and some filters to the vessel in two months due to supply chain inefficiencies, the roll-out of AI solutions onboard seems unlikely. But, once more, saying this at the budget meeting will be considered negative and unhelpful.
Two years ago, it was blockchain. Three years ago, it was having “data on the cloud”. And five years ago, putting planned maintenance systems on tablets was all the rage. Now it is AI that will drive efficiency and value generation in the industry. If only…
Score one point for every mention of AI in the meeting.
8. “How do we reduce our shore and general costs?”
The man who flew first class in United to the budget meeting and holds platinum cards in two airline alliances wants to know how to save costs. Obviously, it is the little people who are to blame, not the senior management. The Four Seasons Hotel is the standard at board level (duh), but that Ibis Budget or the Premier Inn will do you very nicely when you travel to the client’s safety meeting.
Whilst Tidewater CEO Quintin Kneen has managed to sell more than US$70 million of stock in the company in the last two years, and is richer than Croesus, you can bet that he won’t be offering to take a pay cut in the budget meeting, nor to trim his perks, so don’t go there.
Let’s focus on the essentials instead. Perhaps we can cut the receptionist in the Kuala Lumpur office? Does Aberdeen really need a cleaning service three nights a week? Perhaps the bins can be emptied just twice a week? And does the port captain in Rio need a company car? Is Uber not available in Brazil? Let’s not be so disparaging about the new modular office proposal, either; calling it a “port-a-cabin” is unfair.
Of course, we need the head office golf tournament as a morale booster and for clients, and, yes, the senior management leadership retreat in Phuket is essential as a team-building exercise, with the motivational speaker and the yoga workshop.
But does the Mexican office really need a coffee maker and all those expensive capsules? What is the Spanish for “a jumbo pack of supermarket own brand, instant coffee”?
Tot up your marks and send us the score. If you scored more than ten, we suspect you work for a leading American-listed offshore support vessel owner, or for a company owned by the titans of private equity.
If you scored four or less, you may work for one of the few traditional owners left in the industry. Well done.
Or perhaps you just fell asleep in the meeting and missed the Budget Bingo. Not to worry; the same issues and the same futile conversations will be back next year. Same time, same team, same conference room.
Good luck hitting the 2026 targets. You signed off on the budget at the meeting.
Background Reading
The inspiring Silicon Valley bros and their technology has been a holy grail for the offshore industry for at least a decade. Six years ago we were calling BS on MMA Offshore’s efforts to sprinkle what we described as “Apple-style techno-pixie dust” over its business through its iHub initiative – read my “iCall offshore BS!” piece from 2019.
We hope that the new owners Cyan Renewables have continued to "start solving tomorrow's problems today."