On the first day of Christmas my true love gave to me… a partridge in a pear tree, according to the ancient English carol, but at Baird Maritime, we ditch the seven swans-a-swimming and five gold rings, and, instead, we run a dozen festive features on the offshore industry in the run up to Christmas.
Last week, we covered six Keppel jackups-a-swapping in an opaque US$3 billion deal involving the former Singapore rigbuilder and an allegedly arm’s length third party which assumed control of its partially built rig fleet in 2022, we had five W2W newbuilds-a-building at Vard in Vietnam, and four new ENI blocks in Ivory Coast (as well as a film recommendation for a Guy Ritchie war drama).
Subsequent to the piece running, we were contacted by a source who told us that the five newbuild W2W vessels are actually dedicated to Brunei Shell Petroleum (BSP) rather than to offshore wind, which explains why they have accommodation for 190 passengers and crew. These are along the lines of Go Offshore’s Go Aliya and AD Ports' Crest Centurion 2, which already work for BSP, rather than being targeted at the already crowded wind market, which faces significant overcapacity risks in the coming few years. Breathe a sigh of relief Edda Wind and IWS.
We also understand BSP is also running a multi-vessel newbuild crewboat tender for 70 passenger boats with small active heave compensated gangways as well, exciting interest at Strategic Marine and Penguin in Singapore, and Piriou in Vietnam.
It’s not clear where the funds for the new vessels will come from, given the small pool of Bruneian ship owners. Perhaps the new BSP Managing Director Johan Atema will play Santa Claus to a lucky local boat owner in Bandar Seri Begawan and provide the necessary customer guarantees to ensure financing is available to support local content. Brunei produces less than 100,000 barrels of oil per day, but the state is a major producer of LNG, with just under seven million tons per annum (MTPA) of production.
The first three festive features appeared a fortnight ago (here), covering the latest on the Scottish ferry fiasco, two Namibian ministerial jailbirds, and three legacy wells in the Bulgarian Black Sea. So, what have we got this week? Instead of seven swans-a-swimming we find seven hundred thousand dollars of fines due!
When we looked at ENI’s big plans for Ivory Coast last week, we noted that Altera Infrastructure (the company formerly known as Teekay Offshore) was busy commissioning the floating production storage offloading vessel (FPSO) Voyageur Spirit to bring Phase 2 of the Baleine deepwater development online.
This is just one of the seven FPSOs in the Altera fleet — four others are operating in Brazil, with one idle there (Piranema Spirit), and Petrojarl Knarr is being finished at the Dubai Drydocks for the Rosebank project in the North Sea. Additionally, Altera owns two operating floating storage units (FSUs), one working in Norway and the other in Thailand.
Last month, the company announced it was selling its fleet of 18 dynamically positioned shuttle tankers that are operating in Brazil, Canada and the North Sea to the Angelicoussis Group of Greece.
Its previous sale of shuttle tankers is the one that has got it into trouble. Last week, the activist group NGO Shipbreaking Platform announced that Altera was being fined NOK8 million (US$718,000) for illegally scrapping two shuttle tankers, Navion Britannia and Alexita Spirit, on “blowtorch beach” at Alang in India in 2018.
The company sold the ships, along with two other shuttle tankers, to Wirana Shipping Corporation in Singapore. Wirana says on its website that it is “the oldest and one of the largest cash buyers of ships in the world with more than 35 years of experience.” It says it has dealt in more than 88 million DWT made up of more than 2m700 vessels. Over the last decade the company’s average annual transaction volume has been about 100 to 150 vessels.
Whilst Wirana boasts that it is “proudly engaged in green ship recycling as a process of ship demolition and tankers recycling and rigs recycling,” the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (Økokrim) raided Altera’s office in Stavanger in 2020. The Norwegian authorities determined that ships, as hazardous waste, cannot be exported to non-OECD nations under Norwegian and European Union laws. The OECD members are 38 of the richest countries, and Turkey is a member, which is why all the rig owners were sending their units to Aliaga in the downturn.
Økokrim has form with Wirana – five years ago, Norwegian authorities fined the company NOK7 million (now US$628,000) after Wirana had attempted to export the barge carrier Harrier to a scrapyard in Pakistan. Dutch shipowners Seatrade and Jumbo have also been fined in the Netherlands for the illegal export of ships for scrapping on the beaches of South Asia.
In September, six workers were killed and four critically injured in Bangladesh, NGO Shipbreaking Platform reported, when there was an explosion on the tanker Suvarna Swarajya as it was being dismantled. Shipbreaking remains a major business in India, Pakistan and Bangladesh, and deaths and injuries occur in the breaking yards in all three countries, despite efforts to raise standards. NGO Shipbreaking Platform has noted that in 2019 the Bangladesh High Court ordered that vessels sailing under grey- and black-listed registries – flags that have the worst port state control records – should not be imported into Bangladesh. However, in 2023, over a hundred such vessels were brought into the country for scrapping, notwithstanding the judicial ruling.
Shipping is a lowest common denominator industry, as we see from the fiasco of the Dark Fleet tankers trading under dubious registries. Raising scrapping standards and scrapyard worker safety is in everyone’s interests. Altera has learnt the hard way that some states will prevent the export of hazardous materials to poor countries where the facilities for dismantling are insufficient. More should follow suit.
If only the fashion industry and the so-called plastic recycling industries could be prevented from dumping their waste in developing countries as well. Higher global standards are win/win.
In 2019, Seacor Marine Holdings owned and managed eight anchor handlers, and now it has none.
On December 2, the company announced that it had exited the anchor handling segment by disposing of its final pair of owned AHTS, Seacor 888 and Seacor 88, and it has also returned its final leased unit, Norman McCall, to its owner, Bank of America, which is also in the process of disposing of that AHTS. So, that’s enough eights to warrant Seacor’s entry into this year’s 12 Days of Christmas.
Seacor 888 and Seacor 88 were both acquired from the bankrupt Pacific Richfield fleet in 2016, and are 81-metre-long sister vessels built in 2013 with 120 tonnes bollard pull. Britoil is reported to be the buyer, paying US$22.5 million in total for the two ships, as it grows its fleet on top of the acquisition of Vroon Offshore Services and some abandoned newbuilds in China after X-Press Feeders owner Tim Hartnoll took control of the company.
Like many of the vessels built by Ronnie Sudjaca at his own Pacific Richfield Shipyard in Singapore, the ships are of an eclectic design, with over 700 square metres of clear deck space, Fifi2 class notation and over 3,000 DWT, making them akin to medium sized, diesel mechanical platform supply vessels (PSVs) but with 150-tonne line pull winches. Seacor has pulled the specifications from its website after the sale was announced, but you can find them using the Wayback Machine internet archive here.
At the same time, Seacor announced that it would re-investing the proceeds into newbuild PSVs. The company has been a pioneer of battery hybrid PSVs, as we highlighted in 2020 when Seacor announced it was taking full control of eight battery hybrid UT771 design PSVs of 840 square metres clear deck space and 4,200 DWT from its joint venture with Cosco in China.
Now Seacor will build two more PSVs for a contract price of US$41 million per vessel. The PSVs are each 4,650 DWT with 1,000 square metres of clear deck area and will be equipped with medium-speed diesel engines and an integrated battery energy storage system for higher fuel efficiency and lower running costs.
In 2023, we pointed out that Tidewater’s claims in its investor material that newbuild high-specification PSVs cost US$65 million were nonsense, an exaggeration that conveniently suited the company’s incumbent position, based on hypothetical Norwegian shipyard pricing when everyone is building their new PSVs in China. We commented:
“Tidewater had told the market on page 20 of its Barclays presentation that the cost of a newbuilding large PSV was US$65 million, and that the economics for newbuilds were unfavourable. I pondered aloud that, you know, Tidewater might be exaggerating the costs in a self-interested way.”
Seacor’s firm order for US$41 million per vessel, coming after similarly priced orders from Hercules Supply, Costamare and Capital Offshore in China, should lay this myth to rest. It will be interesting to see when Tidewater updates its investor materials to reflect reality.
Seacor will finance up to 50 per cent of the newbuild cost from a new financing package from EnTrust Global at an interest rate of 10.3 per cent per annum.
The company’s shares are down 46 per cent over the last year, and it may be In the Bleak Mid-Winter now, but at least Seacor seems to have a clear vision for the future – a battery powered, diesel-electric hybrid future.
Regular readers of this column will observe the outsize influence enjoyed by John Fredriksen on the offshore industry. The tanker magnate, famed for his ownership of Frontline, and as the founder of Seadrill and of Deep Sea Supply, has returned to offshore since 2021 after he lost control of Seadrill in its second restructuring.
With classic trading flair he has retained ownership of the two Norwegian flag PSVs Rem Mist and Rem Hrist under the management of the Remøy Group, but sold the PSVs Sea Goldcrest and Sea Gull in 2023. Whilst his Seatankers Management bought, then sold, the subsea vessels Edda Sphynx and Edda Savanah to Pelagic Partners of Cyprus in October (the ships have now been placed under Golden Energy Offshore management with the Energy prefix to their names), he has reinvested the proceeds in four newbuild subsea vessels at Wuchang in China of Salt 0494 design, as we reported (the options were declared a few months back).
Through a family trust, he also holds just under 27 per cent of Edda Wind, the largest owner of windfarm support vessels in the world, with a fleet of 13 in operation and under construction. He bought into the company when it listed in 2021, as per our “Diet Teas and Influencers” piece on that fashionable IPO, but disappointingly, the shares have lost 37 per cent of their value since then.
But neither wind nor direct investments in PSVs are where Mr Fredriksen’s biggest offshore investments lie. Instead, he has taken large, but not controlling, positions in two of the biggest names in subsea, now holding nine per cent of both rig owner Valaris and subsea player DOF.
In restructured Norwegian subsea giant DOF, Mr Fredriksen is now the second largest shareholder in the company, as per last week’s filing. Only the Moller-Maersk family has a larger stake (25 per cent) after the merger of DOF with Maersk Supply Service’s global fleet outside Brazil earlier this year.
In Valaris, Mr Fredriksen has used the dip in the company’s share price, which is down 36 per cent over the last year, to accumulate a larger position. He first bought into the company in December 2021, taking a five per cent stake for US$115 million, which he increased to six per cent in January 2022, as per Tradewinds. By October of this year, he had hit eight per cent ownership through his Famatown Finance affiliate. Now, this month, Famatown’s stake in Valaris hit 9.4 per cent. Valaris owns 13 drillships, five semisubmersibles and 35 jackups, and has the largest fleet of any international offshore driller.
The offshore industry has had a roller-coaster 2024, with stock prices hard hit by fears of an oil glut and increased shale production in the United States, and a slowdown in the rate of increase of day rates for many categories of assets. This was the year when Aramco cancelled two dozen jackup rig contracts and oil hovered above US$70 per barrel.
However, when we see Mr Fredriksen accumulating shares in a major driller after a stock price dip, we can be heartened. As the ancient Christmas hymn reminds us, “O come, all ye faithful, Joyful and triumphant!” (although this is not investment advice).
Efforts to raise scrapping standards, newbuilds from Seacor and more investment by shipping’s richest man?
“Sing in exultation, Sing, all ye citizens of Heaven above!”
Background reading
With much of the regional offshore industry in the Gulf gathered in Dubai for a conference last week, it is important not to be dazzled by the glitter of the largest city in the UAE. The shimmering skyscrapers are often built on shady foundations.
We loved the recent OCCRP feature on how “the son of Dubai’s ruler owned a majority stake in a real estate firm formerly chaired by convicted Italian drug trafficker Raffalele Imperiale.”
Once again, OCCRP offers excellent investigative reporting into how, in his new home in the UAE, “Imperiale presented himself as a real estate developer, even as he continued to coordinate the import of thousands of kilograms of cocaine from South America to Europe, according to a 2022 indictment from Italy.” He then used the proceeds to purchase one of the artificial islands in The World development, investigators found.
The greatest gift the anti-corruption forces could get this year would be proper Know Your Customer enforcement in the banks and real estate agencies in the UAE. It’s time to “let in light and banish shade” from the seamy side of the Emirates, as Bandaid put it.
Imitation is the greatest form of flattery, so we were delighted to see that energy consultancy Esgian has put the “Hieronymus Bassoe” byline on its insightful wind features, and assumed that this was a witty pun on their part… then we realised that the author is apparently a real person with a Master’s degree from the London School of Economics in Empires, Colonialism and Globalisation. Life imitates art, so, from one Hieronymus to another… Merry Christmas.
Read here for parts one and two of this year's Twelve Days of Christmas series.