Whilst rates for offshore support vessels in 2026 have dipped below the highs of 2024, they remain strong. Leading-edge, long-term rates for large platform supply vessels (PSV) with over 900 square metres of clear deck stand at just below US$30,000 – around three times operating costs and three times higher than such vessels commanded in the dark days of 2020.
If you don’t believe me, read slide 16 of Tidewater’s definitive presentation on the topic. This is why I love Tidewater as a public company. There’s so much transparency and disclosure. Tidewater has even had the balls to stand up and say in public that it intends to raise large PSV rates to US$40,000 in 2027, if it can.
Is this one voice in the wilderness, however?
Edison Chouest and Bourbon, the second and third largest players, reveal nothing because they are private companies owned by a secretive Louisianan family and a cabal of hedge funds, respectively.
The good news is that Hornbeck Offshore Services, like Lazarus, has arisen from its brush with death/Chapter Eleven restructuring, completed its merger with listed Helix last month, and is now back on the public markets. Even better news for shareholders (no, really) 24 of its 57 offshore supply vessels are laid up and stacked, as per its latest presentation. So, we can expect to get some good data from Hornbeck’s report going forward, just as Seacor exits the stage as a public company due to its ongoing sale process, or strategic review as the board likes to call it, which is believed to reach a climax before year end.
Hornbeck’s shares have fallen 15 per cent in the last month since the Helix deal closed, but the tangled relationship of the Hornbeck family with Tidewater means that we can probably expect Hornbeck to make an all stock offer for Seacor and acquire Seacor’s fleet to give the company the international scale its domestically-focused business has sorely lacked. And, secondly, such a move would be a great snub to Tidewater, which would no doubt provide some well-deserved Christmas cheer to CEO Todd Hornbeck, whose father sold the predecessor Hornbeck company to Tidewater in 1996, but not the company name or brand.
As this column is a written reminder, never forget the power of a personal vendetta in business.
For medium-sized PSVs with deck spaces of between 700 and 900 square metres, day rates are slightly lower, but still in excess of $25,000 per day. And such ships have been achieving similar spot rates in the North Sea this month, at least until the onset of winter drags down rates. You can follow the North Sea market on the excellent Hagland market site here.
The smaller segment of PSVs with less than 700 square metres of clear deck space, which typically means diesel mechanical ships that guzzle more fuel and are now technically obsolete have fallen back more sharply. Rates are now standing in the higher teens, not helped by the American and Israeli attacks on Iran and the war in the Persian Gulf that has slowed down both offshore construction projects and drilling there, and the collapse in activity offshore Mexico that has driven Mexican-flagged vessels out of that benighted market.
However, even at those rates, with operating costs typically at less than US$7,000 per day, owners like Britoil, who have invested heavily in second hand tonnage in the segment, are doing every nicely (see our “rein me in view” of the Britoil four vessel purchase from Turkey here).
It is safe to say that when Chinese lessor ICBC auctions Bourbon Explorer 506 online on the Shipbid.net online auction site on November 24 with a reserve price of US$12 million, it will not struggle to find buyers. The last sister vessel achieved over US$16 million in an earlier action and this ship built in 2014 with DP2 and 710 square metres of clear deck will likely achieve a similar price. With delivery in Abidjan, Ivory Coast, cash-rich Middle East bidders like Astro and Maridive are likely to be once again at the forefront of the bidding as they seek to diversify their fleets away from the war-torn Persian Gulf.
Again, we love the transparency of a public auction that all and sundry can watch and enjoy like a commercial endurance sport with seven-hour bidding marathons, longer than the flight from Singapore to Beijing.
The North Sea spot market has been famous this summer for the massive “pop” in demand for very large anchor handling tug supply vessels (AHTS) with 250 tons bollard pull or more, which have had a bumper 2026. In the North Sea, the AHTS market has been particularly strong, shipbroker Fearnleys has noted, with Norwegian day rates averaging around NOK1.3 million (US$137,000) per day in August and September.
The North Sea market has consolidated strongly, leaving Sea1 (including the Viking Supply fleet which it manages), DOF (including the two nearly 400 ton bollard pull AHTS Aurora Saltfjord and Aurora Sandefjord, which it bought from Aurora earlier in the year) and Solstad with close to 70 per cent market share of AHTS over 250 tons bollard pull. In broker speak, this means owners are being “disciplined”. To charterers, this means that they have little choice but to pay sky high rates when boats are scarce. In April Equinor paid NOK4 million (US$420,000) per day to charter Njord Viking.
And this is not just a North Sea phenomenon. Clarkson data – presented in slide 16 by the casino capitalists optimist industry new entrants in Oslo at publicly listed 2020 Bulkers AHTS AS – showed that term charter rates globally for AHTS of 250 tons bollard pull or more now stand at over US$70,000, up 15 per cent from 2023, whilst 200-ton bollard pull ships, of which AHTS AS itself has gathered 14 such anchor handlers, now average around US$40,000 per day, a tick down from three years ago.
But don’t worry. Putting the vessels under the ownership of a group of rich Norwegians who have profited mightily from selling the ships into the public company will surely turn things around, won’t it?
The question on why nobody has ordered any large new anchor handlers is that with equipment inflation, brokers reckon that a new 200-tonner would probably cost in excess of US$80 million even in China and a 300-tonner might cost upwards of US$150 million, so even with today’s higher rates, the dominant owners would rather harvest from their existing fleets that add capacity at very high capital cost.
Someone will crack and order and when they do, I would anticipate that the other two players would then also order to avoid being left behind. But so far DOF, Solstad and Sea1 all have poker faces and nobody is buckling. There are four million krone reasons why that remains a good strategy.
Whilst industry leader Tidewater, with its fleet of over 200 PSVs and AHTS, continues to maintain that the payback on newbuild PSVs is lengthy (18 years even at a day rate of US$45,000 Tidewater maintains, only because they use a newbuild cost 50 per cent higher than the actual cost in China), one can argue “well, they would say that, wouldn’t they?”
Tidewater with its ageing (2027 will see its average vessel age hit 15 years) but enormous fleet is the single biggest beneficiary of the constrained PSV fleet supply. There’s less than ten per cent of the global AHTS and PSV fleet on order, and only 15 per cent of the subsea fleet. The windfarm support vessel segment has an orderbook at over 40 per cent of the in-service fleet, which is a huge red flag, as we have warned.
With the market relatively strong for PSVs, there are two pertinent questions:
Why are so few newbuilds being ordered and why have the owners of the PSVs that have been ordered have done so badly? The two may be connected…
Sinopacific, in conjunction with a domestic leasing company, had ordered ten 800-square-metre, DP2, Fifi1, battery-hybrid PSVs to its in-house design in China back in 2024. At least six of these have been delivered, with five of them being placed into the… Nigerian market, where they are believed to work on day rates in the low twenty thousands per day.
These are CL Spec Dancy, Linda, Lisa and Paulina. This is not surprising. The Nigerian PSV market is very competitive, but neither Tidewater nor Bourbon nor Chouest nor Seacor nor Hornbeck have PSVs working there, so it is effectively shielded from the big international players, at least for now. So you would hope that rates might be higher there, but clearly in this segment, they are not.
One of the CL Spec ships was bought by Strickland, an operator of security vessels in Nigeria, and trades there as Lady Nelo. The sixth newbuild vessel was sold to Seahorse Marine and Energy of Vietnam. Renamed Afalina, this vessel is chartered in Angola on rates again reputed to be in the low twenties after taxes and Angolan agency fees.
There seem to be four more CL SPEC PSVs to be delivered. The initial vessels that were sold appear to have been priced around US$32 million apiece for delivery in China, which again looks good value compared to the secondhand price of the recent 12-year-old, smaller 710-square-metre clear deck Bourbon Explorer 500 series. But with today’s high bunker prices, any buyer in China has to fork out at least US$1 million on fuel to mobilise the ship to Africa and probably another US$1 million in fit-out, stocking and crew costs.
These CL SPEC vessels seem to be nice ships, but for more owners to be ordering in that segment, you would have to hope that the commercial managers could at least achieve the same rates as Tidewater boasts it achieves for its equivalent vessels, bearing in mind that Tidewater’s equivalent vessels are mostly 12- or 14-year-old ships without battery hybrid systems, not brand new units fresh from the yard.
From the published data from Tidewater (that slide 16 again), it looks like the newbuild CL SPEC vessels are trading at a US$1 million revenue deficit per year (US$3,000 per day) compared to the rates Tidewater and the other top tier players achieve.
Ouch.
But hope springs eternal. Clearly inspired by the entry of the CL SPEC vessels into Nigeria, another cash-rich player has decided to enter the newbuild market.
Clearly the combination of a well-known and cash-rich Anglo-Belgian tanker owner (Union Maritime) with a Norwegian offshore owner based in Dubai (Vega Offshore) will have better luck. That, at least, is the theory behind the wonderfully named Union Vega Offshore (UVO), which pooled the two Union-managed 800-square-metre clear deck PSVs Union Nelle and Union Luna with the 2011-built Vega Juniz (see my earlier comments on the obsolescence of fuel-guzzling, diesel mechanical PSVs) and possibly Vega Zenta in South Africa, owned by Kenneth Fjeld of the UAE. Both Luna Nelle and Vega Juniz are trading in Nigeria.
The first venture of the UVO partnership was to buy a DP2 accommodation barge in Mexico, which was taken to Sefine Shipyard in Turkey, where it remains under renovation and repair. The 2013-built, 70-metre-long, lattice boom crane workboat Berjaya was renamed UVO Hilton, because naming an accommodation barge after a well-known, four-star hotel chain would be aspirational, clearly.
Why not go the whole nine yards and rename it UVO Four Seasons or UVO Savoy?
Not content with their major entry into second hand PSVs, the UVO venture announced last week it was building two newbuild PSVs at Fujian Mawei Shipbuilding in China, with options for four more. We covered the story here. The ships are slightly bigger than the CL SPEC design, being Breeze-designed units with 900 square metres of clear deck space, with delivery of the first unit scheduled for 2028. No price was given for the orders, but we assume it would be in the mid US$30 millions per hull.
There are two newbuilds for relatively prompt delivery from China from Jiangsu Zhenjiang Shipyard, which are being touted at similar prices, but again the sellers of these 78-metre DP2 vessels appear to have gained no traction.
The UVO joint venture proudly announced that, “the vessels will also be prepared for the future installation of a 50-tonne active heave-compensated crane.”
In this crane, we see UVO following in the footsteps of Mr Marinakis’ Capital Offshore and the Costamare/Ugland newbuild PSV venture at PaxOcean. The logic here is that subsea vessels trade work at day rates over twice what PSVs trade at, and surely putting a crane on a PSV will simply turn it into a subsea vessel for, like, US$10 million extra. Duh, why wouldn’t everyone do it?
Note that the only owners to have done this in the last decade are two new, cash-rich entrants from the tanker segment who have never operated PSVs before.
If two other large tanker owners order PSVs with with 50-ton AHC cranes, or ready for them, then surely a third large tanker owner would be wise to follow, apart from the fact that a 50-ton crane is probably much too small for most of today’s subsea work and that running a subsea fleet is much more complex than chartering a baredeck supply vessel to an oil company to run pipe and mud to a rig. Like, you might have to employ ROV crews and surveyors and engineers and naval architects.
But no matter, that’s a lesson that the three tanker owners can learn in 2027.
The first new delivery of the market upturn cycle was FS Hercules also built at Fujian Mawei and also built to a Breeze design. It was delivered earlier this year and, like the SPEC vessels, was not rushed into a high-value, long-term charter. Instead, it won a few months of work with Saipem in Northen Europe and was promptly circulated “discreetly” for sale by the owners at a price north of US$40 million.
Again, this vessel is technically very impressive (our review is here). And again it is fitted out ready to install a 70-ton AHC crane. The managers and co-investors, Fletcher Shipping, are seasoned North Sea operators and the design incorporated a lot of their experience.
Again, maybe you can say that perhaps FS Hercules arrived in the North Sea at the wrong time or was perhaps unlucky, which might be true except for the similar case of Ace Aristotelis, another DP2, 1,000-square-metre, diesel electric PSV fresh from the yard in China westbound from Singapore to Las Palmas in the Canary Islands with an ETA of November 25 as per AIS. It is a high-specification, high-quality vessel marketed by UOS, which has a long track record of chartering and offices in Singapore as well as Europe.
Guess what? It doesn’t have a contract, either, and neither do Seacor’s two similarly high-specification, DP2, 1,000-square-metre clear deck, diesel-electric, battery hybrid PSVs, which will be delivered from China in the next five months.
These are all incredible vessels and I am sure they will be fixed, eventually, but here we seem to have come across one of the problems of the oil industry.
Everyone says they want new and expensive ships with the latest technology and the highest specifications, but nobody wants to be the first charterers of such vessel.
And nobody wants to pay a premium over the market rate a 12-year-old Tidewater-owned PSV with the same 1,000-square-metre clear deck, diesel-electric and DP2, Fifi1 attributes.
Even with EU emissions pricing schemes and carbon taxes, charterers seem most reluctant to actually pay more for new tonnage, or to reward those owners who invest in the fuel efficiency of battery hybrids.
The offshore support market is tight and is expected to get tighter in 2027. Perhaps then charterers will take the gamble of fixing newbuilds from the yard ahead of delivery?
But for now, risk-averse oil companies and their innate conservatism, and budgets built around the last generation of ships, not the capital costs of today’s new vessels, are holding back newbuild orders.
Maybe someone will fix Ace Aristotelis as it makes its lonely way from China to Europe to arrive just in time for the winter seasonal downturn, which usually sees PSV rates in the North Sea fall below US$10,000 per day on the spot market.
Watching Mr Mariniakis mobilise the new ship halfway around the world without a charter must be making Tidewater CEO Quintin Kneen and his directors very happy indeed.