COLUMN | More, more, more! Purus adds to the wind orderbook, EnTrust Global increases green investment plus a Ferry Fiasco update from Scotland [Offshore Accounts]

COLUMN | More, more, more! Purus adds to the wind orderbook, EnTrust Global increases green investment plus a Ferry Fiasco update from Scotland [Offshore Accounts]

No sooner had we written last week's article on the stream of new building commissioning service operation vessels (CSOVs) by Edda Wind and North Star Shipping than Purus Wind added yet more vessels to the renewables orderbook, the day after publication. The company announced on May 16 that it had signed a contract at Vard for two new building CSOVs plus options for two more.

The hull of the first vessel will be built in Vard's Romanian yard with outfitting, commissioning, and delivery from one of the company's facilities in Norway in mid-2025. The second vessel will be built in Vung Tau in Vietnam, with delivery before the end of June 2026.

The three-year lead time for the second vessel shows that even if owners in offshore want to build, the lead time for deliveries at the few remaining yards with track record and experience with these complex, technology-intensive vessels is increasing. Even if bold investors want to build new offshore support vessels (OSVs), they are going to find themselves waiting for yard slots.

Zero-emission (sometimes)

<em>Photo: Purus Marine</em>
Photo: Purus Marine

The two Purus CSOVs are of Vard's 4 19 design, with a hull form optimised for low fuel consumption and low resistance, as well as high operability and comfort, the designers say. The ships will be fitted with a battery hybrid system to run with zero emissions for short periods, and the CSOVs are prepared for charging at sea, so they can be connected to the power grid in the wind farm or in port to charge their batteries. At present, Maersk Supply's Stillstrom technology is the most likely contender to bring this vision of "plug and play" into service, taking power straight from the windfarm via a buoy as an offshore charging point.

Purus and Vard said that the project has been awarded funding by the Norwegian Government's Green Platform Initiative. Of course. Edda Wind's newbuilds also relied on funding from Enova, the Norwegian government enterprise responsible for the promotion of environmentally friendly energy, for the Liquid Organic Hydrogen Carrier (LOHC) concept on their CSOVs.

Like the Edda Wind vessels, the Purus ships are also prepared for future operation on methanol, providing an additional sustainable option to the operation. The multiplication of different power sources is expensive but reflects the lack of clarity today on the likely winner in the contest for the most viable marine future fuel.

Builder also providing the crane

The two key elements of CSOVs are the crane and the active heave compensated (AHC) gangway to transfer the client personnel to the wind turbines. Both Purus vessels will be equipped with Seaonics' Electric Controlled Motion Compensated (ECMC) cranes. Vard, which owns Seaonics, says that the system keeps the load close to the crane tip from the deck level of the vessel to the transition piece platform on the turbine.

The selection of the stepless walk-to-work-system for a range from 15 to 30 metres above sea level was not disclosed. We reviewed the field of walk-to-work AHC gangway manufacturers in 2021 here. This sector is booming with dozens of vessels performing walk-to-work in the North Sea, especially in the summer. Both subsea vessels and platform supply vessels (PSVs) with large accommodation have been attracted to the sector, further tightening PSV charter rates for those that remained.

Purus' private equity background

HST Ella <em>(Photo: Diverse Marine)</em>
HST Ella (Photo: Diverse Marine)

Filings at Companies House in the UK show that Purus is ultimately controlled by a Cayman Islands parent company, owned by alternative asset manager EnTrust Global. According to Forbes, Gregg Hymowitz, EnTrust's chairman, chief executive officer, and founder, has a personal net worth of US$1.3 billion.

In 2021, EnTrust Global announced a strategy it called Blue Ocean 4Impact (no, not a typo) and a commitment to invest over US$2 billion in owning and chartering environmentally-advanced vessels and other marine infrastructure assets "in order to help reduce carbon emissions and other pollution generated by the ocean economy." Purus Marine acquired the British offshore wind crewboat operator HST Marine in 2022. HST features one of the industry's first battery-hybrid crewboats, HST Ella, and the company took delivery of sister vessel HST Frances earlier this year. That crewboat is now working in Helgoland. Purus Marine says it plans to own a fleet of a hundred eco-friendly ships.

Also in 2021, Purus Marine formed a new vessel leasing venture with Dutch shipbuilder Damen. In March this year, we were not surprised to see Purus Wind and HST Marine ordering eight vessels from Damen. The order consisted of four Damen 27-metre and three 32-metre hybrid crewboats and one DP2, 90-metre CSOV. Given the existing relationship with Damen, it is perhaps surprising that Purus' next CSOVs are of a Vard design.

The 32-metre crewboats and the 120 total personnel capacity CSOV will not only be equipped for ultra-low emission operations, Damen says, but they have also been designed to be upgraded to methanol-fuelled engines "when the time comes". When that time will be (if ever) is one of the great unanswered questions facing the maritime industry.

Last month, ITOCHU Corporation of Japan made an equity investment in Purus Marine, continuing the dizzy combination of buying and selling that characterises private equity investment.

EnTrust-managed funds also bought Maas Capital Shipping in the Netherlands from Dutch Bank ABN AMRO in 2021. The acquired portfolio included a diversified portfolio of 15 equity joint venture investments consisting of 76 vessels within the product/chemical tanker, dry bulk, LPG, container, and offshore services segments. In addition, the portfolio included an equity stake in a growing intermodal business that leased out container boxes. We're not sure, though, how that investment is looking in the depressed container market of 2023.

Private equity likes wind

<em>Photo: Crowley</em>
Photo: Crowley

For reasons that are not entirely clear to me, the dominant players in offshore wind are now mostly controlled by private equity.

Norwegian private equity house HitecVision already owns Havfram, which has a pair of jackup wind turbine installation vessels (WTIVs) on order in China. Under the ownership of Britain's 3i, Danish safety standby company and Maersk Group spin-off Esvagt has been transformed into a wind farm CSOV and walk-to-work powerhouse.

As well as taking a strong position in the North Sea, Esvagt has ordered the third newbuilding, American-built SOV through its CREST Wind joint venture with Crowley, contracted against a long-term charter with Siemens Gamesa Renewable Energy. Vard's parent company Fincantieri Marine Group will build the ship in Bay Shipbuilding in Sturgeon Bay, Wisconsin. The ship is set to go into service in the Atlantic in 2026.

Fellow standby operator and new entrant into the SOV and CSOV space North Star Shipping is now owned by Partners Group, which says it holds US$71 billion of private equity assets under management. Partners has pivoted North Star away from its historic emergency response and rescue vessel (ERRV) focus, after the company acquired the Boston Putford fleet of 18 ERRVs in 2019 under its former private equity owner, Basalt Infrastructure Partners.

Private equity missed the oil and gas recovery

Grampian Sovereign <em>(Photo: Balenciaga Shipyard)</em>
Grampian Sovereign (Photo: Balenciaga Shipyard)

At the same time, private equity has largely shunned conventional offshore oil and gas supply vessel operators, which makes no sense to me. North Star retains only one PSV in its fleet now, the DP2, 900-square-metre clear deck space Grampian Sovereign, having sold the 2013-built sister vessel Grampian Sceptre (now FS Sceptre) to Fletcher Shipping in 2022, just before the PSV market really heated up.

I would have expected Bourbon, Vroon Offshore Services, or DOF to have made attractive targets for private equity now that these three troubled companies are on the block for sale. It is not clear to me why investing in cheap PSVs for US$20 million each that can earn US$30,000 per day on term charter is less attractive than spending US$55 million on CSOVs that struggle to earn US$25,000 per day and are often locked into low-rate, long-term charters with rising operating costs. The supposedly risk-free, long-term contracts in offshore wind look a lot riskier than any of their proponents make out.

Private equity managers are supposed to be the smartest guys in the room, handsomely rewarded for their acumen with both hefty management fees every year and a goodly share in any capital gains at the time of their businesses being sold. The private equity model is to exit investments in four or five years. It will be interesting to see now much profit the current owners of North Star, Esvagt, and Purus can achieve when they flip their assets to new owners. Current margins in wind are thin as all the players chase the same long term, bankable contracts.

Scotland's richest Monaco resident bids for Ferguson (again)

<em>A photograph showing the Calmac ferry</em> Glen Sannox <em>with painted-on windows on the bridge, taken during the ferry's launching ceremony on November 21, 2017. Curiously, the above image is still posted for all to see on Ferguson Marine's official site. (Photo: Ferguson Marine)</em>
A photograph showing the Calmac ferry Glen Sannox with painted-on windows on the bridge, taken during the ferry's launching ceremony on November 21, 2017. Curiously, the above image is still posted for all to see on Ferguson Marine's official site. (Photo: Ferguson Marine)

One entrepreneurial success story who failed spectacularly in shipping is Jim McColl. Following our coverage of the Scottish Ferry Fiasco, we were shocked to learn that Mr McColl, the Monaco-resident billionaire who owned Ferguson Marine shipyard when it disastrously won an order for two ferries for Scotland's state-owned operator in 2015, has offered to buy back the "troubled" yard on the Clyde for a symbolic one pound sterling (US$1.24) from the Scottish state.

Well, actually, in a jaw-dropping interview with BBC Radio Scotland last week, Mr McColl said he would need the Scottish government to also pay two years of the yard's operating expenses. So technically, the government would be paying him to take the loss-making yard off their hands.

The Scottish state ended up nationalising the yard after Mr McColl walked away and left it bankrupt in (checks notes) 2019. Mr McColl and Ferguson were unable to provide a refund guarantee, or any parent company guarantees, when they accepted the order for the two ferries, so their customer had no recourse when the yard collapsed. Instead, the Scottish taxpayer is out of pocket for hundreds of millions of dollars, and, eight years on, neither vessel has actually entered service.

Mr McColl also said that after his yard had failed to deliver the second hull (802) and the yard was nationalised, the company should have scrapped the half-built ferry. Indeed, the Scottish government also revealed last week that it "would be cheaper to order a new ferry elsewhere rather than complete Hull 802 at Ferguson," the BBC reported. But complete it they must to protect local jobs, so complete it they will.

We admire Mr McColl's chutzpah, but it might be better if he just shut up, as every time he opens his mouth about Ferguson, he reminds everyone of his part in the biggest procurement scandal in Scottish history. And it is not something to be proud of, despite his efforts to blame everyone else for the failure of the Ferguson business.

Where did the missing millions actually go?

As we said in March, everyone makes mistakes, but the Scottish taxpayers can ill afford another one like the Ferries Fiasco. In late November 2022, Ferguson admitted it could not trace where £128.25 million (US$156 million) in public money meant to be used to build the two ferries went, nor how the £30 million (US$37 million) rescue loan from the Scottish government had been spent. Scotland's Auditor General Stephen Boyle said he could not uncover what happened to the money because records relating to transactions were "not organised or categorised".

Baird Maritime readers have contacted us with various ideas on what has happened to the unexplained funds, but nothing conclusive has been proven.

Luxury caravan does not make for happy campers

The police are now investigating the former First Minister who presided over the calamitous ferry contract award to Ferguson, Nicola Sturgeon. This followed the discovery of an undeclared motor home worth over US$130,000 at her in-laws' house, seemingly paid for with funds from her Scottish Nationalist Party, where her husband Peter Murrell was the party's chief executive. Mr Murrell resigned after admitting he had misled the party over the number of members it actually had, as well as the sources of its funding.

This is a story that is just going to keep giving, definitely beyond the probable delivery of the first ferry, Glen Sannox, apparently in six months' time, and likely beyond the possible delivery of the second ferry, Hull 802, next year, if that indeed happens.

The state ownership of shipyards can be very expensive, but this lesson seems to need to be learnt over and over again in different countries around the world.

We'll keep you posted.

Background Reading

You can view Purus Marine's UK regulatory filings at Companies House here.

Our coverage of the 2022 purchase of HST by Purus is here.

See the Damen CSOV specifications for Purus' March 2023 order. This is an enhanced version of the SOV design originally built in 2019 for Bibby Marine's Bibby WaveMaster Horizon, which is now on a ten-year charter with Siemens Gamesa and EnBW in Germany (on Youtube here).

As a reminder in the Scottish Ferries Fiasco, see our coverage from March on the Scottish Parliament's Public Audit Committee report into the whole sorry affair.

The Scotsman newspaper sent journalist Alastair Dalton down Ferguson to inspect Glen Sannox last week, and published up-to-date photos and videos of the two ships here. "What I gathered from my visit is that under its previous owner, Jim McColl's Clyde Blowers Capital, which won the Glen Sannox and 802 contract, it wasn't just a case of how not to build a ferry, but also how not to run a shipyard," concluded Mr Dalton.

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