On Wednesday 24th November Gregory Brown, an analyst with Infield Systems’ Transaction Services team, gave the opening presentation to the Offshore Support Vessels 2010 conference held in London. Appearing before a delegation of ship-owners, operators, finance professionals and consultants, Mr Brown outlined the current prospects for the macro economy and the offshore oil and gas sector. During the presentation Mr Brown highlighted the operating difficulties in the North Sea spot market for support vessels, the deferral of activity and the expectation of a recovery in demand during mid 2011.
The presentation also provided detailed analysis into the construction vessel sector; outlining the current market dynamics as well as providing a sensitivity analysis based on issues as wide ranging as Petrobras’ financing issues, the fallout from the Macondo incident and the continued lack of attrition in all vessel markets. Whilst highlighting market opportunities, Mr Brown discussed West Africa, Brazil and the frontier regions of the North Sea as well as the expected increase in health and safety legislation across the global offshore sector. Whilst providing case studies of specific projects the presentation also highlighted the risks associated with operating in new markets and paid particular attention to the legislative agenda in Brazil and its local content requirements.
During the conclusion it was explained that Infield Systems sees a recovery in the offshore sector in 2011, but that any increase in contracting activity will not see a short term upside in demand, and that lead times dictate a 6 month delay in offshore work. Having noted that the market remains far removed from the peaks of 2007 and early 2008, Mr Brown explained that the improving macro fundamentals give credence to the expectation that a recovery is due and that opportunities do exist within the sector.