Standard Asia Offshore Forum<br />                                            Monday 29 November 2010The Offshore Market  ...
Who are M3 and what do we do ?<br />M3 Marine Group<br /><ul><li>M3 Marine - Offshore Brokers
M3 Marine - Expertise</li></ul>M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357  t: +6...
M3 - Services<br /><ul><li>Brokerage – Time and bareboat Charter, S&P
Newbuild – Design, Consultancy, Contracting
Vessel Valuations – includes Bank panels
Due Diligence and Market research – includes Banks and Financial institutions
Contract Analysis, Drafting and Negotiation – Buy and Sell side exposure
Legal and Insurance Claims Support – Expert Witness and Arbitration
Technical Editing And Business Writing – full range up to Board papers
Dynamic Positioning Consultancy – includes IMCA audits, FMEA and trials
Specialist marine manning – High end, NOT Crew
Vessel Suitability – Consultancy, in the main ‘Client based’</li></ul>M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 ...
Geography….’this’ market<br /><ul><li>Where are we?
Singapore the ‘hub’ of marine activity in  Asia
The ‘hub’ of Offshore Marine, no different.
Commercial centre for Oil & Gas trading, Insurance and Finance (Marine)
The largest Rig building market in the world
Singapore, Singapore influenced ‘Batam’ and Singapore influenced ‘China’ builds the majority of OSV’s in the world.
Most project mobilisation(s) in the Asian sub continent start or have a large component centred on Singapore
Most of the ‘commentary’ (broker reports, LL, Fairplay etc) focus on North Sea, GoM or ‘Deep’ Brazil…..but</li></ul>M3 Mar...
Geography<br />Sphere of influence here? – half of the world ?<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Fr...
What is an OSV?<br /><ul><li>AHTS - Anchor Handling Towing SupplyAHTS vessels are built Tow and to deploy and recover moor...
What is an OSV 2?<br /><ul><li>PSV - Platform Supply VesselPSV’s range in length from 60 M to over 90 M and have Deadweigh...
The Market - Fundamentals<br />Post the GCF, current oil fundamentals and sentiments are continually improving. We see inc...
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20101101 - The Standard OSV Developments in South East Asia - November 2010, Singapore

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20101101 - The Standard OSV Developments in South East Asia - November 2010, Singapore

  1. 1. Standard Asia Offshore Forum<br /> Monday 29 November 2010The Offshore Market OSV Development in South East Asia<br />Captain Mike Meade, MNI<br />CEO, M3 Marine Group<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  2. 2. Who are M3 and what do we do ?<br />M3 Marine Group<br /><ul><li>M3 Marine - Offshore Brokers
  3. 3. M3 Marine - Expertise</li></ul>M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  4. 4. M3 - Services<br /><ul><li>Brokerage – Time and bareboat Charter, S&P
  5. 5. Newbuild – Design, Consultancy, Contracting
  6. 6. Vessel Valuations – includes Bank panels
  7. 7. Due Diligence and Market research – includes Banks and Financial institutions
  8. 8. Contract Analysis, Drafting and Negotiation – Buy and Sell side exposure
  9. 9. Legal and Insurance Claims Support – Expert Witness and Arbitration
  10. 10. Technical Editing And Business Writing – full range up to Board papers
  11. 11. Dynamic Positioning Consultancy – includes IMCA audits, FMEA and trials
  12. 12. Specialist marine manning – High end, NOT Crew
  13. 13. Vessel Suitability – Consultancy, in the main ‘Client based’</li></ul>M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  14. 14. Geography….’this’ market<br /><ul><li>Where are we?
  15. 15. Singapore the ‘hub’ of marine activity in Asia
  16. 16. The ‘hub’ of Offshore Marine, no different.
  17. 17. Commercial centre for Oil & Gas trading, Insurance and Finance (Marine)
  18. 18. The largest Rig building market in the world
  19. 19. Singapore, Singapore influenced ‘Batam’ and Singapore influenced ‘China’ builds the majority of OSV’s in the world.
  20. 20. Most project mobilisation(s) in the Asian sub continent start or have a large component centred on Singapore
  21. 21. Most of the ‘commentary’ (broker reports, LL, Fairplay etc) focus on North Sea, GoM or ‘Deep’ Brazil…..but</li></ul>M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  22. 22. Geography<br />Sphere of influence here? – half of the world ?<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  23. 23. What is an OSV?<br /><ul><li>AHTS - Anchor Handling Towing SupplyAHTS vessels are built Tow and to deploy and recover mooring systems for drilling rigs. These can be highly specialised vessels that range in horsepower from 5,000 to 15,000 BHP (brake horsepower) in Asia. In harsh environments it is not unusual to see BHP up to 30K BHP but this is a ‘highly’ specialised business with the attendant risks.</li></ul> a typical 5000+ BHP vessel (70T BP)<br /> Built in Asia<br /> The new ’index’ ?<br />Features on the decks of these vessels include large capacity-conventional waterfall winches, sometimes with multiple drums and using fibre ropes for mooring of deep water semi-submersible drilling rigs. Most have Dynamic Positioning capabilities and high cargo capacities. These powerful vessels double as rig and platform supply vessels that are capable of supporting any supply operation, but with the inefficiency of ‘fuel burn’. <br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  24. 24. What is an OSV 2?<br /><ul><li>PSV - Platform Supply VesselPSV’s range in length from 60 M to over 90 M and have Deadweight capacity from 1000T to over 5000T. A ‘small’ PSV in the North Sea would have a DWT of 2800T. </li></ul>SPO UT755L3<br /> Built in Asia<br /> 3,250T DWT<br />These vessels provide the supply support needed for drilling, construction and production operations. Most PSV’s have features such as Dynamic Positioning, a large deck, a high volume liquid capacity and a large capacity for liquid mud and dry bulk. PSV’s allow greater flexibility in an enhanced logistics environment and economies to a Oil Co’s chartered fleet. <br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  25. 25. The Market - Fundamentals<br />Post the GCF, current oil fundamentals and sentiments are continually improving. We see increased opportunities in the Offshore Support Vessel (OSV) market, and OSV Shipbuilding sector in South East Asia.<br /><ul><li>Rising living standards, and the current low organic reserve replacement ratio are supporting oil fundamentals in South East Asia.
  26. 26. Current OSV fleet may not be sufficient in meeting demand as a result of charterers’ increasingly demanding requirements, and the push for younger and “greener” vessels by regulators.
  27. 27. This will benefit patient shipowners with younger and more sophisticated vessels, and OSV shipyards with the capabilities to build the “replacement” vessels.</li></ul>M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  28. 28. Higher E&P activities expected on improving oil fundamentals<br />E&P spending vs oil price……”it’s the price of Oil stupid”<br /><ul><li>Declines in oil prices in 2008 caused caused oil companies to temporarily lower their E&P spending budgets in 2009.
  29. 29. However, oil fundamentals are improving. It is expected to see a 5% and expect a 15% y-o-y increase in E&P spending growth in 2010, and 2011, respectively.</li></ul>Source: M3 with Pareto research<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  30. 30. OSV market in South East Asia driven primarily by E&P spend which is correlated to Oil demand<br />Correlation: Oil Co E & P spending vs offshore Service sector performance<br /><ul><li>The OSV market in South East Asia is ultimately also driven by the demand for oil.
  31. 31. Increases in oil demand will increase oil prices, which in turn boost E&P spending.
  32. 32. This translates to higher demand for oil services assets.</li></ul>Source: Reuters<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  33. 33. Current organic RRR suggests a need for higher E&P investments<br />Organic reserve replacement ratio vs E&P spending<br /><ul><li>Organic reserve replacement ratio has been declining despite higher E&P spending by oil companies.
  34. 34. This supports the need for higher E&P investments.
  35. 35. Note this graph predates the GFC but is still relevant</li></ul>Source: Pareto research<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  36. 36. Oil and gas demand in South East Asia also expected to grow<br />Oil and gas consumption growth<br /><ul><li>Oil and gas consumption growth in South East Asia has grown significantly over the last 29 years.
  37. 37. The region’s demand remained resilient despite the challenging market since H2’08.
  38. 38. Expect oil and gas demand to grow in the region going forward supported by rising living standards in South East Asia.</li></ul>Source: BP<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  39. 39. There are approximately 4,500-5,000 OSVs globally<br />Global AHT, AHTS, and PSVs<br /><ul><li>Globally, there are over 2,500 Anchor Handling Tug Supply (AHTS), and Platform Supply Vessels (PSV).
  40. 40. The global OSV space contains 2,000-2,500 other OSVs including Construction Support Vessels (CSVs), Dive Support Vessels (DSVs), Tugs, and Crew boats.</li></ul>Source: ODS-Petrodata<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  41. 41. Approximately 800-1,000 OSVs located in South East Asia<br />AHT, AHTS, and PSVs in South East Asia<br />There are nearly 400 Anchor Handling Tug Supply (AHTS), and Platform Supply Vessels (PSV) in South East Asia.<br />The region also contains a further 500-800 other OSVs including Construction Support Vessels (CSVs), Dive Support Vessels (DSVs), Tugs, and Crew boats.<br />This fleet represent approximately 20% of the global OSV fleet.<br />Source: ODS-Petrodata<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  42. 42. Majority of the OSV fleet in South East Asia are smaller in size<br />AHT and AHTS fleet capacity in South East Asia<br />PSV fleet capacity in South East Asia<br /><ul><li>Approximately 74% of the AHT, and AHTS operating in South East Asia have 10,000 bhp capacity and below.
  43. 43. Approximately 78% of the PSVs in South East Asia have less than 2,000 dwt capacity.</li></ul>Source: ODS-Petrodata<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  44. 44. 33% of the OSV fleet in South East Asia may be “non-competitive”<br /><ul><li>Approximately 12% of the OSV fleet in South East Asia are older than 30 years, and have past their economic useful life.
  45. 45. Approximately 21% of the fleet lies between 20-30 years. This fleet may be considered “non-competitive” in most eyes.
  46. 46. OSV charterers are increasingly looking for younger and more sophisticated OSVs.
  47. 47. There is also a push towards younger and “greener” vessels (e.g. vessels with diesel electric engines, etc)
  48. 48. Room for more OSVs in South East Asia?
  49. 49. If so, what size ?</li></ul>Age profile of OSV fleet operating in South East Asia<br />Source: M3 with Pareto research, ODS-Petrodata<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  50. 50. Committed OSV newbuildings will replace “non-competitive” vessels<br />AHT and AHTS newbuilds by delivery time<br />PSV newbuilds by delivery time<br /><ul><li>196 PSVs are scheduled for delivery between 2010 and 2012.
  51. 51. 128 PSVs are older than 30 years.
  52. 52. 205 additional PSVs fall between 21-30 years.
  53. 53. Note DOES NOT include recent ‘flurry’ of PSV orders in Europe
  54. 54. 13 AHT, and 326 AHTS are scheduled for delivery between 2010 and 2012.
  55. 55. However, 41 AHT, and 201 AHTS are older than 30 years.
  56. 56. Further, 21 AHT, and 383 AHTS may become “non-competitive” in the next few years.</li></ul>Source: M3 with Pareto research, ODS-Petrodata<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  57. 57. OSV market has a bigger appetite for OSV newbuildings?An investment Bankers view….<br />Net AHT, AHTS, and PSV fleet (global)<br />Net OSV supply should not deviate significantly from 2008 levels if we consider the “non-competitive” fleet.<br />The OSV market was able to achieve very high utilisation in 2008 when offshore fundamentals were still good.<br />Increasing demand for oil will only increase demand for more OSVs going forward.<br />Bigger appetite for OSV newbuildings?<br />Source: M3 with Pareto research<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  58. 58. Competitive landscape on OSV players in SEA / ME<br />Size (Current + NB Fleet)<br />Market Presence Score<br />Source: Pareto research<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  59. 59. Competitive landscape on OSV operators based in South East Asia<br />Great Offshore<br />Greatship<br />Source: Pareto research<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  60. 60. Competitive landscape on OSV operators in Middle East<br />Source: Pareto research<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  61. 61. 22<br />South East Asian yards well-positioned to capture new orders<br />Global AHTS built Year 2000 and later<br /><ul><li>South East Asian yards specialised in building smaller OSVs.
  62. 62. Coupled with their proximity to regional shipowners, South East Asian yards are in a good position to capture orders for smaller OSV newbuildings.
  63. 63. More South East Asian yards are also increasingly able to build larger vessels at lower costs due to “technology transfer” from the European yards.
  64. 64. This provides further revenue upside for the region’s yards.</li></ul>Note: <br />AHTS is used to represent the sizes of OSVs built in Asian and European yards.<br />Vessels built in Other Asian yards may include vessels that are outsourced from yards in other regions.<br />Source: Pareto research, ODS-Petrodata<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  65. 65. Larger yards in a better position to win more newbuilding orders<br />OSV yards situated East of Suez<br /><ul><li>Larger yards with more efficient operational capabilities, and access to additional yard capacity would be in a better position to win more newbuilding orders.
  66. 66. However, yards need to be in a healthy financial position </li></ul>Note: Production output is computed basis the average gross tonnage of OSV vessels delivered p.a. over periods 2008 and 2009. Delivered vessels may include vessels outsourced to, and constructed from the Chinese yards.<br />Source: M3 with Pareto research, utilising Lloyd’s register, Company data<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  67. 67. Summary<br />Current oil fundamentals and sentiments are improving. We see opportunities in the Offshore Support Vessel (OSV) market, and OSV Shipbuilding sector in South East Asia.<br /><ul><li>Rising living standards, and the current low organic reserve replacement ratio are supporting oil fundamentals in South East Asia.
  68. 68. However, current OSV fleet may not be sufficient in meeting demand as a result of charterers’ increasingly demanding requirements, and the push for “greener” vessels by regulators. </li></ul> This has yet to be tested. <br /><ul><li>However, we have seen NIL ‘distress’ in a purported over building since GFC. Still to come?
  69. 69. Increase in requirement ‘demands’ will benefit shipowners with younger and more sophisticated vessels, and OSV shipyards with the capabilities to build the “replacement” vessels.
  70. 70. A contrarian view is that the market is overbuilt, Does the Singapore anchorage tell a story ?
  71. 71. Will Asia catch a cold from the looming ‘Euro zone’ financial crisis….. The GFC brought a mere sniffle ! (note I am not an investment banker)</li></ul>M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />
  72. 72. Thank you<br />Questions<br />Questions ?<br />M3 Marine Pte Ltd<br />15 Jalan Kilang Barat #06-03 Frontech Centre Singapore 159357 t: +65 6327 4606 m: mail@m3marine.com.sg w: www.m3marine.com.sg All rights reserved.<br />

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