Multi-Purpose Support Vessels (MPSV)

Supply & Demand Dynamics

The demand for Multi Purpose Support Vessels (MPSV), and offshore service vessels (OSV's) in general, continues to be driven by the world's increased energy demands. According to BP Energy Outlook energy demands will continue to grow at a pace of about 1.2% per annum until 2040 with oil and gas remaining the dominant source (circa 55%). 

The Multi Purpose Support Vessel (MPSV) market is highly cyclical. Utilization and rates are quick to react to oil price due to the influence oil price plays on investment.

Demand Outlook

Multi Purpose Support Vessels (MPSV's) play a varied role - from subsea installation, inspection, maintenance,  topside installation and remediation to drilling and well support activities. With all majors forecasting lower levels of investment for the remainder of 2020 and 2021 due to pandemic and the depressed oil price without sustained higher oil price MPSV demand will remain subdued as operators focus on higher ROI opportunities or critical maintenance. 

Supply Outlook

Much like OSV's the Multi Purpose Support Vessel (MPSV) market went through a period of aggressive new build programs during the high oil price periods. This has left the market significantly oversupplied. 

Key Players

A variety of owners operate MPSV's - from big OSV owners, single vessel owners, to the marine construction contractors. Some of the main MPSV owners and suppliers are shown in the table below:

Portfolio Positioning

It is typical to see spend within the Multi Purpose Support Vessel category sit in the “Leverage” quadrant of the Kraljic Matrix (low supply risk, high value) however when markets tighten, depending on the scope requirements of the MPSV, this category can become of "Strategic" importance.

At present buyers are in a strong position with low demand, and high competition between owners.

Cost & Price Analysis

Price Analysis

Due to the low oil price and the competitive nature of the MPSV market, and the OSV market generally, owners are operating at close to breakeven with most recording loses for multiple years now. 

Cost Analysis

Costs are highly dependent on customer work scope and the ancillary equipment and services required onboard (includes ROV's, accommodation modules, cranes and walk to work gangway systems). Low-spec MPSV costs may vary between US$5,000 to US$15,000 per day depending on the region and work scope and often can utilize PSV's or AHTS's with modifications to meet the clients needs. High-spec MPSV's vary more dramatically and are significantly more expensive given the larger size and higher purchase (at peak high-spec newbuilds were $80 to $100MM) & operating cost. Costs in this category could be as low as US$20,000 per day to as high as US$50,000 per day. 

Total Cost of Ownership

Strategy

Given the current market conditions any strategy should be focused on increasing competition and maintaining flexibility in the market. Below are a few options to consider:

• Aggregate Demand - It can often be difficult to get a clear picture of MPSV demand within an organization due to the mixture of projects (maintenance, installation, well intervention, inspection, ROV etc.) and different departments responsible for the projects. This often leads to multiple spot charters at shorter notice and higher prices. Try to aggregate demand into campaigns to deliver the best rates. Depending on the demand it may be cheaper and more effective to contract a MPSV full time over individual spot charters.
• Specification and Scope - For marine construction contracts be clear on who is responsible for what in terms of services (ie. are you providing any services), materials  (ie. are there any free-issue materials) and risks (ie. who pays for weather downtime). Where the MPSV is being time chartered be sure the MPSV covers all your scope needs and consider agreeing day rate pricing and mobilization durations for the different operations where they vary significantly. 
• Maintain Flexibility - The most competitive prices will be achieved through short to mid-term charter durations (6 months to 18 months) with Owners reluctant to lock in low for long. Always retain flexibility to exit the charter on short notice (no more than 90 days). In areas with an active spot market, especially in the lower spec segment, it may be possible to hire vessels on and off for short periods
• Competitive Tender - Whether it is a lumps sum price for an agreed scope or multiple projects on a daily hire rate competitively tendering in the current market maximizes competition and will drive the lowest rates. 
• Contract Selection - Time charters or Marine Construction agreements are the preferred choice of contract in the oil and gas MPSV market. Below is a table of the contracting options available for consideration.

Technical Insights

Walk to Work Gangway