Platform Supply Vessel (PSV)

Platform Supply Vessels (PSV) specialize in the logistical support required to operate in an offshore field. Typically PSV's, or supply boats, work between an onshore supply base and the various offshore work locations, including drilling rigs, oil platforms and construction vessels transporting essential supplies (such as drilling fluids, cement, mud, fuel and water) within its tanks, equipment (including casing, drill pipe, and various miscellaneous pieces) as well as personnel.

Dynamic positioning (DP)









Category Description Image

Category Description

Platform Supply Vessels, also known as PSV’s or supply vessels, specialize in the logistical support of the offshore oil field. Working between an onshore supply base and offshore work locations supply vessels transport essential consumables in tanks under deck (for instance drilling fluids, cement, fuel and water) and other supplies (such casing, spare parts, food and provision) on its deck. 

Supply vessels can be summarized into 3 broad groups; small, medium or large, calculated based upon deadweight (i.e. their cargo carrying capacity) or cleardeck area (i.e. the space available to place cargo on deck). 


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Supply & Demand Dynamics

The demand for PSV's, 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 Platform Supply Vessel market is highly cyclical. Utilization and rates are quick to react to oil price due to the influence oil price plays on oil company investment. As of mid-2020 oil prices have not reached levels to tighten a market that has become severely oversupplied through the high oil price years. Competition between supply vessel owners remains high and day rates low.

Demand Outlook

As of Q2 2020, supply vessel demand remains restricted especially following the events of the OPEC price war and the global pandemic. Using rig count as an indicator of demand all locations with the exception of Asia-Pacific have seen a large drop in offshore rig count. This has a direct impact on the number of supply vessels required to support operations driving both utilization and rates down.


Supply Outlook

Although there has been a slowdown in newbuilds (which is unlikely to increase given the current market outlook and low margins on existing assets) and no new capital entering the market, market oversupply remains the dominant force.  With circa 3,500 available OSV's and roughly 250 offshore rigs in service as of July 2020 this implies a 14:1 ratio of OSV's to rigs. With a peak ratio of 4.5:1 back in 2013 the supply glut from multiple years of aggressive new-build programs will continue to depress rates for the foreseeable future.

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Key Players


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Portfolio Positioning

It is typical to see spend within the Platform Supply Vessel category sit in the “Leverage” quadrant of the Kraljic Matrix (low supply risk, high value).

At present buyers are in a strong position with low demand, high competition between owners, and relative ease in switching out vessels. 


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Cost & Price Analysis

Price Analysis

Current Platform Supply Vessel rates face downward pressure. The table below provides some rough guidance on pricing. 

Supply vessel owners have had a difficult past 5 years many of them going through chapter 11 and failing to turn a profit during this period. 


Cost Analysis

The main cost components associated with platform supply vessels are the operating costs (crewing, provision, maintenance, insurance and radios) that can represent up to 70%. Other significant cost components are depreciation, overheads and interest expense. Given the current market conditions theses cost components will vary significnatly depending on impairments and the company's ability to restructure its debt. 

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Total Cost of Ownership

Parameter Service Cost Fuel Cost Performance Cost
Cost Visibility High Medium Medium
Description The rates and charges agreed in a contract for the performance of the service The cost of fuel used by the vessel in performance of duties The cost of inefficiency in performing duties
Cost Driver
  • Daily Hire Rate
  • Type of operation
  • Type of propulsion
  • Fuel Consumption
  • NPT (breakdown)
  • Learning Curve
Commercial Impact High Medium High



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:

  • Refine Specifications and Crewing - Ensure vessels and crew are fit for purpose. With demand low and a glut of supply the market presents an opportunity to charter younger, more fuel efficient, and safer vessel at very competitive rates. That being said try to be as generic as possible to ensure maximum competition.
  • 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).
  • Competitive Tender - Aggregate requirements and tender any supply vessel competitively. The supply vessel market, to an extent, has become more like a commodity in recent years with all owners offering similar vessels. Competitive tenders, firm negotiations and even reverse auctions will yield the best pricing. 
  • Contract Selection - Time charters are the preferred choice of contract in the oil and gas supply vessel market. Below is a table of the contracting options available for consideration. Be clear on who is responsible to pay for what (e.g lube oil). 


Parameter Time Voyage Bareboat
Description Per day or duration of time Per trip/voyage Vessel hull & machinery only 
Operational Preference Preferred Not preferred Not preferred
Vessel Owner Responsibility Vessel
Port Charges
Vessel only
Charterer Responsibility Port Charges
Cargo Loading & Discharge
Cargo Loading & Discharge Crewing
Port Charges
Cargo Loading & Discharge
Calculation of Charges Daily hire rate Lump sum per voyage or based on cargo volumes Monthly lump-sum payment

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Technical Insights

Dynamic Positioning Explained


Hybrid Propulsion Explained


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