Platform Supply Vessel (PSV)

Platform Supply Vessels (PSV) specializes in the logistical support required to

operate in an oshore eld. Typically PSV's or! "eteen an onshore supply
"ase and the #arious oshore or! locations$ including drilling rigs$ oil
platforms and construction #essels transporting essential supplies (such as
drilling %uids$ cement$ mud$ fuel and ater) ithin its tan!s$ equipment
(including casing$ drill pipe$ and #arious miscellaneous pieces) as ell as
personnel.

CATEGORY
CATEGORY DESCRIPTI
DESCRIPTION
ON
Plat
Platfo
forrm Su
Supp
pply
ly Ves
esse
sels
ls (PSV
(PSV)) sp
spec
ecia
iali
lize
zes
s in the
the lo
logi
gist
stic
ical
al sup
suppo
port
rt
required to operate in an oshore eld. Typically PSV's or! "eteen an
onshore supply "ase and the #arious oshore or! locations$ including
drilling rigs$ oil platforms and construction #essels transporting essential
supplies (such as drilling %uids$ cement$ mud$ fuel and ater) ithin its
tan!s$ equipment (including casing$ drill pipe$ and #arious miscellaneous

pieces) as ell as personnel.

RISKS & OPPORTUNITIES
Value opportunities and ris! are features or requirements that may add
or detract from the o#erall #alue oered.
 To
 To ensure #alue is ma&imized attention should "e gi#en to the folloing
areas
Technology   d#ances continue to "e made in PSV #essels alloing
operations to "e carried out safer$ more relia"ly$ more e*ciently and at
a loer cost. +n all circumstances it is not imperati#e to ha#e access to
the latest technology and a "alance must "e struc! "eteen the higher
cost
cost of ne
ne
 tech
technol
nolog
ogy
y an
and
d the
the op
oper
erat
atin
ing
g en
en#i
#irron
onme
ment
nt the
the PS
PSV
V is
required
required to function ithin.
Crew
Crew Ex
Exper
perience  ,#
ience ,#e
en it
ith
h the lat
ate
est te
tech
chno
nollog
ogy$
y$ it
itho
hout
ut an
e&perienced cre all e*ciencies can "e iped out and aect the PSV
#essel a"ility to meet demand. -ith the failure of meeting demand often
costing hundreds of thousands this is an important factor.
Flee Selecion  s
shor
hore
e oil and gas ope
operat
ration
ions
s com
common
monly
ly fea
featur
ture
e
multip
multiple
le /T
/TS
S #e
#esse
ssels
ls as el
elll as PSV
PSV's.
's. +t is the
there
refor
fore
e im
impor
portan
tantt to
determine the optimal num"er of #essels to "e contracted in the eld
 

considering the #essels a#aila"le in the mar!et$ the ser#ice cost$ the
opportunity cost and the cost of failing to meet demand.
SUPP!Y & DE"AND DYNA"ICS
Glo#$l S%pply $n De'$n
 The demand for PSV #essels$
#essels$ and oshore ser#ice #essels (SV's) in
general$ continues to "e dri#en "y the orld's increased energy
energy
demands. lthough o#er the long term glo"al energy consumption ill
see a signicant shift aay from oil and gas$ oil and gas remain a ma0or
source of consumption representing more than 123 of mar!et share.
4as groth is e&pected at 5.63 p.a. and oil 2.73 p.a. through to 8291.
:urthermore it is anticipated that a greater reliance on oshore
resources
resources ill "e seen as onshore production declines and technologies
open the door to more di*cult oshore resources.

nother important factor is the price of oil hich strongly aects the
;P,< and P,< spending patterns of ,=P companies. s of >une 8251
the decline in oil prices has signicantly sloed glo"al ,=P spending.
nalysts remain "ullish on the ?iddle ,ast here groth is e&pected
dri#en largely "y the large @ationals such as A@; and Saudi ramco.

s of 825B SV count as estimated at 9$522. +t is also estimated that of 
these 82813 are 81 years of age or older the ma0ority of hich are out
of ser#ice already. n estimated B12 ne /TS =PSV #essels are
planned for construction through 825C.
-ith 8251 and 825C groth SV groth e&pected to "e marginal across
the glo"e increases in glo"al %eet size is li!ely to place donard
pressure
pressure on prices.
 

Region$l S%pply $n De'$n

 The calm "enign aters of the ra"ianDPersi
ra"ianDPersian
an 4ulf permit ar
are
e mainly
operated "y small to medium size PSV's. ,=P spend$ oil price and rig
count are all good indicators of the general condition of the PSV mar!et.
Aespite the reduction in oil price$ ,=P spend and rig count remain sta"le
and as such it li!ely that PSV prices ill remain only marginally
marginally aected.
+nitially$ #essel oners ha#e indicated no more than a 1523 reductio
reduction
n
in prices as a result of the oil price. This ill li!ely further reduce
depending on the length of
o f time oil price remains don.
 num"er of #essels oners and operators are mo#ing their %eet from
Southeast sia to ?iddle ,ast$ due to #ery lo utilization le#els in S,$
creating a large o#ersupply of #essels in the ?iddle ,ast. +n addition$
continues eorts of regional oil companies to reduce costs and
renegotiating charter rates$ resulted in signicant reduction in charter
rates reaching up to 123 (SourceE S>).
 

t current
current it is estimated that 51C PSV's or! ithin the ?iddle ,ast.
Foo!ing forard to 8257 this is estimated to rise to circa 812 dri#en "y
increased rig acti#ity and increase pro0ect acti#ity. The dominance of the
large @;'s$ such as A@;$ GP$ and Saudi ramco ensures the prices
are some of the loest around the glo"e.
KEY P!AYERS
 The /TS mar!et ithin the Pe
Persian
rsian 4ulf is highly fragmented.  small
num"er of #essel oners control circa 953 of the mar!et hilst the
remainder is distri"uted across 522H #essel management companies.
 The main regional #essel oners areE Tideate
Tideater$
r$ Iamil shore$ /alul
shore$ Jour"on shore and Topaz ?arine.
 

E(TERNA! SCANNING
 The mar!et place is strongly fa#ored toards "uyers ithin the region.

 The mar!et is characterized "y a large "uyer and supplier im"alance$

high standardization in #essel specications resulting in relati#e ease in
sitching to alternati#es.
 
S%pplier Power i) !ow
• Fots of alternati#e #essels and suppliers$
• ,asy to sitch #essel and supplier$
• Suppliers are almost e&clusi#ely reliant on oil and gas industry$
• /igh utilization is required to co#er cost$

 
Poeni$l o* new enry i) +igh
• ?ar!et has high degree of standardization$
• ;hartering practises ma!e it relati#ely easy for companies to manage
#essels ith "are"oat charters$
• Vessels can mo#e across regions easily
Co'peii,e Ri,$lry i) high
• @o one dominant company ithin region due to similar specications

and num"er of suppliers

 

• /igh &ed costs

Thre$ o* S%#)i%ion i) 'ei%'-high
• PSV duties can "e carried out "y /TS #essels although at a slightly
higher cost (fuel)

.%yer Power i) high

• :e "uyers in region all of hich tend to "e large @;'s or +;'s
• ;ost of sitching is lo
• Fots alternate similar specication #essels
 

PORTFO!IO POSITIONING
Portfolio positioning is essential in guiding strategy ithin the category.
 The category is positioned "ased upon three factors 5) supply ris!$ 8)
protD#alue ris!$ and 9) poer structure.
Jased
Jased upo
upon
n a det
detail
ailed
ed ana
analys
lysis
is the PSV cat
catego
egory
ry is pos
positi
itione
oned
d as a
F,V,K
F,V,K4
4,
, cat
catego
egory
ry (ie
(ie.. lo sup
supply
ply ri
ris!$
s!$ me
mediu
dium
m to hig
high
h prot
protD#
D#alu
alue
e
ris!).
• Fo supply ris! is supported "y 5) the large selection of suppliers
and #essels$ 8) the ease of sitching$ 9) the standardization of %eets
across suppliers$ B) lo competiti#e demand ith regional "uyers.
• ?edium to /igh ProtDValue is determined "y 5) the relati#e high

le#els of e&penditure (the su"category should also "e considered ith

su"categories such as nchor /andling Tug Supply #essels (/TS) and
,mer
,merge
genc
ncy
y Kesc
scue
ue an
and
d Keco
co#
#ery
ery Vess
ssel
els
s (,K
,KK
KV's
's)) gi#e
gi#en
n the
commonality of suppliers and similar su"category characteristics)$ 8)
/igh costs of failing to meet demand requireme
requirements$
nts$ in particular rig time.
• Po
oer
er is str
stron
ongl
gly
y fa
fa#o
#orred toa
toarrds the
the Ju
Juye
yerr (See
(See ,&
,&te
terrna
nall
Scanning section)
COST & PRICE ANA!YSIS
ANA!YSIS
Aue
Aue to the
the co
comp
mpet
etit
iti#
i#e
e na
natu
turre of the
the su
su"
"ca
cate
tego
gory
ry dai
daily
ly hir
hire ra
rate
tes
s

typically consist of as much 123C23 direct costs. The most nota"le

 

costs are 5) depreciation of the asset$ 8) creing costs. ther direct

costs
costs inc
includ
lude
e mai
mainte
ntenanc
nance
e (sp
(spar
ares$
es$ spe
specia
ciali
list
st e&
e&per
pertis
tise
e and gen
gener
eral
al
consuma"les)
consuma"les) and other administ
administrati#
rati#e
e item
items
s such as inspe
inspection
ctions
s for
clas
class$
s$ %a
%ag
g reg
egis
istr
try$
y$ insu
insura
ranc
nce
e an
and
d as
asse
sett #a
#alu
lue
e ad
ad0u
0ust
stme
ment
nts.
s. Th
The
e
remainder of the daily hire rate is made up of 92B23 indirect costs$
such as corpo
corporate
rate o#erhe
o#erheads$
ads$ inte
interes
rest$
t$ and ta& assumption
assumptions.
s. 528
52823
23
prot margin can "e assumed.
Aue to the nat
natur
ure
e of the su"
su"ca
categ
tegor
ory$
y$ par
partic
ticula
ularl
rly
y the com
compet
petiti
ition$
on$
prices tend to re%ect the mar!et conditions.
TOTA! COST OF O/NERS+IP
+t is common practise to procure the ser#ices of PSV's$ "oth short and
lo
long
ngte
terrm$ us
usin
ing
g a stand
standar
ard
d ti
time
me ch
char
arte
terr. ddi
dditi
tiona
onall co
cost
sts
s i
ill
ll "e
assumed "y the Juyer$ other than the hire rate$ "ased on standard time

charter practises. These shall includeE

•  The cost of mo"ilization and demo"ilization (toDfrom home port to
or! location port).
• Struct
Structura
urall alt
altera
eratio
tions
ns as requi
require
red
d for the ope
operat
ration
ion and the re
re
instatement of the #essel "ac! to its deli#ered condition at the end of 
the hire
• cc
ccom
ommo
modat
datio
ion
n and me
meal
als
s are
are ch
char
arge
ged
d at an agr
agree
eed
d ra
rate
te as
stated in the contract (on a per night and per meal "asis) for the Juyer's
personnel on "oard
• ?aintenance Aays are accrued "y the supplier at a rate of 8B
hours per 5 month of operational ser#ice. Should the supplier ish to
lea#e
lea#e the el
eld
d to car
carry
ry out mai
mainte
ntenan
nance$
ce$ su"
su"0ec
0ectt to ha#
ha#ing
ing acc
accrue
rued
d
enough days$ the "uyer ould "e required to pay the hire rate during
this period. s ell at the end of the charter the Juyer is responsi"le for
paying the hire rate for each unused maintenance day
• :uel  The Juyer is responsi"le for the pro#ision of fuel oil that ill
"e consumed throughout the #essel operation. The fuel e*ciency of the

#essel can ha#e a signicant eect on the o#erall cost of onership. +n

calcul
calculati
ating
ng the fue
fuell con
consum
sumpti
ption
on con
consid
sidera
eratio
tion
n mus
mustt "e gi#
gi#en
en to the
 

typica
typicall ope
operat
rating
ing con
condit
dition
ions$
s$ #es
#essel
sel spe
speci
cic
c fue
fuell con
consum
sumpti
ption
on dur
during
ing
those conditions and the cost of fuel.
• ther items  ll lu"ricants$ ater$ port charges$ e&penses related
to cargo are for the ;harterer's account and may need to "e factored
into the T;.
STRATEGY 
 The su"category analysis carried out presents a strong case for a
strategy that maintains or further ma&imizes the poer of the "uyer
"uyer..
 There are a num"er of ays in achie#ing this hoe#er the items should
"e considered
• Ves
esse
sell Sp
Spec
eci
ica
cati
tion
ons
s  Sp
Spec
eci
ica
cati
tion
ons
s sh
shou
ould
ld "e Lg
Lgen
ener
eric
icM
M  it
should apply to as many possi"le #essels hilst remaining t for purpose
 to ensure competition amongst suppliers and the a"ility to sitch$
•
 ggregate Spend  Juyer's should loo! to le#erage regional spend
across the su"categories of #essels gi#en the commonality of suppliers
in the category$
• ;ompet
;ompetiti
iti#e
#e Tend
ender
er  Tend
ender
ers
s sho
should
uld "e con
conduc
ducted
ted to ens
ensur
ure
e
ma&imum competition and folloed ith negotiations$
• @egotiation Style  Supplier should "e approached ith direct and
hard (slightly aggressi#e) negotiations. The "uyer should capitalize on
mar!
mar!et
et inte
intell
llig
igen
ence
ce an
and
d se
see!
e! to tar
targe
gett pric
prices
es "a
"ase
sed
d up
upon
on th
thei
eirr
unders
understan
tandin
ding
g of cos
costs
ts and mar
mar!e
!ett con
condit
dition
ions.
s. Juy
Juyer
er's
's sho
should
uld tar
target
get
prot margins$
• /ire Periods  ?aintain relati#ely short commitments (59 years)
ith full %e&i"ility to terminate for con#enience at no cost on 62 to 582
days$
+n general the su"category strategy is focused upon a traditional arm
length relationship ith the suppliers.
TEC+NICA! INSIG+TS
s the PSV's main duty is supply equipment$ materials and consuma"les
to #arious locations$ dec! space (for the transport of equipment and
cargo)
cargo) and tan
tan!
! cap
capaci
acity
ty (fo
(forr the tra
transpo
nsport
rt of ess
essent
ential
ial ope
operat
ration
ional
al
 

consuma"les
consuma"les such as ceme
cement$
nt$ mud$ fuel oil$ and fre
fresh
sh ater) should "e
considered against the operational needs of the "uyer.
 The nature of the PSV operation in#ol#es or!ing ithin close pro&
pro&imity
imity
of other marine #essels and structures. s a result it has "ecome more
comm
common
on for PS
PSV
V #e
#esse
ssels
ls to fe
featu
aturre dy
dyna
nami
mic
c po
posi
siti
tion
onin
ing
g sy
syst
stem
ems$
s$
comput
computer
er sys
system
tem tha
thatt aut
automa
omatic
ticall
ally
y mai
mainta
ntains
ins the #e
#esse
ssel's
l's pos
positi
ition$
on$
minimising the ris!s of or!ing in and around other marine #essels and
structures.