These days PSVs are cheaper to hire than AHTs

Vol 19, PW 17 (05 May 16) Exploration & Production

A glut of Platform Supply Vessels (PSVs) in the market has resulted in ONGC receiving unprecedented low rates in a tender to hire 18 offshore vessels for five years.

When price bids were opened on April 21, ONGC received lower quotes for PSVs than for Anchor Handling Tugs (AHTs). Usually it's the other way round: day rates for PSVs are typically 20% higher than AHTs.

In June 2015 for instance ONGC hired two PSVs from TAG Offshore at $10,400/day for five years. But one AHT was hired from Greatship and another from GOL Offshore at $8280/day.

In this tender for eleven 80-tonne AHTs and seven 3000-deadweight tonne PSVs, TAG Offshore is lowest bidder for AHTs, offering four vessels each at $7000/day. But for PSVs, Ocean Sparkle is lowest bidder offering one vessel OSL Triumph (formerly Lady Grete) at $6600/day.

"Companies with PSVs are desperate for work," says an industry source. "I don't know how they can sustain these low rates for five years." ONGC is legally-bound to award contracts to the lowest bidder but will negotiate hard to bring down TAG's AHT rates to below the PSVs.

Expect ONGC to approach owners of seven other higher priced Indian-flagged AHTs to match TAG's new rates if it succeeds.