In May, I discussed the OSV industry recovery taking place in the in both the USGOM and West Africa. These markets make up two-thirds of the Golden Triangle of offshore oil and gas activity with Brazil as the third corner. Brazil is now showing signs of sustained recovery and a long-term up cycle which further underscores the strength of the recovery here in the US GOM.
During the first week of October, state-owned Brazilian oil company Petrobras issued requests for quotations for up to 20 OSVs ranging from 3,000 to over 4,500 deadweight tons to support long-term charters for upcoming drilling and production activities. The value of all of these potential contracts is upwards of nearly $1 billion dollars. As with all Petrobras charter requirements, they prefer to use Brazilian-flagged vessels, but will utilize foreign-flagged vessels to fill additional requirements as necessary. US based companies participating in this bidding is could result in further tightness in the US-flagged OSV fleet domestically.
All three corners of the golden triangle are seeing significant and sustained increases in OSV demand. Owners need to take advantage of a market that is finally favoring them but at the same time be preparing for the next downturn. We know from experience that it will no doubt arrive at some point in the future and will inevitably surprise all market participants.