Swire Group

Swire to expand offshore fleet

PUBLISHED : Thursday, 17 May, 2012, 12:00am
UPDATED : Thursday, 17 May, 2012, 12:00am


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Investment holding company Swire Pacific will spend US$1.2 billion over the next few years buying more than 20 new offshore support vessels to expand and upgrade its existing fleet of 77 ships.

John Rae-Smith, executive director of Swire Pacific Offshore, said the investment in larger, more powerful and capable ships reflected the move by energy companies to explore for oil and gas in more hostile and challenging environments, including deep water.

'We are building the fleet to go chasing the explorers,' he said, pointing out that Swire Offshore, which is among the top six offshore shipping firms in the world, operates in 50 countries including Brazil, Australia and West African nations.

The vessels include 21 that have already been ordered from shipyards in Japan, Singapore and South Korea.

They also include a sister vessel to the Pacific Champion, a 16,300 brake horsepower anchor-handling tug-supply ship, that was delivered last year by South Korea's Sekwang Heavy Industries. The Rolls Royce-designed vessel was the first ever ship to be christened in Hong Kong by Swire Pacific Offshore.

The other vessels on order included eight deepwater anchor handling tugs being built in Singapore for delivery between next year and the end of 2014, Rae-Smith said yesterday.

Two offshore wind farm installation vessels, which will have jack-up legs to stand on the seabed, are also on order and will be used to install wind turbine generators off the coast of Germany in the North Sea. They can also be used to dismantle offshore installations. 'A lot of infrastructure all over the world will be decommissioned. Our equipment is big enough and tough enough to get involved in that market,' he said.

Rae-Smith added that the investment includes the purchase of additional platform support ships. The Swire Pacific board has given the green light to acquire these vessels but orders have not been placed.

Last year Swire Offshore ordered eight 5,000 deadweight tonne platform supply vessels, four of which will be constructed at Japan's Universal Shipbuilding and four at the EISA shipyard in Brazil.

The expansion comes as observers expect a boom in oil exploration activity in the next few years following an anticipated rise in oil prices.

'I do think the level of exploration will continue to increase but the rate of increase should be slower than we had expected,' Rae-Smith said.

Drilling activity could be split into three types, he said. The first two cover long-term exploration that involves relatively consistent drilling programmes carried out by national oil companies and oil majors that are less affected by prevailing oil prices.

The third involves projects carried out by independent oil companies that need to raise bank finance to fund their exploration operations. These programmes are more susceptible to oil price volatility, which in turn determines whether they get financial support from banks.

Last year it was anticipated rising oil prices would fuel an increase in exploration from this year, but oil prices later fell rather than rose.

Swire Offshore generated net profit of HK$785 million on revenue of HK$3.5 billion last year as average charter rates rose 11 per cent.

Speaking at an industry event during Singapore Maritime Week last month, Lionel Lee, group managing director of ship-owner Ezra Holdings, estimated the offshore industry was worth US$600 billion and forecast that charter rates for large platform supply and anchor handling vessels would stage a strong recovery, booming between 2013 and 2015.

The offshore market has also attracted other Hong Kong ship owners. Gautam Chellaram, a son of Hong Kong ship owner Sham Chellaram, who owns KC Maritime, has diversified into offshore vessels. He currently owns one ship and is about to take delivery of a second.