03/04/2017 - 15:48

Oil price albatross weighs on marine logistics players

03/04/2017 - 15:48

Bookmark

Save articles for future reference.

Offshore oil & gas: The marine logistics sector is yet to significantly rebound from the lower oil prices of the past few years, although positive signs are emerging.

HEAVY HAUL: A Tams Group vessel replaces a fender at a jetty. Photo: Tams Group

The marine logistics sector is yet to significantly rebound from the lower oil prices of the past few years, although positive signs are emerging.

Western Australia’s offshore logistics market has had a shake-up in recent months, with two supply bases changing hands and work starting on a $123 million project to build a new facility in Onslow.

ASX-listed MMA Offshore is in the process of selling its Dampier supply base to Toll Group for $44.1 million, while further north, the company is selling its 50 per cent share of a Broome supply base to Toll.

See more on offshore oil & gas here.

The two companies had previously owned the latter base as a joint venture.

At Dampier, MMA will continue to operate the slipway for a further 12 months and will have a services agreement with Toll to access other parts of the facility.

MMA has used that base for work with Chevron, where it had a $100 million contract, which is due to end or be extended in June this year.

Chief executive Jeff Weber said the sales were part of a move to streamline the business and focus on its core business line of operating vessels.

“We’re carrying more debt than we’d like to and we’re looking to reduce that,” Mr Weber told Business News.

“From a supply base perspective, it used to be a big part of our Australian business. But it’s a smaller part of our international business, so it made sense for us to sell it onto people who probably do that more as their core business.”

Mr Weber said demand for vessels had dropped considerably, with the company having a lower utilisation, although he said that could partly be ameliorated by stationing unused vessels overseas where they could be kept more cheaply.

Mr Weber said the signs weren’t yet pointing to an improvement in the market, although the second half of the 2018 financial year was looking more promising.

“On the positive side, this time last year I think the oil price was about $30 (per barrel), so it’s better than that,” he said.

“Our clients are starting now to make a bit of money and (are) therefore looking at their spending decisions going forward.

“There’s a delay between an improvement in the oil price before we actually start to see an increase in demand; we still see it being fairly tough for a little bit longer yet.”

Construction of the new $123 million Onslow Marine Support Base, which is located on Beadon Creek near the town, started at the end of last year, with the facility to be ready for operation in September.

Kuwait-headquartered Agility Logistics will operate the facility after completion.

Onslow is closer to a number of offshore operations, including Barrow Island and the Pluto platform, than the nearest major competitor base at Dampier, while it is also considerably closer to Perth.

Building up

Tams Group chief financial officer Lee Bartlett said margins on oil and gas sector work were still relatively low, although there was an increasing level of activity in the market.

“A lot of the work we’re working on now has been in the pipeline for the best part of two years,” Mr Bartlett told Business News.

Jetwave Marine Services managing director Michael Hansen was more optimistic of activity in the shorter term, saying the first quarter of this year had been encouraging.

Mr Hansen said Jetwave had recently won two contracts, one of which was in offshore oil and gas, with Quadrant Energy.

That was for a Varanus Island support vessel.

He said the company had about eight vessels dedicated to oil and gas, or around 80 per of its offshore capacity.

The company will also be adding new tugboats to expand its portfolio in Fremantle, Onslow and Dampier.

Bottom hit

Bhagwan Marine chief operating officer Darren Kolln said he believed the marine logistics sector had reached the bottom of the current cycle.

“We are seeing some signs of recovery with several oil and gas majors looking to fix longer-term vessel charters,” he said.

Mr Kolln added that he could see signs of increased operating expenditure as larger projects moved into their production cycles. 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options