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INDUSTRY OVERVIEW
This section is provided by Braemar Seascope Offshore (“Seascope”). The statistical and graphical
information contained herein is drawn from Seascope’s database and other sources. Graphs and tables are all
prepared from information contained in Seascopes own data bases unless an alternative source is indicated
underneath the relevant graph or table. In connection therewith, Seascope has advised that: (i) certain
information in its’ database is derived from estimates or subjective judgments; (ii) the information in the
databases of other maritime data collection agencies may differ from the information in Seascope’s database;
(iii) whilst Seascope has taken reasonable care in the compilation of the statistical and graphical information
and believes it to be accurate and correct, data compilation is subject to limited audit and validation
procedures and may accordingly contain errors.
Seascope further advise that you should also be aware that since 1 September 2008, (the date of
Seascope’s general overview), there may have been changes in the shipping industry and the various sectors
therein which could affect the accuracy or completeness of the information in this section.
1.0 Introduction
The World Energy Outlook 2007 report released by the International Energy Agency (IEA) forecasts that
the global primary energy demand will increase at an average annual rate of 1.8% between 2005 and 2030,
with global oil demand reaching 116 million barrels per day in 2030, an increase of 37% up on 2006. More
than 70% of this increase comes from developing countries.
World Energy Outlook 2007 projected that two-thirds of the increment would be used in the transportation
sector, where petroleum remains to be widely used since there are few competitive alternatives at present.
Less than one-third of the projected increase would be from the industrial sector, which is mainly used in
chemical and petrochemical processes. Much of the overall increase in consumption was anticipated to come
from nations where strong economic growth is expected, especially in Asia.
The latest report by the BP Statistical Review of World Energy June 2008 cites that two-thirds of global
energy consumption growth was from the Asia-Pacific region. Even though Chinese growth of 7.7% was the
weakest since 2002, China is accountable for half the global energy consumption growth, ahead of the US and
India.
Demand for oil and gas is dependent on a variety of factors, one of which is the winter weather. Since a
great proportion of energy is used for heating homes, there will be less demand and thus a decline in energy
prices during mild winters. Population growth, robust economic growth and the resulting burgeoning industrial
activity as exhibited particularly by China and India, and rapidly expanding transportation especially in recent
years of low-cost airlines are also responsible for increased demand for energy and subsequently higher prices.
Political developments which are adversely affecting production in oil rich nations such as Iran, Iraq and
more recently Nigeria, are also responsible for the shortage of supply and thus a higher price. Graph 1
illustrates that the price of crude oil is directly correlated to world events, where the price of crude oil is
higher than normal during periods of political unrest (reflected in the spikes of oil prices). Supply shortages,
for example caused by hurricanes, as well as low levels of oil and gas inventories also result in higher prices.
In recent years however, some of the early discovered economically viable oil and gas fields are maturing
and/or are close to being exhausted. Even with EOR (Enhanced Oil Recovery) technology to increase the
amount of oil which can be extracted from an oil field, the substantial costs involved for this process offsets
the profits and revenues are dependent on prevailing oil prices. The North Sea is a good example of an area
where the production is in decline because of exhaustion as well as for geological reasons and this declining
trend does not seem to be reversible despite EOR and the current high oil price. This has led to the increase of
deep sea exploration activities and the subsequent demand for offshore vessels in order to meet the worldwide
demand for oil and gas.
Offshore oil and gas exploration is taking place in many geographic areas of the world and well over
95% of all cargo going to offshore drilling units and platforms is transported by vessel. The range of offshore
support vessels is therefore diverse in size and function, with more than 20 types of specifically designed
vessels that comprised a total of about 5,691 vessels in the entire worldwide fleet in January 2008.
Transportation services of cargo and supplies to offshore drilling rigs, fixed and floating platforms is the main
workscope but other services include transport of personnel to, from and between offshore installations, towing
rigs to location and placing or retrieving their anchors, providing safety and emergency response services, and
supporting offshore construction projects. This latter workscope covers a multitude of different vessels
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