O TTO M ARINE L IMITED - Microsoft Internet Explorer - SGX

3.0 Ship Chartering
The majority of chartering opportunities for offshore support vessels generally originate from the oil and
gas exploration companies, construction contractors such as platform installation and maintenance companies
and pipe-lay contractors. Ship chartering generally involves the hiring of a vessel for a specified period (which
can be for a specific time period ie for example 3 months or for the duration of the drilling of a well, or a
number of wells, which is not a defined period in terms of the actual number of days) at a specific day rate,
with terms agreed between the shipowner and the charterer on a specific contract form called a charterparty.
Many oil companies have their own preferred charterparty and there are also independent charterparties drawn
up by BIMCO (The Baltic and International Maritime Council) organisation.
3.1 Types of Ship Charters Available
3.1.1 Spot Charter
Spot Charters are the employment of vessels on a short term basis (day by day period) of up to (usually)
30 days duration. The vessels earn the going rate in the market at the time and are dependent on the demand
for, and supply of vessels on the day. Since the employment of the vessels is unpredictable, so are the revenues
generated, but especially in the North Sea, many of the charterers like to rely on the spot market to cover ad
hoc requirements. Owners may well have periods when the vessel is off hire between spot jobs.
3.1.2 Term Charter
Term Charters involve the employment of the vessel for a period of time, which could be medium or long
term. Although there are no specific definitions of medium term and long term charters as different owners
have different ideas on medium and long term, medium term charters can be defined as lasting from 1 to
6 months and long term charters are for more than 6 months and may be up to 5 years or longer. Similarly, as
stated above, vessels may be chartered for a period defined as the duration of the drilling of a number of wells
and this would also be a term charter — the number of wells and the expected duration would then determine
whether it is medium or long term.
Vessels operating on term charter have continuous employment and are paid continuously whilst on
charter so owners are much more able to predict their earnings and potential profit.
3.1.3 Bareboat Charter
Under a bareboat charter, the charterer (who may be another owner) will supply all the officers and crew
and will operate and manage the vessel. The owner will know what his income is going to be as any
breakdown is for the bareboat charterers’ account generally. Short term bareboat charters are very unusual with
normal periods generally being for a minimum of 1 year. The only exception to this is any contracts in
Australia and New Zealand which require full local officers and crew and for which vessels are bareboat
chartered by local operators for the period required.
4.0 Description of Rig Types
With the decreasing supply of oil and gas that can be easily extracted onshore (land-based) and in shallow
offshore regions, exploration and production of oil and gas have ventured into previously untapped reserves in
deeper offshore areas. Rigs are now drilling in deeper water and in more remote offshore locations than
previously as technical innovation linked with high oil prices has made it commercially viable to do so. There
are different main types of offshore rigs of which the most common are jack-ups and semisubmersibles. Graph
2 shows the primary types of offshore rigs that are in service worldwide.
76