Archives for posts with tag: demand

Since 1970, 179 offshore gas fields have been discovered in the Browse and Carnarvon Basins of Australia’s Northwest Shelf. From around 2005, as offshore technology advanced and Asian gas demand rose, operators hatched plans of monstrous magnitudes for these fields. However, in an environment of low oil prices and E&P spending cuts, some of these offshore behemoths now look more endangered.

Taming The Seas

The Australian NW Shelf accounts for about 15% of offshore projects globally with CAPEX of over $5bn. NW Shelf projects tend to be capital intensive, in part because they are remote, with an average distance to shore of 161km. Development thus entails long export pipelines (889km for Ichthys, for example) to onshore LNG plants, or as yet unproven FLNG technology. CAPEX in turn contributes to high project breakeven prices, as does OPEX: for example, OSVs make longer trips for far-from-shore projects. Until recently, high project breakevens stymied final investment decisions (FIDs). However, due in part to cost-saving subsea and cryo-technology, in 2007, Chevron approved Greater Gorgon, a $37bn multi-field project with reserves of 40 tcf. Subsequently, 11 more projects received positive FIDS, including Prelude ($12bn), Pluto ($16bn) and Wheatstone ($29bn).

Teething Problems

Since 2007, 4 of these projects have come onstream and the other 8 are due to begin ramping up 2015-17. However, these 12 projects have not been without their problems. Greater Gorgon, for instance, was first scheduled to start up in 2H 2014, rather than 2H 2015; CAPEX has risen by 49% to $55bn. Meanwhile projects yet to be sanctioned have seen FIDs delayed by operators trying to cut costs. Scarborough, a mooted $19bn FLNG development 286km from shore (which has now been delayed again due to the fall in the oil price) underwent multiple FEED studies following the 2010 pre-FEED. Before circumstances changed, a 2019 start-up briefly looked likely.

Monsters Have Feelings Too

NW Shelf gas projects are thought to be some of the more sensitive globally to the change in the oil price since mid-2014. Greater Gorgon’s breakeven is relatively low for the area, but still stands at $67/boe. Projects further from shore are thought to have higher breakevens, in the $80-100/boe range. No Australian project more than 250km from shore has passed FID, though 50% of those yet to reach EPC exceed this distance, casting doubts on their viability. Since the fall in the oil price, Scarborough’s FID has been postponed to 2017/18; start-up before 2023 is considered unlikely. Other projects facing fresh feasibility concerns include Equus, Browse, Greater Sunrise, Crux and Cash Maple. Indeed, the average slippage for such projects already stands at 40 months. Many may not now come onstream before 2023 and a paucity of start-ups is anticipated in the mid-term, 2018-22, due to delayed FIDs 2014-17.

Clearly, then, remote Australian mega-projects are subject to high costs and breakevens, which increases slippage risk. That being said, the long-term fundamentals of energy-hungry non-OECD economies still suggest remaining NW Shelf gas will be viable eventually. These mammoth projects are not extinct yet.

OIMT201504

Seven years into the recession, the tanker market is blazing away, with VLCCs earning over $50,000/day and Aframaxes not far behind. It’s an amazing development which leaves investors pondering whether this is, in Churchill’s famous words, “not the beginning of the end, but maybe the end of the beginning”. Analysts now wonder if it’s worth the risk of going out on a limb and calling “turning point”.

Potential Paradigms

Whatever the outlook, it’s worth pausing to enjoy the moment – and, perhaps, reflect that nothing like this happened in the 1980s. So something has obviously changed, but over the long-term it’s hard to see what it is. Since 2007, the tanker fleet has grown much faster than seaborne oil trade. We know from experience that when there’s an underlying surplus, spikes rarely last more than a few months and paradigm shifts making “this time different” are rarer than hen’s teeth, if not impossible.

Disappointing Demand

Let’s start with the crude oil trade, which fell by 6% from 38.4m bpd in 2007 to about 36.3m bpd in 2014. OECD oil demand has declined since 2007, with North America down 8%; Europe down 12% and Japan down 13%. So there’s not much joy there. Add an extra 4.6m bpd of oil production in North America and seaborne crude imports dropped by 2.1m bpd. Of course, non-OECD imports have increased, as has products trade, but overall the oil trade has only increased 2.8%, from 55m bpd in 2007 to 56.5m bpd in 2014. A tonne-mile approach pushes the growth up to 7.9%, but that’s still only 1.1% pa.

The Flighty Fleet

Meanwhile the tanker fleet has been buzzing. At the end of 2007, when the credit crisis was just getting started, it was 383m dwt, but since then it has grown by one third (126m dwt) to 509m dwt. Of course, macro statistics are always a bit fuzzy, but an increase of less than 10% in trade and 33% in ships tells a pretty clear story that there is probably lots of ‘surplus’ tonnage tucked away.

A Logical Disconnect?

Such a surplus should surely “cap” rates. But clearly this is not happening, so what’s going on? There are a few explanations. Firstly, seasonality; global oil demand was 2.1m bpd higher in Q4 2014 than in Q2. Assuming most of that is translated into trade, that’s a 4% increase which, over a short period is enough to get things started. Add to that the surge in speculative cargoes held at sea, and demand is motoring. Finally, throw in the reluctance of owners to speed up, and the limited growth in the crude tanker fleet in recent years, and the recent rates look more convincing.

Cyclical Or Structural?

So, simple numbers don’t always give you the whole answer, but there’s never any harm in looking at the big picture. If the simple interpretation is right, things might ease off. But the real dilemma is probably the underlying surplus. Are today’s speeds the ‘norm’ for the future? With bunkers at $300/tonne, the answer is “maybe”. But given time, it could well become a key question. Have a nice day.

SIW1168

We may be in a recession, but some segments of the shipping market are doing better than others. In the last few months the dry bulk market has been plumbing the depths of despair, whilst large tanker owners appear to have hit the jackpot, with rates surging to over $60,000/day. Why is it that tankers are doing so well this year?

It’s All About Dynamics

Back in September VLCC tankers were earning less than $15,000/day, but over the winter the tanker market “slot machine” lined itself up with the four cherries needed to hit the jackpot. The first cherry was the seasonal cycle. Oil demand is generally higher in the final quarter of the year and in 2014 major importer demand was 2.2m bpd higher in Q4 than in Q2. The second cherry was the oil price, which collapsed just as the seasonal cycle got started. By the year end Brent at $50/bbl encouraged traders punting on physical oil, and where better place to put it than in a tanker? Cherry number three was slow steaming which meant that ships were at sea, not hanging around the loading zone. In December 2014 there was only one VLCC sitting spot in the Gulf on average, down from 12 in September 2014.

Fruity Number Four?

The fourth cherry was more subtle, but equally important; tanker owners seem to be better at “finding the floor” when the market tightens. In weaker periods, the theory runs, tanker owners are less likely to counter strongly in a tight market, for fear that charterers would turn the tables when the market slackens. When the supply-demand balance is more robust, as it appears to be today, they manage things more confidently. This sounds plausible, but is it true? To check, we analysed VLCC spot earnings since 1991, using the monthly average of VLCCs spot in the Gulf to indicate available supply. Splitting the data at 2000, we calculated the average earnings for each number of VLCCs sitting spot in the Gulf.

From A Position Of Strength

The results are shown in the graph. The blue line shows the spot/earnings relationship 1991-99 and the red line shows the same 2000-15. The lines suggest that with 7-20 VLCCs sitting spot in the Gulf, earnings were much the same in both the ‘weaker’ period (average earnings of $26,000/day 1991-99) and the ‘stronger’ period (average earnings post-2000 of $46,000/day). But with 6 or fewer spot ships, the earnings since 2000 have been 68% higher, suggesting that owners can  take greater advantage of a tight supply situation when the overall supply-demand balance is more positive.

How To Win The Jackpot

So there you have it – two conclusions. Firstly the number of ships in the loading zone is what matters, not any “theoretical surplus”. If ships are slow steaming, such a surplus only matters if they speed up. Secondly the analysis suggests that when the supply of spot ships is tight, the wider ‘strength’ of the market impacts how owners negotiate matters a great deal. Relative to spot supply, VLCC earnings in the stronger post-2000 period increased significantly compared with the weaker 1990s. As a result, the conclusion for owners could be “stay slow and be brave”. Have a nice day.

SIW1164

The rigid pipe layer fleet is complex, varied and sometimes perplexing: S-lay, J-lay, reel-lay; barge, vessel, semi-sub; tensioners, carousels, moonpools – units therein defy easy comparison with one another. And so, unlike in many sectors of the offshore fleet, it is not immediately clear what is a ‘high-spec’ and what a ‘low-spec’ unit. What is needed, then, is a framework to analyse the 172-strong pipe layer fleet…

Offshore Operations

In essence, pipe layers are used to install rigid pipelines on the seabed, primarily during the development of offshore fields. These pipelines are used to export oil/gas to shore, or to transport fluids between seabed or surface installations within a project area. Pipe laying is conducted during the EPC phase of project development, consequent on award of (typically lump-sum) EPIC and SURF contracts, usually to specialist offshore construction companies like Allseas, McDermott, Saipem, Subsea7 or Technip, who own 4, 5, 14, 6 and 6 pipe layers respectively – 20% of the fleet. There is no pipe layer spot market as such, so comparing day rates to pick out the high-spec from low-spec units is not possible.

Inscrutable Idiosyncrasy?

Vessels’ traits are not immediately helpful either. Monohull structures account for 19% of units and barge/semi-sub structures for 81%. Pipe sections are welded on-board and deployed via J-Lay towers (8% of units) or S-Lay stingers (76%), the letter indicating the curvature of the pipeline as it is lowered to the sea floor. However, 3% of vessels have both J-Lay and S-Lay structures; 16% use cranes or have hybrid, reel-lay systems; and the tensioner capacities of lay systems (i.e. the weight of pipeline they can support) range from under 10mT up to 2,000mT. There is no simple correlation between a single feature and a unit’s capabilities: “Lorelay” has tensioners of 265mT, yet cannot lay pipes in ultra-deepwaters; “C Master”, with tensioners of 160mT, can. The secondary functions of units can also vary greatly: 10% of units have ROV capabilities, for example. Moreover, 19% of units in the flexi-lay fleet can install rigid pipelines (and 5% vice versa). How then, amidst this variation, to distinguish a ‘high-spec’ from a ‘low-spec’ pipe layer?

A Promising Perspective

One way is to cross reference the maximum pipe lay water depth of units with the maximum diameter of pipe they can lay. Thus the 12 units in the “red” segment of the inset chart (e.g. “Seven Borealis” and “Sapura 3000”) could be considered high-spec and versatile, competing with units in the “dark blue” segment for ultra-deepwater subsea contracts, but with the “light blue” segment for large export pipelines in shallower waters. In the opposite quarter of the matrix, the 55 “grey” units are mostly barges, deployed in shallow waters like the Niger Delta and Lake Maracaibo. One could say there are four (overlapping) markets for pipe layer work. The range of EPC contracts for which construction companies are likely to bid will depend in part on the segmentation of their pipe layer fleets.

So, pipe layers have an array of characteristics complicating segmentation. However, some units are clearly better suited to some projects than others. By cross-referencing factors like water depth with pipe width, one can craft a framework for sorting through this diverse fleet.

OIMT201501

With the holiday season almost upon us, deliveries of many types are the focus of attention. In shipping, deliveries into the world fleet peaked a few years ago, and then the rate of capacity delivered from the world’s shipyards went on the slide. At some point this should have started to stabilize but, with output often fairly volatile from month to month, it needs some work to identify when.

Peaking Deliveries

In the years 2006-08 an unprecedented total of 646m dwt of vessel capacity was ordered at the world’s shipyards. Although, following the economic downturn, the delivery of some of this was delayed or cancelled, capacity delivered rose substantially in the years 2010 to 2012, and peaked on an annual basis in 2011 at 166m dwt (on a monthly basis, 12-month moving average deliveries peaked at 14.8m dwt in June 2012). Inevitably, following the downturn, a slowdown in ordering occurred, and after the peak in output deliveries started to slide. The question was how long would the slide in deliveries last, and how quickly would surplus building capacity exit the arena?

Sliding Then Flattening

Monthly delivery data provides some of the answer. Although this can be volatile, the 12-month moving average (a metric showing the average monthly output over the last 12 months) gives an idea of ‘annual’ output capacity at any point in time. The graph shows that this had dropped to 12.8m dwt by January 2013 and then to 10.1m dwt by July 2013. By January 2014, the 12-month moving average had reached 8.6m dwt, down 42% from the peak. Shipyard output, in dwt terms at least, had slowed perhaps more quickly than many had imagined.

But, has the rate of output stabilized since then? The graph suggests yes. In April 2014, the 12-month moving average reached 8.0m dwt, and since then has remained in a fairly narrow range between 8.0m and 7.4m dwt. Clearly the rate of output has flattened. The full year delivery forecast for 2014 stands at 7.8m dwt per month, with a not too dissimilar figure currently projected for 2015.

Covering Up

Meanwhile, the line on the graph highlights an interesting side effect. As deliveries have slowed, and the orderbook has started to grow again (at 316m dwt, it is today 18% larger than at start 2013), the orderbook expressed as years of ‘cover’ in terms of the 12-month moving average rate of deliveries has increased significantly, moving from 2.2 years in July 2013 to 3.5 years today. Not quite the 4.4 years seen in 2010, but substantially more cover than the 1.7 years when deliveries went on the slide in 2012.

Onward, Upward?

So, it looks like deliveries have stabilised, and this perhaps came around a little more quickly than some expected. Moreover, whilst the environment today is still challenging for yards, a side effect of the slowdown in output has been an increase in the level of cover. When output starts to increase again is open to question, but today’s orderbook for 2015 delivery (135.1m dwt) is a little bigger than that for 2014 delivery at the start of this year (133.8m dwt), so watch this space.

SIW 1150

As in the case of most areas of shipbuilding, the contracting boom of the mid-2000s allowed Chinese shipyards to gain market share in the OSV sector. Initially, however, this was limited to relatively simple units. More recently, Chinese yards have begun to construct more sophisticated vessels, with broader global appeal. At the same time, they have grown market share (53% of the OSV orderbook, versus 36% in 2008).

AHTS Demand Dries Up

Back in the boom years, although Chinese yards took many orders, the majority of these were from Asian owners for use in the benign waters of the East. Asian-designed ‘commodity’ AHTSs of around 5,150 bhp made up the bulk (55%) of these orders. Chinese yards were assisted in gaining a market share by
build-to-stock intermediaries, such as MAC, Coastal or Nam Cheong, which outsourced orders to Chinese yards with the prior intention of resale close to delivery. Meanwhile, European owners tended to restrict their ordering to established yards, for instance those in Norway, whose designs they knew and trusted.

In Asia, working for NOCs like Petronas, Pertamina and PTTEP, whose operations are mostly near-shore, these small OSVs could find a market. But both Chinese yards (keen to diversify their product mix) and Asian owners (keen to expand their business into new geographies) had an incentive to change approach.

PSV Purchasing

In an effort to climb the value chain, Chinese yards began to licence OSV designs from European companies, such as Rolls-Royce, or Ulstein for example. Subsequent ordering of such designs has been focussed on larger PSVs – in 2013, 82% of orders for Chinese built PSVs 4,000+ dwt had European designs. Demand for these vessels outpaced that for AHTSs, as more deepwater and far-from-shore fields entered development, with PSVs being the vessel of choice for these remote operations. The yards’ previous (Asian) clients transferred their attention to these vessel types, keen to gain a slice of the action in areas like the North Sea, or West Africa. At the same time, non-Asian owners were encouraged to order at yards now offering designs which they recognised, at prices 20-30% lower than those offered by European shipyards. Between the start of 2010 and 2014, China’s OSV orderbook rose nearly fivefold, to 382 units (53% market share).

Future Demand

Of course, the trend towards China can only last if the vessels which they deliver meet with acceptance in the Atlantic oil producing regions. However, the signs are encouraging, with Chinese built vessels making up a large proportion of deliveries into internationally operated areas (33% in 2013). Of all Asian-built PSVs with European designs currently active, around 30% are employed in West Africa, whilst 30% of PSVs >3,000 dwt are working in NW Europe.

This is an evolving situation, which will become clearer as the large PSV orderbook delivers. For the time being, however, Chinese yards look to have risen to the challenge of becoming builders of OSVs attractive for global operations.

OIMT201411

Each year, in the first week of November, we invite readers of the Shipping Intelligence Weekly to predict the value of the ClarkSea Index one year ahead. The competition entries are always interesting, and give us an idea of what the shipping industry’s expectations of the market really are. However, as everyone knows, it’s hard to get it right and the competition can only have one winner…

Stick Or Twist?

In 2013, it felt like there was some consensus amongst industry players that the bottom of the cycle might have been reached and that markets would start to take a turn for the better. Shipowners contracted 176.9m dwt of new ships, the highest level since 2008, reflective of a more optimistic outlook than previously. The ClarkSea Index represents a weighted average of tanker, bulker, boxship and gas carrier earnings, and it is interesting to see if the entries in our annual competition supported this optimism.

At a first glance it seems that competition entrants had a cautiously positive outlook, with the average prediction of the early November 2014 index value at $14,553/day, well above the $10,843/day average prediction for November 2013 from last year’s competition. The average forecast was also far above the actual full year 2013 ClarkSea Index average of $10,263/day, and the value at the start of November 2013 of $10,767/day.

Hard Times?

Looking at 2014 to date, this optimism may have been slightly misplaced. The ClarkSea Index overall has not performed particularly well since November 2013, averaging just $11,625/day. Crude tanker earnings have improved but have been spiky, while product tanker earnings have generally remained under pressure. Bulker earnings have seen limited upside aside from some helpful spikes in the Capesize market. Gas carriers have been the star performers, with significant earnings gains, but containership earnings have remained in the doldrums.

During most of 2014 to date, the index has stood below the $12,000/day mark. Across the 45 weeks in the year to date, the ClarkSea Index only exceeded the average competition prediction in three of them. However, last week, on 7th November 2014, the ClarkSea Index rose to $15,139/day, helped by more positive bulker and tanker markets and up 41% year-on-year, if still well below the 2004-13 historical average of $20,795/day.

Pipped At The Post?

So, although index levels this year have generally remained low, the recent rise has meant that the actual value on 7th November was higher than the majority of competition entries. Around 25% of the ‘forecasts’ stood in the $13-14,000/day range; maybe people were right to be optimistic after all? However, having dipped below the $10,000/day mark in September, the index has only really improved over the last month or so.

So, is the glass half empty or half full? Depending on your viewpoint, the cautious optimism has either been misplaced or justified. Whatever the case, this year’s winner is Mr Peter Bekkeston of Klaveness Chartering with a forecast of $15,123/day. Have a nice day, Peter; your champagne is on its way.

SIW1147

Self-Elevating Platforms (‘SEPs’) are generally used to provide offshore support for construction and maintenance projects. These units fall within the wider ‘construction’ sector in the segmentation of the offshore fleet, and can generally operate in water depths of up to 120m. The key deployment areas for these structures exist in the US Gulf of Mexico (GoM), West Africa and the Middle East. Despite high numbers of shallow water developments in the North Sea and South East Asia, there has been relatively little deployment of SEPs in these regions, although recent contracting patterns within South East Asia suggest this may soon change.

Rising Above Regional Regimen

The Graph of the Month shows the regional breakdown of producing fields with a water depth of <100m, as well as the share of self-elevating platform deployment across these regions. South-East Asia contains the largest number of shallow water developments with 552 active fields, closely followed by the US GoM (508) and the North Sea (452). However, there is a large disparity between these regions in terms of SEP deployment, with the US GoM accounting for the deployment of 161 units compared to the North Sea and South East Asia where just 10 and 19 structures are deployed respectively.

Lower deployment numbers in these regions can be largely attributed to a major factor in each region. In the North Sea, self-elevating platform use is often restricted by harsh operating conditions. In South-East Asia an ample supply of support vessels has provided ships for use in construction and support duties in the region.

Jacking-Up Orders

The current SEP orderbook includes 24 units with a record combined contract value of almost $2bn, of which 13 are for South-East Asian owners. Of the 15 contracts agreed in 2014, 60% of these are for Asian owners. Although these units will be capable of operating internationally, indications from owners including Teras Offshore, Swissco Marine and East Sunrise Group hint at a South-East Asian target market. There is a large fleet of mid-sized supply vessels in the region and historically these units have worked similar roles to the SEP fleet. However, the mid-sized supply vessel orderbook has diminished from around 200 units in 2012 to the current total of around 70 vessels, potentially supporting future deployment of SEPs in the region.

Lifting Expectations

An abundance of shallow water fields and relatively benign conditions means that South-East Asia is a region with strong potential for the future deployment of SEPs. Despite a lack of historical deployment, the attraction of competitive day rates in comparison to support vessels has reportedly begun to attract interest, in turn leading to investment in newbuild units from Asian owners.

So, a reduced orderbook for mid-sized supply units and an expected increase in field developments within China and South-East Asia could be positive news for SEP owners. Whilst still way below levels of deployment in the Gulf of Mexico, this region could provide impetus to self-elevating platform demand in the future.

OIMT201410

Eleven years ago in 2003, when China opened its doors and the steel boom got underway, the shipping community was suddenly presented with an ‘Aladdin’s Cave’ of cargo. Unlike Japan and Korea, China had not locked in the fleet of ships it would need. So the escalating imports of iron ore soon turned into a gold mine for shipping. With so much cargo and a limited fleet of ships, Capesize rates surged.

Unexpected Riches

Shipping has always done well out of “miracle” economies, but the Chinese growth surge which followed was special. In the next decade, Chinese industry, especially steelmaking, grew faster than anyone could possibly have predicted. In 2003 the Chinese government thought steel production would reach 300mt in 2010. Actual output in 2010 was 627mt. The effect on trade was profound. China’s seaborne imports quadrupled, reaching 2 billion tonnes in 2013, by far the most any country has ever imported in a year. The freight boom this triggered between 2003 and 2008 was also arguably the best in the industry’s history.

Even after the Credit Crisis in 2008, China kept expanding, with just one short-lived wobble in 2009. This growth helped cushion shipowners from a 1980s style meltdown that might otherwise have hit the bulk and container markets.

Unavoidable Evolution

But in the real world, economies move on and there are many signs that change is underway. China is a very big country, and some provinces are still poor, but across the economy activity is slowing. Industrial production growth fell to 6.9% year-on-year in August and the dollar value of export trade, which for many years grew at about 20-30% pa, only managed 8% in 2013.

The real change this year has been in steel and construction. Official statistics suggest that floor space under construction is down 17% year-on-year and house completion is down about 30% this year. Some Beijing analysts are predicting much lower house building over the next two years. Although iron ore imports are up by 18% year-on-year, steel production is only growing at 5%. Not a good omen. Meanwhile steel prices have slumped another 5-10% and steel exports are up 37%. All signs of market weakness.

Value-Added Production

Of course these trends could be cyclical, but China is a very different economy from 10 years ago. A new generation has grown up with computers, smartphones, cars, fashion and confidence. Environmental concern, which triggered the impending ban on high sulphur coal imports, illustrates the way these changes can trickle through into trade.

New Trend, Old Story

So there you have it. China’s sprint for growth is easing off and it is projected that imports will grow 5% this year. This is way below the 10-20% pa of the boom years. It happened to Japan and Europe in the 1960s and to South Korea in the 1980s and 1990s. So does that mean ‘Aladdin’s Cave’ is empty? Such a big cave with so many dark corners, makes it hard to say, but it’s a serious issue for investors. Have a nice day.

SIW1143

In the early 1990s when shipping emerged in a fragile state from the traumas of the 1980s, raising finance was a problem. The shipping banks had taken a battering in the 1980s, and the US financial crisis had taken out the American banks. ‘Basel 1’ made getting a loan over $25m difficult, syndications were rare and the capital markets were unapproachable.

$200 Billion? No Way

Against this background, estimates that the shipping industry would need to raise $200 billion to finance investment during the 1990s seemed an impossible mountain to climb. In fact these estimates of future investment requirement, based on the need to replace the ageing fleet and allow for expansion of the key tanker, bulkcarrier and containership fleets, proved to be on the low side. During the decade investments in new ships added up to about $340 billion. And of course, miraculously, the money appeared. Syndications, club deals, capital market transactions, the German KG market and a few new banks filled the gap.

$1.4 Trillion? No Way

But history repeats itself and today the old problem of “where will the money come from?” is back on the agenda with a vengeance. This time the numbers are bigger. On our rough estimate, the cost of financing the shipping industry over the decade from 2014 to 2023 could be around $1.4 trillion. That’s a massive step up from the 90s (the chart shows investment from 1990 to 2013, with estimates to 2025). But the business has changed dramatically since the early 1990s when it was mostly about tankers, bulkcarriers and containerships. In the coming decade only half the investment (about $760 billion) is to finance the replacement and expansion of these core fleets.

New Investment Era

The other half consists of sectors which, in the early 1990s, had little impact (partly, perhaps, because there weren’t many statistics). Two market segments which look likely to generate a lot of value-added over the coming decade are LNG tankers and cruise ships. These are not newcomers; they have been around for years. But the changing world economy seems likely, in different ways, to boost investment in these segments very substantially, and together they account for about 20% of the projected investment.

The other big segment of potential investment for the shipyards is offshore. In the early 1990s that was, like the proverbial dodo, an extinct entity, with little business on offer. But the relentless pressure on energy supplies, both oil and gas, and the focus on mobile facilities, suggests this might account for as much as 30% of future shipyard investment.

Spend, Spend, Spend

So there you have it. Shipping needs the investment, but where will the money come from? Most analysts agree there’s a tidal wave of cash sloshing around the world, looking for a home with a good story. Unfortunately shipping’s financial story remains a bit patchy, but the reassuring lesson of the 1990s is that there’s always someone who will find a way to do the business. Who will it be this time? Well, that’s the trillion dollar question. Have a nice day.

SIW1141