In the first half of 2011, offshore orders rebounded greatly back to the peak level in 2007 and 2008. The market is prosperous with a package of offshore plants ordered worldwide.

The performance of offshore newbuilding market in H1 greatly exceeded the original expectations with 65 large drilling equipments, 12 mega production equipments, 65 AHTSs and PSVs traded.

Accompanying the increase of new orders, global offshore order backlog also witnessed great surge, especially drilling plants and PSVs. Besides, the operation of offshore utilization market grows more efficient. Platform utilization ratio has increased from 72% to 77.6% from January to June this year and the market demand is still on the rise, which draws the daily rent going strong.

It is predicted that the offshore plant output will undergo great increase in next few year, with deliveries reaching 61, 36 and 52 in 2011 and the following two years.

The total amounted invested in offshore plants in H1 came up to $35bn, accounting for 46% of the newbuilding investments total. Drilling ships, jack-up rigs and LNG-FPSO/FSUR, FPSO, OSV occupy 50%, 20% and 30% respectively of the total.

The increase of trade volume is partly due to the rise of offshore plant unit price. Take the KFELS B Class Bigfoot jack-up rigs as an example, a newbuild jack-up rig cost $180m in January but worth $190m till May, increasing by 11%. The values for drilling ships secured by Korean shipyards are mostly more than $600m, which is still potential for appreciation compared with the level before the financial crisis.

Drilling ships and jack-up rigs are the highlight in the large drilling equipments market. 29 drilling ships were ordered in the first six months, occupying 48% of offshore orders, while jack-up rig orders coming to 30 vessels, accounting for 49%.

In large production plants, LNG production equipments shined brightly with four LNG-FSRU and one LNG-FPSO traded.

The demand for drilling ships is mainly from the emerging deep-water areas, especially West Africa and Brazil. The needs for jack-up rigs are mainly from equipment update and replacement from traditional oil-producing regions like Middle East, Gulf of Mexico and so on. The potential demand growth for the two ship types, together with the increasing crude oil prices, made the considerable new orders currently.

In the first half, Korean and Singapore shipyards swept the offshore newbuilding market by overwhelming advantages. Keppel, HHI and Samsung together won 61% of the total order, demonstrating their absolute dominance in the market. Keppel Offshore & Marine made new history by getting order for 21 offshore plants this year, tripling its total of last year.

Chinese shipyards also made some spoils in the game, especially DSIC and COSCO Shipyard. With its cooperation with SeaDrill, DSIC made great progress in jack-up rigs market by getting few ordered into effect. COSCO Shipyard also takes the lead in domestic FPSO conversion and drilling ships construction.

As for the reasons underlying the surge of offshore orders, especially for drilling ships, insiders point out it is the increasing crude oil prices and the release of compensatory orders that jointly push the market.

Some experts estimate that the fever won’t continue for the current offshore orderbook has been 87% of the present fleet. However, the hot momentum has shown no weakening signals till now with many shipowenr keeping investing in offshore plants.

In fact, the biggest motivation for shipowners to invest in offshore plants is the flourish crude oil market. If oil prices remain high, new offshore orders would still spring up. Furthermore, many multinational oil companies sharply reduce relevant investments after financial crisis. But with the market picking up, these enterprises are supposed to invest more in offshore projects, which further encourages shipowners put more cash into the market.

Nevertheless, some offshore orders in the recovery period are speculative without long-term charter contracts, which may increase the instability of the market.

The offfshore plant newbuilding market is expected to continue the good momentum given the current situations and positive factors.

In view of the limited dock in Singapore and S. Korea, shipowners are likely to consider Chinese shipyards when putting new orders, which may further push China’s offshore construction level.