Guest editorial: Trends converge to squeeze conversions

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by William Gibby, Technical Director at MAATS Tech.

Building a ship from scratch is a massive undertaking. It can take several years, many millions of pounds and tens of thousands of tons of materials. You can understand the temptation then, to assume converting an existing ship to suit your purposes would be cheaper, quicker and easier. However, from our niche perspective of cable laying, subsea construction and other special purpose ships, the opposite seems to be the case.

I guess the go-to example for a successful conversion market is the huge uptick in fortunes for FPSOs. The market’s thriving, with converted vessels accounting for 63 per cent of global FPSO market revenue in 2015 according to Global Market Insights.

However, when you become more specialised, things get trickier. Back in the days when cable laying was very much the little cousin to umbilical and pipe laying for the oil and gas sector, sure – conversion was often the way to go. However, as offshore renewables and interconnectors become the growth opportunities, the requirements shift. Specifically, the weight requirements rocket by several thousand tons.

That immediately decimates the number of suitable candidates for conversion, making new builds more tempting.

Then you have the fact that the vessels you’re eyeing up are remarkably heterogenous. Look at converted cable layers and you’ll see they often look very different to one another. In contrast, converted FPSOs are invariably former tankers – a specific vessel classification with fairly consistent characteristics. Not so in our industry.

That means you have to invest a considerable amount of time and resources upfront to evaluate whether or not the vessel in question is suitable for conversion to your requirements. It’s not always immediately obvious, and if it turns out you’ve been barking up the wrong tree, you might find yourself significantly out of pocket and no closer to getting your ship.

Plus – all this assumes that there’s a vessel available for you to convert in the first place. But with such a limited pool of viable candidates it’s not a very liquid market. If a ship is well-designed and in good condition, chances are it’s out there doing the job it was built for. Not many good ones are sitting idle waiting for that special someone to convert it and imbue a new lease on life. That means, to get the vessel you need, you may have to pay above market value to get it.

So, add those things together – the difficulty in finding a suitable ship in the first place, the cost of assessing whether or not it’s right for conversion (and it might not be), then the cost of acquiring the thing. Those apparently obvious cost-benefits of conversion (as opposed to new build) start crumbling pretty quickly. Plus, with new build, you don’t need to compromise – it can be specified exactly as you need it to be.

So, while the FPSO conversion market may well continue to thrive, in more niche parts of the maritime sector, such as ours, things aren’t so simple and I think we’ll see new builds hog the limelight for the time being. That said, at MAATS Tech we’re ready for the engineering challenge whichever way the wind blows.


About MAATS TECH LIMITED

MAATS is a marine engineering consultancy experienced in special ship design for new-building or conversion. Core competencies are centred on dynamically positioned special purpose vessels for diverse operations in sub-sea construction, diving, cable laying and flexible and rigid pipe laying. MAATS Tech offer total project management of special ship projects to owners and operators.

In addition to marine engineering and naval architectural services, MAATS Tech also design and build carousel, tensioner and overboarding systems for the deployment of flexible pipe, umbilicals and power cables. MAATS Tech are the world leader in such systems having delivered over 25 carousel systems to date.

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