In a lousy North Sea offshore market, Norway's Island Offshore has sold a ship for conversion into a salmon delousing vessel.

Domestic aquaculture player Smir Group has acquired the laid-up, 3000-deadweight-tonne UT 755LN-type platform supply vessel Island Spirit (built 2006) for operation by its Hydro Shipping unit.

The new owner has renamed the vessel the Hydro Patriot — its second converted PSV — as oil and gas ships continue to exit a sector hit by dire rates since the pandemic struck and oil prices fell.

Laid up for three years

Norwegian broker Seabrokers said Hydro Shipping is removing some equipment on the ship so it can be converted, such as the remotely operated vehicle (ROV) mezzanine decks, the ROV winch, the A-frame and the housing module.

This will take 11 weeks, including the installation of "hydrolicers" — equipment that cleans lice off salmon.

Prior to the sale, the ship had been laid up since late 2017. VesselsValue assesses the PSV to be worth $10.34 million.

Island Offshore has 29 other vessels, including PSVs, anchor-handling tug supply units, multipurpose offshore ships and a flotel.

"Our focus is finding sustainable long-term solutions for each vessel. This may include divestment," Island Offshore managing director Tommy Walaunet told Upstream's sister shipping publication TradeWinds.

"Finding alternative work outside our industry may offer some relief and reduce the oversupply of vessels in oil and gas."

Negative impact

He added that low oil prices create a challenging scenario for offshore service providers.

"Ultimately, this implies reduced activity and less demand for offshore service vessels to support exploration and production activities," Walaunet said.

Walaunet added that he is seeing multiple cancellations and deferrals in the market, and expects the company to take a negative hit in the next 12 months — unless the oil and gas market takes a rapid change in direction.

He said: "We are back to a scenario with significant oversupply leading to vessels being traded below opex [operating expenses] and more lay-ups. Cancellations and deferrals will continue to impair markets until the oil price picks up."

The company has two vessels in lay-up, in addition to one ship brought in-house pending the start of a contract in June.

Former deputy managing director Walaunet replaced Havard Ulstein as the boss of Island Offshore in September last year.

The change had been planned for "some years", but the company said at the time that it wanted to wait until the offshore market improved.

Ulstein, who had been in the role for nearly 20 years, has continued as business development manager.

(This article first appeared in Upstream's sister shipping publication TradeWinds on 7 May 2020.)