A P&I perspective of the offshore industry in 2017 and ahead

The Field

December 2017

2017 has been another challenging year for offshore contractors. The lay-up ratio of vessels and units entered with Skuld hit an all-time high around the middle of the year, when operational activity is typically at its peak. However, into the fourth quarter, we have seen a steady increase globally of drilling and production project tenders, which has a positive knock-on effect for the servicing industry. At the same time, a number of players seem to be positioning themselves for a market upturn, as mergers and takeovers hit the headlines.

Market conditions have had an impact on the contractual climate as bargaining power is subject to the law of supply and demand. That said, we have not, on a general basis, seen a fundamental change in contracting principles, which for the long run is positive - a clear and fair allocation of risk and reward has the twin advantage of fostering sustainable conditions for all players and reducing the overall insurance costs for any project. Having reviewed in excess of 700 operational contracts during 2017, we have gained a unique insight into contractual trends and challenges. This has enabled us to take part in a number of very interesting risk assessment discussions with members and clients throughout the tender process.

The majority of claims continue to be people claims, but this year there has been an increase in the number of collision incidents and indemnity claims. That trend even continues to laid-up units - we have responded to incidents protecting our assureds' interests following a collision between stacked jack-up drilling rigs which underline the importance of proper lay-up planning.

« Looking ahead, we see more offshore projects going live during 2018 and we will be actively taking part in and offering support to oil companies and offshore contractors for their offshore operations. »

In this regard, we have seen a slight increase in activities in "new" geographical areas, and also a change in operational focus, with companies moving into fields such as specialised decommissioning projects, or vessel owners refitting their vessels to become attractive for alternative employment. These activities will all have an impact on the risk profile and impose challenges on the shipowner as well as require additional support from us as insurers.

On behalf of the offshore team, I am grateful to all members, clients and brokers for having put their trust in Skuld during 2017 and I am confident that through Skuld Offshore's pre-risk focus and day to day servicing concept, we will continue to provide you with service and competence you can rely on also in 2018. We look very much forward to an exciting year ahead and continued cooperation.

Christofer Kobro
Global Head of Offshore