SHIP CHARTERING IN THE OFFSHORE INDUSTRY

Abstract

In oil and gas extraction, “offshore” refers to the development of oil fields and natural gas deposits under the ocean. Offshore Support Vessel (OSV) are those marine vessels which is specially designed to support oil and gas industry. Nowadays OSV owners facing tough market due to fluctuations of oil prices. This research is about to identify the ship chartering strategies used by local shipping company especially in poor market condition. This study focuses on the OSV company which is the owner of the vessels. For this research, a headquarter of this company is located in Sri Petaling, Selangor and their operation base is at Kemaman and Labuan. Company X Sdn. Bhd. was selected as the subject of research. Company X Sdn. Bhd. is the owner of 42 OSV which are operated in local waters and foreign waters. This OSV is the key role to support the upstream oil producers operation. The main objective of this research is to identify the strategies used by Company X Sdn. Bhd. in securing employment of their vessel poor market condition. This study provides an idea on how the ship chartering strategy can be used to survive in the poor market condition in oil and gas industry. In this research, a case study is used to identify the specific phenomenon of how Company X Sdn. Bhd. formulating and developing their strategies and the barrier when formulating the strategies. From the results, the researcher determine the effectiveness of the strategies using Company X Sdn. Bhd. latest Annual Report. Based on the latest two years annual report, the decrease of vessel employment is clear because of poor market condition. Even though the strategy is quite not effectives, the company still need to have a good relationship with the client in order to secure their vessels employment and to give confident to the client to pursue the contract in the future. Other than that, Company X Sdn. Bhd. need to strive the competition between other ship owner/operator in order to maintain the competitive advantages.