POSH Xanadu begin eight-month charter with Petrobras in offshore Brazil


Singapore OSV owner sees growth opportunities amid encouraging signs in renewables, subsea and offshore construction sectors

One of the largest OSV owners in Asia, Singapore-based PACC Offshore Services Holdings Ltd (POSH) was founded in 2006 as a member of the Kuok Group, which is controlled by Robert Kuok, Malaysia’s wealthiest man, according to Forbes. The Kuok Group has interests in maritime, hospitality, real estate, agriculture and logistics companies. Among the Kuok Group’s well-known brands is the Shangri-la Hotels.

Besides POSH, maritime interests held by the Kuok Group include PaxOcean, a shipbuilder and repairer with facilities in Singapore, Indonesia and China and Pacific Carriers Limited, a Singapore-based dry bulk carrier, tanker and container ship owner.

PaxOcean’s six facilities build and repair a wide range of commercial vessels. In April, PaxOcean Shipyard Singapore delivered the Giovanni Venturi, a former anchor-handling tug supply (AHTS) vessel built for Bourbon Offshore, that was converted into a water injection dredger (WIDs), for Dutch owner Jan De Nul. PaxOcean is converting two other former Bourbon OSVs into WIDs for Jan De Nul.

Newly appointed CEO

POSH will now be steered by its former deputy chief executive, Keng Lin Lee, who assumed the role of chief executive and joined the board as executive director on 1 May. Mr Lee has been an integral member of the POSH management team since joining the group in 2007. He has more than 10 years of experience in the offshore marine industry and was part of the team that led the acquisition of PSA Marine's offshore business in 2007. He has been instrumental in the development and operations of various joint ventures and new business divisions.

Keng Lin Lee (POSH): “We will innovate and adapt our strengths to meet the evolving needs of our clients, capturing more opportunities”

Prior to joining POSH, Mr Lee was employed by PSA International as its corporate and business development manager, where he was responsible for business development and charters of harbour tugs and OSVs.

Mr Lee is expected to continue to explore options to expand services in subsea and renewables, drive operational efficiencies, build closer to clients and optimise POSH’s asset portfolio.

“We are encouraged that our new businesses – subsea and renewables – are already gaining traction,” says Mr Lee. “We will now further expand our offerings in these growth areas. We will also innovate and adapt our strengths to meet the evolving needs of our clients, capturing more opportunities.”

Offshore projects that were sanctioned in previous years are gradually coming onstream, says POSH, resulting in a slight uptick in offshore construction activities. At the same time, the attrition of older vessels is expected to ease vessel oversupply slightly in the short- to mid-term.

In the longer term, developments such as shale technology and the global transition towards greener energy sources constitute a structural shift in the oil and gas industry. While oil and gas are expected to remain as the dominant energy source, the share of energy contribution by renewables is projected to see a substantive increase globally. This transition could present both current and future growth opportunities for POSH.

Better OSV revenues, utilisation

Publicly traded on the Singapore Exchange since 2014, POSH reported a 12% decline in revenue year-on-year to US$61.8M for the three months ended 31 March 2019, despite posting higher revenue from its OSV business and slightly better vessel utilisation (70 to 68%). POSH attributes the lower revenues to an under-performing offshore accommodation segment, which saw its revenues dip 39% from the previous year to US$23.8M. As a result, POSH reported a lower gross profit of US$6.8M for the quarter.

“We expect charter rates and utilisation to improve slightly for the OSV segment as offshore projects that were sanctioned in previous years materialise”

POSH says the lower revenue was largely due to POSH Arcadia – one of the group’s two semi-submersible accommodation vessels (SSAV) – being tied up for the quarter. Correspondingly, gross profit declined 47% to US$5.0M.

However, POSH expects improved results for its offshore accommodation segment during the remainder of the year. “We expect sustained improvement for utilisation and charter rates for the [offshore accommodation] monohull segment for the rest of FY2019,” said the company in a statement.

POSH Arcadia and its sister POSH Xanadu were both built by PaxOcean Engineering Zhoushan Co Ltd, in China as dynamic positioning class 3 -apable floatel vessels with accommodation for 750. Complying to DNV GL comfort class, each SSAV has offices and a conference room for clients, gymnasium and sports room, library, cinema, and lounges. On the aft deck, one Liebherr 100t crane is located starboard and one Liebherr 150t crane located on port to support light construction activities.

For station-keeping and propulsion, each SSAV is fitted with Brunvoll nine thrusters, including two 2,038 kW azimuthing stern drive units, five 2,400 kW retractable units and two 2,400 kW bow tunnel thrusters. Ship-shaped, the SSAVs have a maximum transit speed of 11 knots.

In January, POSH Xanadu began an eight-month charter with Brazil oil giant Petrobras in offshore Brazil. Petrobras has an option to extend the charter by an additional eight months. Additionally, all four of POSH’s light construction vessels (LCVs) and three multi-purpose support vessels (MPSVs) were deployed during the quarter.

In 2018, POSH Xanadu and POSH Arcadia achieved near 100% utilisation and gangway uptime. POSH Xanadu supported Chevron’s Big Foot tension leg platform (TLP) in the US Gulf of Mexico, while POSH Arcadia was charted for Shell’s Prelude, the world’s largest floating LNG (FLNG) located in the Browse Basin off of Australia.

Aside from the two SSAVs, all monohull vessels in the offshore accommodation fleet were deployed in Q1 2019, with improved charter rates, POSH reports. In Q4 2018, seven of its accommodation vessels had secured walk-to-work (W2W) charters to support offshore maintenance work, experiencing a 90% utilisation rate. POSH has a fleet of 12 offshore accommodation vessels, along with 42 OSVs, 31 harbour services and emergency response vessels and 38 transportation and installation vessels.

Results from the company’s joint ventures also slide to a loss of US$1.6M compared to a profit of US$0.6M in Q1 2018. This was due to lower vessel utilisation for its offshore marine service contractor joint venture, POSH Terasea.

POSH Terasea has a fleet of high bollard pull ocean tugs to provide towage and mooring installation of floating production storage and offloading (FPSOs) vessels, floating production systems and semi-submersibles. In 2016, POSH Terasea delivered one of the world’s largest FPSOs, Glen Lyon, from Ulsan, South Korea to Haugesund, Norway.

POSH’s partners in the joint venture are Singapore-listed liftboat and tug owner Ezion Holdings Ltd and heavy-lift cargo transportation company, Seabridge Marine Services Ltd.

Boost from renewables and subsea

POSH did see positive results from its new business segments established in 2018. Following its initial success in securing a subsea umbilicals risers and flowlines (SURF) contract last year, the company’s subsea solutions arm, POSH Subsea, clinched its second contract in Q1 2019 to support a pipeline replacement project off the coast of India.

In the renewables sector, POSH Kerry Renewables, a joint venture with Kerry TJ Logistics, added to its orderbook several contracts to support offshore survey and preparatory works for offshore windfarm construction in Taiwan.

“Moving forward, we expect charter rates and utilisation to improve slightly for the OSV segment as offshore projects that were sanctioned in previous years materialise,” says POSH in a statement. The 13 vessels under long-term charters to a national oil company in the Middle East experienced a 97% utilisation rate. POSH also refitted two OSVs for walk-to-work and subsea support operations, as part of its ongoing strategy to re-profile assets to serve growth segments.

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