Branching out into offshore wind has been the right decision for Dutch companies like Van Oord and Boskalis. SWZ|Maritime’s Editor-in-Chief Antoon Oosting points out they can now benefit from the increase in offshore wind projects worldwide and are as such less impacted by the slump in oil prices and the corona crisis.
In every issue of SWZ|Maritime, Oosting writes an opinion piece about the maritime industry or a particular sector within it. In the September 2020 issue, he discusses how Dutch and Belgian companies can play an important role in the booming offshore wind industry.
It was on the 16th of June that Rotterdam based dredging and offshore contractor Van Oord had to announce a reduction of some ten per cent (500 jobs) of the global workforce of 5217 (end of 2019 of which roughly half are stationed in the Netherlands). But just like the other big three competitors Boskalis, DEME and Jan De Nul, the offshore contractor from Rotterdam also benefits a lot from the now booming offshore wind market. The same goes for some other Dutch firms like Heerema and Jumbo.
The policy to strongly diversify their companies from dredging and activities strongly related to investments in the offshore oil and gas industry towards investments in vessels for installing offshore wind parks, now turns out to have been a wise one. That is why these companies are now far more financially healthy than during the before-last sharp dip in the oil price and the subsequent sharp cut of investments in this industry. From 2014 to 2016, the oil price fell to a record negative level of less than US $ 27. It increased again to over US $ 70 till it dropped once more this year on April 21 when North Sea’s Brent oil noted a record low of US $ 19.33 per barrel.
These companies are now far more financially healthy than during the before-last sharp dip in the oil price
Yet, shifting the focus from oil and gas to offshore wind is easier said than done as it relies strongly on the ability to obtain financial resources. Bank loans depend amongst others on capital solvency, value of assets and in the case of Boskalis, the only one that is listed on the stock exchange, on the share price. Belgian DEME is only indirectly influenced by the stock price by mother company Ackermans & Van Haaren. Purely for tax reasons, Luxembourg based, but otherwise fully Belgian Jan De Nul and Dutch Van Oord are still family owned companies.
Lower value of ships
At the presentation of the financial results of the first half of this year on 20 August, Boskalis reported that the corona pandemic and the sharply lower oil price had reduced the value of a number of ships. The group is therefore writing down € 148 million on two old own vessels, vessels of two participations and goodwill. As a result of the writedown, the net loss for the first half year amounts to € 96.4 million.
More important, however, is that the operating result was positive. In an explanatory statement, CEO Peter Berdowski mainly points to the development of the operating result, that is, the profit from ordinary activities. Without the extra depreciation, a profit of € 47.5 million was achieved. This is better than the corresponding period last year, when Boskalis recorded a loss of € 40.9 million.
As a sign that things are not going so badly at all, Boskalis could shortly afterwards report that it recently took on two exceptional projects of which the first has everything to do with the innovating offshore wind market. This project involves the transport and installation of five floating wind turbines for the Kincardine floating wind farm off the coast of Aberdeen in Scotland. The second project involves the installation of bridge sections of the world’s longest suspension bridge, the Çanakkale 1915 Bridge in Turkey.
As a sign that things are not going so badly at all, Boskalis could report that it recently took on two exceptional projects
Decisive factors for the award of both contracts according to Boskalis, are the company’s versatility in the field of offshore transport and installation work and the wide variety of specialised equipment with which it is able to fully execute the projects.
Positive outlook
It results in a for investors important positive outlook. At the presentation of the 2019 results, CEO Peter Berdowksi was still cautious: ‘The picture for Offshore Energy is not expected to change materially in the second half of the year. The services activities at Transport and Subsea Services will partly depend on the spot market. At Survey, demand from the offshore wind sector remains strong and the oil and gas market is impacted by oil price developments. A good second half of the year is expected for the contracting activities Seabed Intervention and Subsea Cables based on the projects in the order book.’
At the presentation of the first half year results, Berdowski was already far more self-confident about the future. In a statement to the Dutch newspaper Financieele Dagblad (FD) Berdowski said: ‘The first half of the year was a rollercoaster in which we had to pull out all the stops to steer the company through the Covid-19 crisis.’
Boskalis can boast a well-filled order book of more than € 4.7 billion and it looks with confidence to the rest of 2020 and expects to match the gross operating result of 2019 (€ 376 million). ‘I wouldn’t have dared to dream this three months ago,’ says Berdowski in the FD. At the time, the company was still in the dark about the consequences of the corona pandemic, he says. This has become a bit clearer now, but Berdowski emphasises in an explanation that the further course of the pandemic is still uncertain.
Orion incident
With a turnover of € 2.62 billion, Belgian DEME Group was last year’s number two of the major four Dutch and Belgian dredgers, just behind the 2.645 billions of Boskalis that in fl eet size and personnel is still by far the biggest of the four. Like all the other operators of ships, DEME also encountered a lot of problems with changing of crews, inefficiency in projects and delays in deliveries due to the Covid-19 pandemic. Yet, almost no ongoing project has been stopped or postponed, despite the restrictions imposed by local authorities.
At the beginning of May 2020, DEME Offshore was confronted with an accident with the offshore installation vessel Orion, as a result of which the vessel could not be deployed on the Moray East project as planned. During loading tests, the crane suffered considerable damage. Fortunately, only a few minor injuries were reported.
The vessel will probably not be able to be put into service until around the end of 2021
The vessel was still under construction and owned by COSCO (Qidong) Offshore Co. and was moored at the quay at the Liebherr yard in Rostock, Germany. The repairs to the Orion have now started, but the vessel will probably not be able to be put into service until around the end of 2021. However, DEME has worked out alternative solutions which are in line with the outcome of the Moray East project and which will enable the project to be delivered more or less within the time allowed.
Taiwan offshore boost
The Chinese independent island republic of Taiwan has started a huge offshore wind farm programme with no less than 69 projects planned of which only two are already in operation. Most of them are still at the planning stage or have just started construction. This provides work for a wide range of offshore wind contractors. Besides all four major Dutch/Belgian dredgers, Heerema Marine Contractors (HMC) and Jumbo Shipping each have a share of the work that is needed to develop the projects.
One of the first companies to ensure itself of a nice share of all the work to be done, was Jan De Nul. Recently, the Belgians installed the first jackets in Taiwanese waters approximately ten kilometres off the coast of Fangyuan in Changhua County. Onshore, the civil works for the connection of the offshore wind farm are completed. Mid September, a total of nine jacket foundations, weighing approximately 1100 metric tonnes each, have been installed on the seabed by means of the offshore installation vessel Aegir, which Jan De Nul Group chartered from Dutch HMC for the foundation installation campaign.
‘Two years have passed prior to installing the first jacket foundation offshore. We are therefore more than delighted that the installation has been successful,’ says Peter De Pooter, Manager Offshore Renewables at Jan De Nul Group. In total, the TPC Offshore Wind Farm will comprise 21 offshore wind turbines, each installed on a jacket foundation, which are anchored to the seabed by four steel pin piles. Installation of these pin piles started in June this year. After installing the jackets on the pin piles, the void between these two is grouted to create a firm connection.
Lots of projects still to come
And although Van Oord announced to reduce its workforce, at the beginning of this year, it still had € 3.61 billion of work on order. Last year, Van Oord won its fi rst Taiwanese cable project (from Ørsted). At the presentation of the 2019 results Van Oord said: ‘The market outlook is positive, with high tender volumes’, and ‘Our overall orderbook remained solid with a positive outlook’.
2019 growth rates marked a new record for the offshore wind energy market
In the meantime, the offshore wind market is still growing. 2019 growth rates marked a new record for the offshore wind energy market, reports German magazine Hansa. 6100 MW of new energy generation capacity were added globally, and experts estimate the annual market for new installations to reach 15,000 MW by 2024. Up to the end of 2019, a total capacity of 29,100 MW was installed, of which 33 per cent in the UK, 26 per cent by the Germans and 23 per cent in China. Denmark follows with 6 per cent, Belgium with 4 per cent and the rest of the world with 8 per cent (including the Netherlands).
But this will change in the near future. Until 2026, the USA expects to build some fifteen offshore wind parks with a capacity of over 25,000 MW in total. Other countries, such as Japan and Taiwan, will also follow soon.
SWZ|Maritime’s September issue can be found in our Archive.
