Home' Work Boat World : October 2015 Contents Hasta la vista, Asian
owners! Hola problems
A no-holds-barred look at the real goings on within the OSV industry. By HIERONYMUS BOSCH
In some states in Mexico you have better odds carrying out a
murder and not being caught (such as Guerrero, where only
one in 15 murders results in a conviction according to a recent
Human Rights Watch report) than surviving a round of
Russian Roulette, where statistically five in six players should
survive the first spin of the chamber of the revolver.
This statistic is a stark reminder that the rules of normal
business and normal life do not apply in much of Latin America.
In many areas south of the Rio Grande, the combination
of endemic corruption, social breakdown and violent
narco-trafficking gangs make a mockery of human rights and the
rule of law. Yet somehow many Asian boat owners, especially,
have seen Latin America as their golden ticket to fast track
growth and develop business in new markets.
The record of Asian owners there is patchy at best, and reminds
us that the best sucker is a foreign sucker , w ho naively believes
that this time will be different, and that their special foresight and
unique acumen will protect them. In June, the first half results of
2015 for Swire Pacific Offshore saw the company report its first
loss in many years on the back of large write offs of a failed new
building programme at a distressed Brazilian shipyard. Both the
Managing Director and the Finance Director have now moved
onto other roles in the Swire Group.
In Mexico in 2014, POSH saw massive write-downs on
investment in an ill-fated joint venture with its local partner
Oceanografia, a local partner which was found to be involved in
massive fraud over factoring invoices at the Banamex division of
Citigroup. This resulted in many of Oceanografia’s vessels and
those of affiliated companies being held under legal proceedings
for most of the second half of 2014.
As a result, POSH was losing mo ney even before oil hit US$50 a
barrel at the year end. In 2013 Jaya Holdings announced some big
contract wins in Mexico prior to the sale of its marine businesses
to Mermaid Marine Australia, but in 2015 it is clear that none of
the ships have actually got there , apparently due to issues ove r
payment with the local partners.
Miclyn EOS is no w rumoured to be sending fast crew boats to
Mexico, the latest in a long line of Asian-based companies who
believe that the shores of Tabasco are lined with gold.
Swiber dives into Mexico
Despite this ill omen in the land of the Aztecs, the Swiber
Group has also dived into Mexico in a big way with very mixed
results, as the state oil company Pemex has come to a grinding
halt in the oil industry downturn.
Swiber ’s reporting to the Singapore exchange is hard to unpick,
but its Latin American division doesn’t seem to have been making
much money, even before the current downturn began. Swiber
has also boldly gone to the furthest reaches of the continent as
well, undertaking a lump sum pipelay job in the Patagonian
region of Argentina.
The wilds of the Magellan Straits are a far cry from Jurong, and
Argentina is notorious as a country whose costs resemble those in
the North Sea, but with none of the advantages of the shore
support and technical services an owner can obtain in Aberdeen
or Stavanger, and no ne of the productivity.
The last construction company to work there on a similar
contract, McDermott, bled money hand over fist when their barge
lost its stinger in a storm a decade or so ago, with such serious
consequences that the red ink required special mention in the
company’s stock exchange filings. Presumably, Swiber is
sufficiently well informed to mobilise a barge fro m Asia halfway
around the world to wild stormy waters.
Pacific Radiance in Brazil
With Swire stung in Brazil, the only other Asian owner working
there has been Pacific Radiance . With mo re than a dozen high
specification new buildings on order and due to deliver in the
next year, if delivery dates are at all to be believed in Chinese
shipyards, Brazil would seem to be a logical place for Pacific
Radiance to grow. But after entering the market with a couple of
large anchor handlers a few years ago, the Singapore-based owner
has not taken on any new contracts.
Why? Insiders say that the existing business in Brazil has
pro ved harder to make profitable at all, and that hopes of easy
money with Petrobras have faded to a grim realisation of the
operational and commercial struggles off Macae. Needless to say
early September saw Pacific Radiance unveil a new build large
support vessel to be jointly owned in conjunction with
Oceanteam/Diavaz for long-term time charter with Diavaz
But the cause célèbre for Asian owners in Latin America is the
sad story of CH Offshore, which chartered two large anchor
handlers to Venezuela when President Hugo Chavez was in full
revolutionary flow there. This resulted in a massive unpaid debt
which the company had to pursue to the High Court in London.
Staff bonuses for 2013 were not awarded after the unpaid charter
high was recognised as impaired.
But if Asian boat owners have had problems in Latin America,
pity the largest Asian investor of them all... the Chinese
government. China has extended US$50 billion of loans to
Venezuela, loans which the government in Caracas can barely
afford to service. Ninety five percent of Venezuela’s export
revenues come from oil and it was the one sector of the economy
which provided the funds for Hugo Chavez’s extravagant and
extremely corrupt regime.
Now Chavez is dead, and US$100 is but a fading memory.
China faces the difficult decision to extend further credit of US$5
billion to its bankrupt ally, and risk throwing away good mo ney
after bad, or sit back and watch Venezuela’s failing regime grind
to a halt with empty supermarkets, rising violent crime, and social
breakdown. If the Asian boat owners have had problems, they at
least have the choice of removing their vessels and bringing them
home. The Chinese government doesn’t have that luxury.
14 October 2015 WORK BOAT WORLD
14 OFFSHORE:Layout 1 14/9/15 11:49 AM Page 14
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