Subsea Vessel Market Faces Shifting Dynamics as Fleet Expansion Accelerates

The still pending merger between Saipem and Subsea 7 is getting closer, with now only the European Commission’s Phase II review outstanding at the time of writing. The European Commissions deadline was first 26th November 2026, then extended by 14 working days to the 16th December. Basis the latest official guiding indicates a close between late 2026 and early 2027 with February mentioned several times, where we can expect the initial period will be focused on post-merger integration and organizational optimization. Once the dust settles, the impact in the vessel market is likely to kick in, which we believe could lead to increased pricing power for the charterer.

With the market consolidation among the Tier 1 players, it is likely to see competitors with Tier 2 and 3 EPCI capabilities becoming more relevant among the end-clients, who always seek increased selection and a higher degree of competition. A good example of this is where DOF Subsea and DeepOcean would traditionally sit in the IMR and lighter subsea construction segments, but now might be the time to move towards expanding into field development capabilities.

In the field development space today, we expect Ocean Installer to be alternative for E&Ps after building an impressive track record on a variety of projects across mooring, SURF, and decommissioning. Over the summer, they received a contract covering SURF and pre-commission at the Bacalhau field from Equinor in Brazil, with expected offshore operations next year, which marks the company’s first entry to the country. While likely not directly tied to the competitive situation, it is an interesting development showcasing a new market participant in the most active region for floating production capacity in the years to come.

Subsea EPCs Secure New Contracts Across Key Offshore Markets

Among the Tier 1 EPCs, the contract intake in August and September have been flattish, yet showcasing intake across familiar regions. Turkish Petroleum awarded Subsea7 an extension covering towing, mooring-line installation and connection work for the Sakarya Phase 3 floating production unit in the Turkish Black Sea, with commissioning activities scheduled for 2028. The award is classified as sizeable, implying a contract value of USD 50 and 150 million.

In the US Gulf, LLOG Exploration awarded Subsea7 a contract for the fabrication, transportation and installation of a 29 km steel catenary riser and pipe-in-pipe system, together with umbilical and subsea-controls installation, in approximately 1,300 m water depth. Offshore work is expected to start in 2028 and the value is estimated between USD 50 and 150 million.

Saipem, who have been engaged with the current work on the Sakarya Phase 2 project, have now received an award from GOE Petrol Sanayi for an approximately eight-month contract for commissioning services on the Osman Gazi floating production unit, which will serve the gas field in the Turkish Black Sea.

In Africa, Saipem and Jan De Nul have formed a consortium and signed an LOI with ExxonMobil Mozambique for the Rovuma LNG Phase 1. The LOI covers preliminary engineering, procurement and technical services covering offshore upstream facilities that will connect 18 subsea wells to the onshore LNG plant through subsea pipelines and manifolds. The initial scope is valued at approximately EUR 11 million and the full EPCI award remains subject to FID and regulatory approvals.

Saipem also secured an EPCI contract from Azule Energy for the West Hub Tails project offshore Angola. The scope covers approximately 62 km of subsea flowlines, risers and umbilicals tied back to the Agogo FPSO, located around 180 km offshore in water depths of up to 1,750 metres. The contract is valued at approximately USD 350 million and is expected to run for around 2.5 years.

Azule Energy awarded TechnipFMC a contract to design and manufacture flexible flowlines, risers and associated equipment to tie production from the West Hub development back to the Agogo FPSO in Block 15/06, offshore Angola. The award is classified as significant, indicating a contract value of between USD 75 million and USD 250 million.

In Malaysia, Petronas awarded TechnipFMC an integrated EPCI contract covering the full subsea scope of the Limbayong deepwater greenfield development. The project will utilise TechnipFMC’s Subsea 2.0 configure-to-order platform, and the award is classified as significant, implying a contract value of between USD 75 million and 250 million.

On the vessel chartering side, we have seen a relatively slow end of summer with few high profile new long-term contracts awarded. Reach Subsea recently exercised a one-year option for the “Deep Cygnus” from Havila Subsea & Renewables, which will keep her firm towards March 2028.

In the higher end segment, DOF Group has received a letter of intent for a contract valued at between USD 50 million and 100 million that would secure work for one of it’s I-class vessels in the first half of 2028. As such, the contract visibility in the 400-ton segment have improved significantly over the last year.

On the corporate side, DeepOcean and TFKable Group plan to establish an integrated EPCI offering for offshore-wind inter-array cables, combining cable manufacturing with survey, engineering, transport, trenching, installation and protection. The multi-year programme includes plans for a dedicated newbuild cable-laying vessel. No investment value nor delivery date was disclosed.

Similarly in West Arica, diving specialist Mermaid Maritime and Marine Platforms of Nigeria have formed Mermaid Subsea Services, owned 49% by Mermaid and 51% by Marine Platforms, to pursue subsea work for TotalEnergies and other Nigerian operators while meeting local-content requirements. The venture targets subsea EPCI, ROV support, well services and vessel chartering.

In Brazil, Petrobras awarded the 2008-built CSV “Normand Valiant” a two-year contract for accommodation support to production activities on the Brazilian continental shelf. The vessel, equipped with a walk-to-work gangway and capacity for 120 people onboard, is expected to start in the fourth quarter of 2026 almost in direct continuation of its current employment and less its scheduled class renewal. Gross contract value is approximately USD 62 million.

Newbuild Wave Puts Pressure on Vessel Charter Rates

Many EPCs have been conservative in adding new long-term tonnage in recent months, leading to low volumes of new reported fixtures. Multiple EPCs have optional periods that were excised at lower rates than owners’ current expectations, with several vessels reaching option expiry next year. As the total orderbook across 150 to 400-ton crane vessels now total roughly 35 vessels, we see a market with charterers will have ample choice from existing tonnage and newbuilds.

As an example, Østensjø Rederi has now launched the 120-meter Ocean Energy Support Vessel built at Gondan in Spain, with delivery scheduled for late 2027 following outfitting and sea trials. The vessel is designed for a combination of walk-to-work and CSOV support, offshore construction, subsea installation, ROV work, as well as cable laying and repair, with 1,400 m² deck space and accommodation for 173 people onboard. While the contract value has not been publicly disclosed, a European built vessel with this level of specifications comes at a premium.

Other owners with uncommitted 250-tonne units scheduled for delivery between Q4 2026 and Q2 2027 include Rem Offshore, Island Offshore and Sea1. Given the current scarcity of active long-term requirements from the major EPCs, we expect owners to show greater commercial flexibility to secure contract coverage ahead of delivery. This trend is already evident in the 150- and 250-tonne segments, where time-charter rates for the latest long-term fixtures have softened from the peaks recorded in 2024 and 2025. We also expect an increasingly notable rate differential between owners capable of delivering integrated scopes, including ROV and engineering services, and those providing vessel capacity alone.

These market dynamics could shift relatively quickly in owners’ favour, as only a limited number of long-term requirements would be needed to absorb a meaningful share of the speculative orderbook. Given the record EPC backlog and the underlying pipeline of subsea opportunities, we would not be surprised to see vessel contracting activity increase over the medium term. However, while active requirements remain limited and the fleet continues to expand, we expect near-term upside in charter rates to remain constrained.