In May, offshore and wind carrier Esvagt will bid on an SOV contract in wind turbine maker Siemens Gamesa’s large-scale US offshore wind project Coastal Virginia Offshore Wind, Esvagt CEO Peter Lytzen tells WPO.
The US market for offshore wind is red hot, and offshore shipping company Esvagt is working hard to break through to the market alongside its US partner, Crowley.
We expect to make an offer on Siemens Gamesa’s offshore wind farm on the US east coast in May
PETER LYTZEN, CEO, ESVAGT
”We expect to make an offer on Siemens Gamesa’s offshore wind farm on the US east coast in May,” says Esvagt Chief Executive Peter Lytzen to WPO.
Esvagt and Crowley plan to go for a service operation vessel (SOV) contract in Siemens Gamesa’s major US offshore wind project, Coastal Virginia Offshore Wind.
When fully completed in 2026, the wind farm will be able to generate 2.6GW from some of the world’s largest offshore wind turbines.
Siemens Gamesa will construct the major farm together with US developer Dominion Energy. The farm will be located 45 to 63 kilometers outside Virginia Beach, Virginia, on the US east coast.
Previously, Danish utility Ørsted has built a smaller offshore wind farm with a capacity of 12MW together with Dominion Energy.
SOV contracts to Equinor and BP project still undecided
Esvagt doesn’t wish to put a number on the SOV contract’s value before a potential contract has been signed.
The shipping company, based in western Danish city Esbjerg, has already made an offer on a years-long SOV contract with Equinor and BP, which are currently building another large offshore wind farm, Empire Wind 1 og 2, on the US east coast.
Empire Wind 1 and 2 is placed 24 to 48 kilometers southeast of Long Island.
However, Equinor and BP’s SOV contract has not yet been decided. Previously, Esvagt has told WPO that a decision could me made toward the end of 2021 or in the beginning of 2022.
So far, Equinor has not made a final call on the SOV contract. Normally, an SOV vessel doesn’t have to be ready during construction of the wind farm but only when the farm has become operational.
”As we understand it, it is the entire project which is taking longer than they [Equinor and BP, -ed.] expected,” states Lytzen.
Contract to Maersk Supply Service
Equinor and BP have recently decided the contract on a wind installation vessel for offshore wind farm Empire 1 and 2. As reported by WPO, Maersk Supply Service won the deal.
The Maersk company has placed a wind installation ship order of probably USD 350m with Singapore-based Sembcorp Marine. The vessel is slated for delivery in 2025.
Lytzen is convinced that Esvagt will eventually break through on the US offshore wind market for SOV ships.
I’m an absolute optimist […] and we aim for the same market share in the US as we have in the North Sea
PETER LYTZEN, CEO, ESVAGT
”I’m an absolute optimist, because the market is in growth, and we aim for the same market share in the US as we have in the North Sea. Meaning around 40 percent,” says the top exec.
But Esvagt and US partner Crowley are not the only ones with an eye fixed upon the offshore wind market.
US players such as Tidewater, international joint ventures and companies like Edison Chouest and Windea Hornbech will likely participate in the competition for the SOV contracts.
”It’s a competitive market because expectations are high and many want to enter the market. When a lot of players want access to a market, there is a risk that some are willing to make low offers in order to get started. Here, we are probably more realistic,” states Lytzen.
For years, Esvagt has benefited from the offshore industry by supplying safety services for rigs in the North Sea. More specifically, so-called emergency, rescue and recovery vessels (EERVs).
But the oil market is under pressure. Esvagt, which is owned by private equity firm 3i, has a strategy to make business grow by offering long-term contracts on SOV vessels for the operators behind the growing number of offshore wind farms.
Among other sources, the growth is supposed to come from the US offshore wind market, which, however, is protected against foreign competition by the so-called Jones Act.
The legislation means that all SOV ships have to be built in the US and have US crews and a US-based majority owner. Therefore, Esvagt has established a joint venture with US company Crowley.
