Helicopter Offshore Market Review YE 2021

There were a total of 300 civil turbine helicopters devoted to offshore operations in Asia-Pacific at the end of 2021. The offshore fleet decreased by two units (a drop of 0.7%) compared to 2020. By numbers the offshore fleet is around 6.7% of the total civil turbine helicopter units, yet it is around 16% of its total value.

Although the global economy started to recover from the downturn brought on by the COVID-19 pandemic, the O&G industry recovery has been hampered by the decline of petroleum supplies and capital.

Prices for oil and gas were skyrocketing as demand rose faster than supply. The insufficient supply can be partly attributed to OPEC+ (Organization of the Petroleum Exporting Countries) crude oil production cuts that began in late 2020. As a result of the production cuts, the price of crude oil started 2021 at US$48.52 per barrel and increased to a five year high of US$83.36 on October 26.

Countries around the world are experiencing various levels of an energy crisis. As the principles of Environmental, Social, and Corporate Governance (ESG) oppose the use of fossil fuels, many institutional investors and governments have begun to eliminate non-renewable resources from their alternative portfolios. Jim Cramer, the CNBC investment expert, once claimed that oil stocks are non-investable. This has shaken investors and led them to withdraw funds from the crude oil industry. Because of the unfavorable conditions in the O&G industry, the offshore market for helicopters in the Asia-Pacific region continued to shrink in 2021. However, the rate of decline slowed, as the demand for oil and gas has recovered to pre-pandemic levels.

The offshore configured helicopter fleet in Asia-pacific has three types of missions, namely, O&G, Marine Pilot Transfer and Wind Farm. Accounting for 280 offshore helicopters, the majority of the offshore helicopters flew O&G missions. Under these missions, the decrease of four helicopters (a 1.4% decrease) from 2020 to 2021 was much smaller than the difference between 2019 and 2020 of 18 helicopters. The number of offshore helicopters flying Marine Pilot Transfer missions remained at 18 helicopters. Two helicopters flew Wind Farm missions, both operated by China Southern Airlines General Aviation.

The three new deliveries, five pre-owned additions, nine deductions, and the one helicopter that changed its mission from offshore to onshore in the offshore helicopters category led to two net deductions in 2021.

Airbus and Leonardo supplied 107 (35%) and 87 helicopters (29%) of the current offshore fleet, respectively, and continued to be the top two OEMs. Sikorsky came third, with a fleet of 77 helicopters (26%), followed by Bell with 24 helicopters (8%).

The Leonardo AW139 helicopter model was the single most used offshore helicopter model in the Asia-Pacific region, as there were 68 of them in the offshore fleet in 2021. The Sikorsky S-92 and Airbus AS365 were the second and third most popular offshore models, with 33 and 30 helicopters, respectively.

Mainland China and Australia are the biggest offshore markets. Although India saw a two-unit net addition, there was no change in its rank. Thailand accounted for the most offshore

fleet deductions of three units in 2021, which saw it drop from sixth to seventh place, with Vietnam overtaking it.

Citic Offshore Helicopter Co. (COHC), the largest Asia-Pacific offshore operator with 40 offshore helicopters in 2020, saw a decrease of one unit in its offshore fleet, but retained its top

position in 2021. Weststar Aviation ranked second and added one helicopter to its fleet in 2021. India-based Pawan Hans, which added one helicopter to its fleet, had 18 helicopters at the end of 2021 and ranked third in terms of fleet size.

The O&G industry is currently going through a cycle of under investment. Although renewable energy is growing, and capital is flowing from non-renewable resources to the development of renewable ones, the production of renewable resources is not sufficient to fill in the gap arising from the low energy supply. It should also be stated that renewable energy cannot widely replace fossil fuel usage at this current time. The demand for crude oil remains high and continues to drive prices up. In late 2021, Bernstein Senior Oil and Gas Analyst Neil Beveridge said US$150 per barrel of oil is a possibility in 2023 or 2024. Unless there is a dramatic decline in crude oil demand, which is unlikely, the need for offshore operations will remain. Thus, under the pressure of various external factors, offshore operators will remain cautious, leading to further slight reductions in the Asia-Pacific offshore fleet with a slow rebound in the industry.