By Jason Holland, Contributing Editor reporting from London
Published on Thursday, June 02, 2016
Marine Harvest and Deep Sea Supply PLC have entered into a Heads of Agreement to establish a 50/50-owned aquaculture/shipping joint venture (JV) that will build, own and operate aquaculture vessels.
The move follows through on Marine Harvest’s announcement in December last year that it would evaluate the potential for expanding business activities into service vessels.
A new statement released by Marine Harvest said the Norwegian seafood producer and Deep Sea Supply, an owner and operator of supply vessels, believe there is significant room for efficiency improvements across the value chain in aquaculture shipping, ranging from reduction in newbuilding cost to more cost-efficient operations.
Marine Harvest said it would aim to significantly reduce costs related to vessel services through the JV.
Over the past few years, aquaculture vessels have increasingly become an integrated part of the value chain. Currently, Marine Harvest charters 44 vessels with a combined cost of approximately EUR 100 million (USD 112 million) per year, making it the industry's largest charterer of such vessels.
The JV expects to enter into contracts for the construction of aquaculture vessels, which will be chartered by Marine Harvest upon delivery.
Current discussions indicate a substantial reduction in newbuilding cost compared to solutions provided by alternative aquaculture providers.
The JV will be Marine Harvest's preferred provider of aquaculture vessels. The JV also intends to compete for external contracts. It will enter into management agreements with Deep Sea Supply covering all necessary management services, including technical management, ship management and other corporate services.
“The aquaculture shipping industry is fragmented and characterized by lack of competition. Through the JV, Marine Harvest and Deep Sea Supply aim to consolidate the industry to achieve economies of scale,” said the statement.
“The JV will explore any opportunity that may improve building cost or operating cost, including taking advantage of the current imbalance in the offshore service vessel market through potentially convert surplus offshore vessels into aquaculture vessels if project economics are favorable.”