“You can see that oil trading is gradually narrowing down. The US has systematically lowered its stake in terms of oil import. The longtime arch enemies with occasional tepid compromise for manipulative reasons once in a while – India and China, have been on top of their game on how best to bring OPEC to accept willy-nilly their own conditions on oil trading. The US, also the long time enemy of the big oil cartel, is neither relenting nor willing to let OPEC drink its water and drop its cup – these plus all other factors are capable of sending signals that can hinder or ginger offshore activities”, an energy expert has this to say to Energy Window International editors.
Offshore drilling activity has plummeted since the oil price crash, dropping 36% globally between 2014 and 2017, with report of a very huge rig market. Utilization of the global floating rig fleet was reported to have fallen from 90% to 65%, and day rates were slashed by up to 70%. Citing the North Sea, the report said the decline hadn’t been quite as dramatic as the global picture. High levels of sanctioned projects pre-downturn, and ongoing drilling campaigns at giants such as Troll and Ekofisk, meant activity dropped by only 20% from 2014 – 2017.
Mhairidh Evans, senior research analyst, offshore supply chain was quoted to have said at a conference in Stavanger, Norway as follows: “Looking to the future, we expect the global recovery in the offshore market to be cautious and gradual.
“However, momentum in the Norwegian market means the NCS is leading the way and one of the world’s hottest offshore markets for now. About 40% of all subsea Xmas trees ordered globally in 2017 will be delivered to Norwegian fields (compared to previous levels of 10 – 15%).
“And for rigs, a combination of increased demand and tight supply, has meant rates within the specialist harsh environment fleet are rising the fastest of any sector. Wood Mackenzie estimates around a 25% increase for 2018 harsh environment day rates compared to 2017, with further inflation on the horizon for 2019.”
Ms Evans was also quoted to have added: “But the longer term outlook may sound alarm bells for the Norwegian sector. Poor exploration results have meant a drying up of the project pipeline, and operators are having work harder to grow their portfolios from existing discoveries. Wood Mackenzie forecasts year-on-year declines in NCS drilling activity out to the early 2020’s. Meanwhile, projects being planned in the deepwater sectors of Africa and Latin America promise bigger prizes for the supply chain. More investment will be required to keep the NCS near the top of the tree.”