We attended the Offshore Support Journal’s annual awards ceremony, organised by Riviera, as a provider of niche gas detection solutions, which revealed some interesting and slightly unnerving statistics. As we’re all aware the price of oil for consumers is dropping significantly, great for us, but what does this mean to businesses in the industry, and how is the bigger picture being affected?
We attended the event, which saw almost 600 delegates welcomed in London. The conference attracted businesses from all over Europe and across all areas of the Oil and Gas industry including oil majors, ship owners, vessel operators, shipbuilders, financiers and industry associations. Presentations delivered by panellists and open floor discussions were utilised to debate key issues and concerns within the marketplace.
The market has been hit with a significant decline in oil price which has been caused by an overabundance of oil, over mining and the use of alternative fuels such as shale oil.
This has impacted the barrel price, which has dropped from around $112pb (per barrel) to $59pb, so around a 50% decrease, which obviously already has, and will have, a continuing knock on effect within the industry.
Industry statistic – Offshore production equates to 16% of the total world energy supply, producing around 26.1m barrels per day, equating to 30% of all oil production.
Speakers from market leaders in the industry forecasted a short-term outlook of a 57% drop in market trading, assessed the market as looking ‘ropey’ for the next 3-5 years and predicted a stop on new projects for approximately 3 years.
However, the long-term outlook suggested demand for oil/energy will increase by 25% in the next 20 years, with the general feeling remaining that long term focus will be unchanged by the oil price reduction. The major players will continue to pursue this tactic, whereas the smaller players may delay this type of exploration for a few years.
With this in mind it’s always useful to take a step back and look at the bigger picture, to quote the BBC’s ‘The Big Oil Drop’ series, focusing on the changes in the industry, ‘There are simply too many variables involved to make any kind of meaningful, definitive forecast…what happens next is a bit harder to see’.
One thing that’s for certain is events like the Offshore Support Journal annual awards provide a really enlightening and informative insight into a multi-billion pound industry which is currently under significant change, providing a platform for open and honest debate about how the future may develop.
Author: Melanie Smith, Marketing Executive