Skip to main content

Offshore marine: breaking the mould…

Published by , Editor
Oilfield Technology,


The protracted low price environment is pushing the offshore marine supply chain to breaking point. Rig managers, OSV contractors and subsea vessel owners are trading at 60 - 70% discounts to 2013 highs and every week seems to usher in a new wave of profit warnings, impairments or defaults. Although E&P customers are also taking a beating, they are firmly in the driving seat when it comes to bargaining power.

Taking the jack-up market as a microcosm of the wider offshore marine industry, DW estimate that average jack-up fixtures have fallen by 50% whereas average O&M costs per rig have seen reductions of just 25 - 35. In short, buyers have shown far greater efficiency in cutting their supply chain costs. Whilst E&P companies are able to take advantage of major oversupply throughout the entire offshore marine segment, contractors are left footing the labour bill. Since 2014, labour costs have fallen just 10% as compared to R&M or SG&A associated costs at 35% and 30% respectively. Despite lower demand, there is still a limited number of competent crews (particularly highly trained personnel for DP operations and subsea work) and contractors are loathe to cut ties with capable people for fear of losing out in the (inevitable) upturn or jeopardising LTI and HSE performance, which in turn reduces the marketability of their assets.

With dayrate growth unlikely over the next 12 - 18 months and the supply/demand situation expected to only get worse, offshore marine players need to optimise their bottom line strategies and breakaway from prevalent operating models. Mid-sized owners may be evaluating the potential of greater outsourcing and the scale players may see merit in vertical integration. The answers will be unique for everyone but when the market does rebound from current depths, we can expect those that adapted to be the ones still standing.

Michelle Gomez, Douglas-Westwood Singapore


Adapted from a press release by David Bizley

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/22022016/offshore-marine-breaking-the-mould/

You might also like

 
 

Embed article link: (copy the HTML code below):


 

This article has been tagged under the following:

Oil & gas news