PartnerShip: After the crisis, the Oil & Gas market has recovered for the major Oil & Gas groups. What were the signs of this?
Christian Brugård: Everything is linked to the price per barrel, which fell in late 2014. When it reached 30 dollars in 2016, the major Oil & Gas companies reached the low point of the market. Since then, the large companies are doing better, but they’re still pushing aggressively for cost reductions and reduced rates. Today we see a strong recovery, but how much are the major groups ready to invest in projects? In 2017, 11 large projects Float Production Unit projects were launched globally. This was a turning point for the market. In 2018, between 12 and 15 projects are expected, and even if this is extremely difficult to predict, we expect between 16 and 19 major projects in 2020. In addition to this several other smaller and larger non-floating production projects have been sanctioned, and will be sanctioned in the same period according to our analysis.
PS: What about service providers like BOURBON?
C. B.: For those companies, the low point was reached last year; since then, the market has been making progress, particularly for the drilling sector. 2018 is a pivotal year for service providers who are beginning to be active again. Today, 60% of the service vessel fleet is operational, i.e.. 5% more than at the beginning of the year, which is a rather good sign. Furthermore, some new strategies have come about, but without major innovations: costs have been systematically brought downward, but with more effective, more reliable, more automated solutions. This is excellent for principals! Likewise, we observe that subcontractors are teaming up in order to offer integrated solutions. Recently, we saw companies making joint offers in developing Oil & Gas fields. In every way, innovation is a greater challenge for the players on this market than ever.
Innovation is a greater challenge for the players on this market than ever.
Christian BrugårdHEAD OF OFFSHORE FROM Clarksons Platou
PS: But there are still many stacked vessels...
C. B.: Currently, the offshore support vessel activity has resumed: between January and July 2018, utilization for the active fleet has bottomed and started to climb again. That's a good indicator of the market recovery. However, out of the 4,600 OSV in the worldwide fleet 1,200 are still stacked, including 600 that are over 15 years old: with the recovery, it will be necessary to reinvest in those vessels, but will it really be worthwhile for the oldest of them? That will depend on the vessel type, how they were maintained, but 15 years is generally a limit not to be exceeded. BOURBON, like the other service providers, will have to face this challenge, but with limited cash on hand. That's a real challenge.
PS: During this time of crisis, digitization is at the heart of technical evolutions. How do you analyze this strategic change?
C. B.: Digitization is a major issue. It is based on 3 main focuses: sharing, collecting, and analyzing information and connecting equipment and people. It is already in place for the most part, but it is starting to develop and be more generalized. In Oil & Gas, improving the quality of analyses will make it possible to optimize platform operations and vessels, reduce the financial and operational risks with a more analytical approach and possibly to reduce OPEX. BOURBON has also been one of the pioneers in this area. The first step of digitization will probably result in a better risk analysis of offshore investments and operations: for example, a better understanding of exploration and production costs. More and more staff will be transferred to shore, fewer on-board work hours will be necessary, which will reduce OPEX. However, new CAPEX investments will be required, either to outfit new vessels or conducting retrofitting of existing equipment.
Digitization is a major issue. It is based on 3 main focuses: sharing, collecting, and analyzing information and connecting equipment and people.
PS: One last word on autonomous vessels?
C. B.: They are obviously coming to the market, that seems unavoidable to me. Within five or ten years, there will be the first autonomous conventional vessels. It will probably be longer in Oil & Gas due to more complex operational patters. But I could be wrong, it can of course move much quicker in Oil & Gas as well. In my opinion, the first step consists of connecting vessels in order to reduce crew size, which is happening with BOURBON. As for the drilling industry, a portion of monitoring already takes place on shore.