Subsea Expo 2015: Subsea UK CEO Neil Gordon Breaks Down the Subsea Industry’s Current Climate
09 February 2015The UK still boasts the single largest concentration of subsea capability and excellence in the world. Our challenge is to maintain that position in the face of the current drop in oil price and increasing global competition. This means we need to get better and quicker at developing new innovation and technology – which is a key theme at Subsea Expo this week.
The first half of 2014 saw our sector continue the upward curve we have enjoyed in recent years with most companies reporting strong order books. The growth wasn’t confined simply to the UK; our industry enjoyed expansion internationally with exports growing to almost 50% of our total revenues.
However, during the summer of 2014 we started to see a cooling off period that has been compounded by the drop in oil price. We have also seen the dynamics changing in other parts of the global subsea market. Australia has perhaps peaked slightly and we have seen it cool off as it begins to move from a CAPEX intensive region into a more OPEX focussed operational area. We are starting to see a drying up of projects in Africa but Mexico’s energy reform last year will have a significant impact on companies in the Gulf of Mexico as its deepwater market begins to open up.
The sharp decline in oil price is resulting in the inevitable cut-backs and job losses. Due to the cyclical nature of our industry, most of us have been here before and we know that we cannot afford to panic. Talk of crisis and collapse of the North Sea industry is not helpful and does not truthfully reflect the situation. Without minimising the impact of such a swift decline in commodity price there are, I believe opportunities, particularly for the subsea sector which now plays a fundamental role in the oil and gas industry’s future.
Recalibration of costs and a greater focus on efficiency, while painful, also present opportunities to closely examine how we have been operating. Efficiencies will be looked for and expected across the industry and undoubtedly there will be the knee-jerk short-term solutions but more strategically and where the subsea sector can play a pivotal role is in driving long-term change and efficiency through innovation and technology and this is therefore a major focus for Subsea Expo but also a major priority for Subsea UK throughout 2015 and beyond.
more [source: Energy Voice]