Abu Dhabi: Oilfield services firms are on the path to recovery following many years of a slump due to low oil prices, experts told Gulf News, pointing out the pickup in service activity in the Middle East as well as across the globe.
The global oilfield services sector went through a tough time after oil prices collapsed in 2014 and in subsequent years with many firms posting losses and shutting their operations as low oil prices hurt their revenue.
From more than $100 (Dh367.3) per barrel five years ago, oil prices slumped to about $50 per barrel late last year before stabilising around $65 per barrel currently on the back of output cuts by Opec and non-Opec members and geopolitical tensions in the Middle East and in Venezuela.
“Oil and gas industry is on a positive note as the capital expenditures in field development during 2019 is expected to be more than 40 per cent compared to 2018. This will enable more projects in the industry to keep all related sectors to keep engaged,” said Ashik Subahani, managing director of Dubai based oilfield services firm Great Waters Maritime.
He also said new investment plans by Abu Dhabi National Oil Company (Adnoc) and Saudi Aramco will boost the industry in the coming years.
Adnoc will be spending Dh486 billion in the next five years to increase oil production to 4 million barrels per day by 2020 and 5 million barrels per day by 2030. Saudi Arabia also announced new investments as the kingdom positions itself as a reliable supplier of oil to the global markets.
Meanwhile, Norway based consultancy Rystad Energy expects global service market revenues will likely reach the mark of $920 billion in 2025, eleven years after the last peak in 2014.
“This will be the longest slump faced by the oilfield service industry since the 1980s, with about $2.3 trillion in revenues lost along the way,” said Audun Martinsen, Rystad Energy’s Head of Oilfield Service Research.
“On the bright side, in only three years’ time, activity levels will be higher than they were in 2014, although the cost cuts achieved in the sector means spending levels will only be 80 per cent of what was seen in that peak year.”
Commenting about the Middle East market, he said the services sector bottomed out in 2018, at $78 billion, coming down from $95 billion in 2014.
“With expansion of the oil and gas sector in Saudi Arabia (due to expansion of Marjan, Zuluf and Berri), in Iraq (driven by Pearl Project) and in Qatar (Bul Hanine and Qatargas), overall Middle East service market will reach 2014 levels already in 2021.”