Oilfield services firms are expected perform better in 2018 on the backdrop of rise in oil prices, top executives told Gulf News.
Brent, the international benchmark, is currently trading at about $80 per barrel, up from 2017 average price of $55 per barrel as oil producing countries cut output to prop up prices.
“Year 2018 is going to be a positive year for oilfield services firms. Oil-producing countries are starting to spend on new projects due to rise in oil prices and it would reflect positively on the revenues of services firms,” Audun Martinsen, vice president of oilfield service research from Rystad Energy in Oslo told Gulf News in a phone interview.
He predicted a revenue growth of 5 per cent in 2018 for the oilfield services firms operating in the Middle East. The figure is expected to go up to 7 per cent in 2019.
“Higher oil prices has given confidence to operators to support production growth in future. They will continue to deploy capital, drill wells and develop facilities.”
“In Saudi Arabia, we predict a mature growth of about 10 per cent for services firms due to new projects announced by Saudi Aramco.”
National oil companies from the Gulf region are investing heavily in the development of oilfields to boost production capacity.
Abu Dhabi National Oil Company (Adnoc) has announced almost $109 billion investment in the next four years throughout the value chain and Saudi Aramco is also planning new investments in the next three years.
Kuwait Petroleum Corporation is also upped its spending on new projects.
Ebrahim Al Alawi, Deputy CEO of Al Mansoori Specialised Engineering activity is picking up throughout the MENA (Middle East and North Africa) region as operators (oil and gas companies) revive exploration and development plans that were shelved when oil prices dropped.
“New opportunities are arising in India, Central Asia and East Africa and we expect to experience record growth in 2018,” he told Gulf News.
Al Mansoori Specialised Engineering is one of the biggest oilfield services companies in the region with operations in more than a dozen countries.
Echoing similar views, Ashik Subahani, Managing Director, Great Waters Maritime expects new project announcements in the UAE and other GCC countries very soon.
“Indian government has recently announced the field development at seven locations at East and West coasts and currently seeking bids from investors and establishments. We can feel a positive trend in the offshore market around the Middle East and India region.”
Oil prices have been going up in the last few months due to production cut agreement between Opec (Organisation of the Petroleum Exporting Countries) and non-Opec members, healthy demand and geopolitical tensions in the Middle East.
The decision of the US President Donald Trump to exit Iran nuclear deal is also supporting oil prices.
Oilfield services sector was badly hit in the past few years following the collapse in oil prices and sharp pull back in capex in oil and gas sector. Thousands of people lost jobs and billions of dollars have been wiped out from the market.
Martinsen said oilfield services firms are back to recruiting in a big way due to the positive scenario of their earnings going up.
Source: Gulf News