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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Rystad: Low Prices To Send Oil Services Market Into Recession

Following three consecutive years of growth, the oilfield services market is set to slip into recession in 2020 if oil prices stay at their current low levels, Rystad Energy said on Wednesday.

According to Rystad Energy, total global revenue of oilfield services firms will decline by 4 percent in 2020 if oil prices stay flat next year.  

This year, the oilfield services market is expected to grow by 2 percent to US$647 billion, the energy consulting and business intelligence firm has estimated. But if oil prices stay at around US$60 a barrel Brent Crude, the revenues would likely drop to some US$621 billion next year, putting an end to three years of revenue growth in a row, Rystad Energy warns.

“Lower oil prices call for negative growth in the service market in 2020,” Audun Martinsen, head of oilfield services research at Rystad Energy, said in an update on the sector.

“For suppliers, this means that a three-year growth story will come to an end regardless of which market segment you look at,” Martinsen added.

The biggest drag on oilfield service revenues would be the U.S. shale industry as it is expected to contract by 6 percent next year. Offshore oilfield services purchases are seen down by 1 percent as companies would cut back on exploration activity to cut costs at these oil prices, Rystad Energy said.

“This new market view stands in stark contrasts to what we previously forecasted when oil price estimates stood around $70 for 2020. At that oil price, the service market was expected to grow by 2%, held up by offshore and shale. However, downside risks have been mounting in the oil market, and we could face additional headwinds in 2020,” Martinsen said.

As of 2021, the oilfield services market is expected to recover from what is now expected a downbeat year 2020, Rystad Energy said.

In recent months, the U.S. shale patch has started bracing for an extended period of weak oil prices, and drillers and oilfield services firms have been cutting staff and reducing budgets to weather the slowdown in North America’s fracking growth.

By Tsvetana Paraskova for Oilprice.com

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  • Tripp Mills on September 16 2019 said:
    I'm not surprised at all by Rystads once again - imo "ficticious" prediction on what they want so far as causing the oil services etc. problems financially - so Rystad, when there are problems I hope and expect you will have a front row seat in any court case (I don't mind being there to explain what I have seen - to disclose I may take positions within the next 24-48 hours in any of these industries related to energy, oil services etc. Now Rystad, the short message here is I am sick and tired of seeing you all try to cause financial harm to the energy industry (strategic to the United States in many ways). Trying to be respectful and please take it as such however when you author these articles and don't disclose your intentions it just makes me roll my eyes when I see your name and articles (please don't take offense to this - it is just business!). All the best and hopefully one day you will pay someone to write something different. So why should it be so difficult to balance the world oil supply? Are you all going to supply everyone during this supply disruption? Are you going to provide oil services or are you just trying to bankrupt companies in the United States and cause Saudi Arabia problems (I have credibility and I wish I could read your articles and feel the same way about yours - I don't know what the oil markets will do day by day - do you? All the best and have a great day...seriously (its just business so please don't take offense to my professional comments - i'm sure personally we are just fine. All the best, Tirpp
  • Tripp Mills on September 16 2019 said:
    Another quick comment - do you all think it is smart to sell what is a limited commodity (and it appears like you all "think" its cool to do it and punish companies which is apparently in a sector you are part of) at "cheap prices" - this causes problems - it causes people wanting to drill in the Alaskan Tundra for example for why and harm the environment - it causes our strategic "mix" of energy sources problems - is "cheap" oil - is it worth it long term to potentially destroy companies, the industry, drain reserves, etc.? Is it worth it - I would like to have wildlife, I would like to keep our strategic IP in things like offshore, oil services, etc. I would like for America and our ally Saudi Arabia to have and maintain leadership in the global energy sector - its not just about money and draining things dry at this price - demand is going up apparently so we need to get back to reporting accurately (do I know everything no - do you all know everything - no - I do know why is it so problematic to have oil at $80 to curve demand a little bit - look what happens (Saudi Arabia gets a drone strike and everyone blames their geopolitical risk which frankly imo just like anyone's has been left out of the pricing in the first place). I just wish everyone would "think" about the long term impacts of all of this stuff - we have people who want to drain energy however yet have in their minds to not like energy companies - it makes no sense. And then their is the "economically" recoverable portion - finally, these comments were directed at the article "OPEC challenged in 2020". Why is it such a problem to let or work with OPEC to balance world oil supplies - they cut and they cut for a reason....think everyone (don't we want a future in America and elsewhere - don't we want to have great U.S. jobs in energy or are people just trying to destroy the men and women who everyone calls when a hurricane hits to run and get their power etc. turned on as fast as they can go - however then I see this). Do you all want to do that job? I just get tired of seeing companies etc. in the United States "gloat" and "be so happy" over this type of "cheap as we can go limited and certainly limited economically recoverable" oil - do you want your kids not having oil (apparently some think we just can not use it period - want to fly a 747 on solar power - I would likely select no thank you!). All the best, Tripp

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