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The oil price slump that started in 2014 has affected the business of drillers and other service providers as companies slashed exploration spending, but offshore vessel providers say recovery signs are visible in new orders.
London-listed Gulf Marine Services is seeing ‘clear signs’ of recovery in the oil and gas market, the company said on Tuesday upon announcing a long-term deal with a national oil company in the Middle East and North Africa (MENA) region.
Gulf Marine Services, set up in Abu Dhabi in the 1970s, has won the contract to charter one of its mid-size class vessels for three years, including options, with the start set for early in the first quarter this year. Gulf Marine Services’ vessel would be supporting “well intervention activities” for a NOC in MENA, the company said.
The group is seeing more tender opportunities in the Middle East, chief executive Duncan Anderson said in the statement.
“The new charter, which together with other recent contract wins has increased our total backlog by approximately two-thirds since 1 November 2016, demonstrates that the market is showing clear signs of recovery,” Anderson noted.
According to a recent report from Wood Mackenzie, exploration expenditure is set to drop this year as well: estimates are that oil and gas exploration investment will slump further still, to $37 billion, which would be the lowest exploration investment level since at least 2009. In comparison, in 2014 exploration investment hit $100 billion. In 2018, however, things will start recovering, Wood Mac said, and by the following year investments in exploration should reach about $50 billion, growing further still in 2020 to $60 billion.
According to the International Marine Contractors Association (IMCA), the offshore oil industry could cut exploration costs by more than 30 percent if it would just agree to use standardized equipment.
“Oil companies could take out 30 percent of the cost using standardized specifications and ruthlessly pragmatic engineering,” Allen Leatt, CEO of IMCA, told Reuters last month.
By Tsvetana Paraskova for Oilprlice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.