There’s plenty of scaremongering going on about oil majors reining in their capex this year, sending jitters to many in the offshore sector, however Standard Chartered bank’s point man is convinced the cut backs are mainly onshore, with offshore still set for very solid growth.
In the second and final part of our look at our parent firm, Asia Shipping Media’s Offshore Business Breakfast, held at the Fullerton Hotel in Singapore last month in association with Standard Chartered, we look at the very thorough presentation given by the bank’s director of oil and gas equity research, Duke Suttikulpanich.
Producers’ ROEs have been declining for the last three years, Suttikulpanich said, and while oil prices have been dropping with many saying the price of a barrel might hover around $90, Standard Chartered disagrees saying a barrel will be worth $108 – $115 from 2014 to 2017.
Independent oil companies’ development capex has slowed down from 5% last year to 1% this year, and likely no growth at all next year, Suttikulpanich said, but stressed this decline is mainly onshore. “Offshore is still strong,” he said, with 7% growth expected this year, much to the relief of the 45 people in the room, made up predominantly of OSV and rig owners.
Most Asian producers are moving away from shallow water to deep water, Suttikulpanich noted, adding that there was a need for plenty more semi-submersibles in the region. Asian growth is coming from national oil companies who are likely to account for around 70% of the spending increase this year, Suttikulpanich said.
Concluding, he maintained: “Any slowdown in offshore this year is just a brief pause.” Asian offshore E&P spending growth will remain healthy at 6.4% per annum over 2014-18 versus 7.3% per annum rise over 2009-13, he estimated.