Subsea Industry Regains Momentum

[James McLauchlan]

There appears to be some small signs of improvement on a global basis..

I picked the below out of an email received recently from Quest Offshore Resources Inc.

The global subsea industry appears to be regaining momentum through 1H 2010 despite the regional turbulence in the US Gulf of Mexico (GoM) created by the deepwater Macondo spill in April. While the oil and service companies with a vested interest in the GoM wait to understand how the operating environment in the area may change from the deepwater spill, areas like West Africa, Brazil and Asia Pacific are laying the groundwork to rebound strongly after the financial crisis of 2008.

Quest’s forecast portends that more than one-third of the demand for subsea hardware over the next five years will come from Brazil (1,065 subsea trees) while fully 25% or more of subsea systems demand will be destined for the African subcontinent. African subsea systems spend for 2010-2012 awards are estimated at US$5.1bn. Global subsea system spend is projected at about US$6.2bn in 2011e – awards on par with market activity in 2008 and growing from a trough of ~US$3.9bn/year in 2009 and 2010. Quest market projections point to global subsea system CAPEX spending growth totaling US$10-12bn per annum in 2012 and 2013 (awards), respectively.

[Andy Shiers]

Hmmmmm , Does that mean the rates will go up ?
I hope so 8)

[me]

Not sure about Asia still damn quiet, not every year i have to go to Europe to work, but weather is OK right now 8)

[Scott Beveridge]

Does anyone see any "in between the lines" context here (in the above quote James posted)???

[liddelljohn]

Europe = a little busy if you are good eg: no trainees
Africa = busy
USA =I dont know about that one
Middle east= ticking over could be better
Central asia =ticking over
india = YUK you can go there its quite busy but orrible
Asia = not very busy …must be some pent up demand

thats my take , i have been busy this year with good rates in europe and africa

[baglimit]

whats the consensus on what the price of oil has to be to maintain growth in the industry ?

$60

$70

$80

$100+

it appears to have maintained generally a price of US$70-$75 a barrel for some time now. is this the price that has provided some level of recovery ?

are many projects requiring $100 barrel before they are seen as viable ?
are those projects need for $100 a barrel dependent on region eg asia, or purely technical issues eg ultra-deep?

[Scott Beveridge]

Bag,

I can’t really swallow the idea of $100/bbl needed to make a viable profit for deepwater projects. A good review of the mega-profits that most oil companies have made in the past year with "volatile" price swings makes it an unbelievable statement.

[baglimit]

no reason to disagree scotbeve – just questions that have been raised elsewhere and looking for participants input, rather than ‘know it alls’.

[James McLauchlan]

I seem to remember, not too many years back, when $35/bbl was quite acceptable to the oil companies and they still made a tidy profit thank you very much. There was also plenty of work around. These days they are used to making huge profits and would not easily slip back into reasonable profits as they would find that hard to swallow.

$100/bbl is often talked about as the way the price is going in the longer term but taking inflation into account I feel anything over 50 will still make development and extraction profitable.. just not as cosy as the oil majors currently have it.

[Scott Beveridge]

no reason to disagree scotbeve – just questions that have been raised elsewhere and looking for participants input, rather than ‘know it alls’.

Sorry Bag to sound like "a know it all" – I’m not actually – if you need links and further material to review, I’ll be pleased to send you some.

[baglimit]

no reason to disagree scotbeve – just questions that have been raised elsewhere and looking for participants input, rather than ‘know it alls’.

Sorry Bag to sound like "a know it all" – I’m not actually – if you need links and further material to review, I’ll be pleased to send you some.

sorry scot – the know it alls reference is people external to this site – self appointed commentators in the finance industry mainly, and as i said im looking for participants input, as ive read enough from those with vested interests in what oil should be priced at.

[Scott Beveridge]

no reason to disagree scotbeve – just questions that have been raised elsewhere and looking for participants input, rather than ‘know it alls’.

Sorry Bag to sound like "a know it all" – I’m not actually – if you need links and further material to review, I’ll be pleased to send you some.

sorry scot – the know it alls reference is people external to this site – self appointed commentators in the finance industry mainly, and as i said im looking for participants input, as ive read enough from those with vested interests in what oil should be priced at.

Ahhh… roger that Bag… WELL understood.

[Spacer]

Read between the lines, maybe time to learn a new language or two.

Agree with James, only a few years ago contracts were bases on 35-45 per bbl

[Scott Beveridge]

Guys,

A year + ago, I had posted that the price would reach an equilibrium point at approx. USD$75….. and here we are. End price petroleum products do not cost much to refine and ship (transport) – hence my boiling blood over the mega-profits the oil companies reap!!! 👿 🙄

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