1.4Activities and Markets
The rapid rate of market deterioration in 2015 was largely unexpected by the industry, despite caution on the back of a sluggish 2014. SBM Offshore’s outlook at the beginning of 2015 was more positive. However, this view changed as the oil price started to slide, resulting in an knock-on effect; a significant number of projects, which were previously expected to be awarded in 2015, were postponed or canceled. A consequence for SBM Offshore was that the Company was not awarded any major contracts in 2015, forcing a change in outlook for the future. The industry as a whole is revising investment plans downwards for 2016 and even 2017.
Three key events caused the oil price to collapse in 2014 – the effects of which will continue into 2016 (see graph:Awards forecasts):
- Demand was lower than expected as economic growth slowed down in regions such as China
- OPEC declined to play its role as swing producer and maintained its output levels, adding to the overall oversupply
As a consequence theaward forecast significantly suffered in 2015 compared to the outlook that was foreseen back in 2014 (see graph below):
EPC Awards Forecasts (Comparison)
Historical and Estimated Awards
This downward trend can also be applied to other products and services within SBM Offshore’s portfolio such as Turret Mooring Systems, Semi-submersibles ands. The expectation is that the current industry climate may extend beyond the short to medium term. Despite this negative climate, some clients’ projects are advancing. In November 2015 SBM Offshore received from Petrobras a formal invitation to tender for the Sépia and Libra s offshore Brazil and also in October the Company received from Technip a Front-End Engineering and Design (FEED) contract for three, large-scale turret mooring systems associated with the proposed Browse Development in Australia.
SBM Offshore is active in the following market segments:s, Semi-submersibles, s and Turret Mooring Systems with the main focus on the lease and operation of the Company’s fleet of s. In 2015 the Company continued to execute and advance its current projects in line with contract obligations, ensuring that clients’ expectations are met. The major projects include:
Turret Mooring Systems for:
EPC for FPSOs:
- Cidade de Maricá
- Cidade de Saquarema