The economic slowdown and downturn in the global oil and gas industry is an opportunity to optimise on cost and improving efficiency.
It’s a time for “spring-cleaning” when companies can transform the situation and look into internally to become more efficient and productive, said an industry expert.
Vivek Seht (pictured), CEO of Halul Offshore Services Company that offers logistics and support services for drilling operations to several leading oil companies cautioned that restricting and efficiency improvement do not mean laying off people. It’s a question about ‘what is must to have’?, and ‘what is good to have’? without compromising the safety or quality of services.
“We are currently trying to optimise our cost to become more efficient. However, we are also getting ready for upswing which is expected to take place within two years,” Vivek told The Peninsula in an interview.
He added: “This year the oil and gas industry is more about conserving cash and maintaining market share. The expansion plans of companies, especially those operating in the energy sector, is going to be a challenge.”
Halul, the marine offshore services arm of Milaha (Qatar Navigation), owns a fleet of nearly 40 vessels, and majority of them operate in Qatar. Its clients include oil and gas majors like Qatar Petroleum, Shell and others.
On the occupancy rates of the Company’s service vessels, he said that Halul is doing better than the market average. And vessels which are not marketable are parked.
“We directly depend on the oil and gas industry where the investment is coming down, and revenues and profits of companies have dropped dramatically. This is across the board, and companies are asking for 20-30 percent discounts,” said Vivek.
Commenting on oil price recovery he cautioned that this year and next year it’s going to be “a bit sluggish”. But post-2018 things are expected to get better.
Goldman Sachs, one of the world’s leading investment banks, says the higher base demand growth this year, which is estimated at 1.5 million barrels per day, is expected to fully offset increased production in the US.
Other market analysts suggest that with the global oil inventories at record highs and plenty of oil already need to be cleared from the market, anticipating any dramatic recovery in oil prices is unlikely. In fact, many believe the prices may continue hovering around $45-$55 a barrel this year and next year.
“When oil production is dropping, it starts impacting us. If the prices per barrel don’t go up dramatically, oil majors will continue controlling their expenses and costs, which impact my business,” said Vivek.
Asked about restructuring in Halul, he said that the Company has not laid off any staff. Currently it has about 1,000 employees, including off-shore and office staff.
On salary cuts, he said: “We have gone by the market rates. But we have been fair. In today’s market the biggest thing is getting paid in time.”
