Page 14 - MEOG Week 10

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the spread of the coronavirus disease. However, even as workers return to the yards, Rystad Energy expects projects may
still have to contend with 30 per cent to 50 per cent fewer work hours.
Construction progress may also be slowed by supply delays, as the delivery of bulk materials, modules and equipment are hampered by transportation restrictions both within and outside of mainland China. The plant utilization rate in China’s equipment manufacturing sector has now fallen to less than 10 per cent.
Rystad also pointed out that project management would face severe issues as travel bans restrict contractors, engineering firms, certification companies, and E&P officials
from accessing shipyards.
This became prominent after the
coronavirus spread to the lombardy region of Italy, forcing major contractor Saipem to ask thousands of workers to stay home until further notice.
It is not yet clear when the effects of the epidemic will ease, but the situation will worsen in March and the impact of the virus is not limited to Chinese fabrication yards as it affects the entire global service industry.
As the virus has caused reduced industrial activity and travel restrictions in China and beyond, much of this year’s global expected oil-demand growth will be lost. Earlier this month, Rystad heavily revised its annual global oil demand growth forecast down by
25 per cent to 820,000 barrels per day (bpd) in 2020 due to the effects of the coronavirus.
Oil prices have already dipped below the $50 per barrel threshold and could fall further if OPEC does not implement additional supply cuts. lower oil prices will result in oil and gas companies scaling down their flexible investment budgets, especially shale operators in the US as well as some offshore exploration and production (E&P) players.
“Our current assessment forecasts that COVID-19 could result in global E&P investments falling by around $30 billion
in 2020 – a significant hit to the industry,” Martinsen stated, adding that some of these investments are likely to come back in 2021. oFFshore enerGy today
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Week 10 11•March•2020