Offshore staff
HØVIK, Norway – In the face of falling oil prices, confidence in the outlook for the oil and gas industry has dropped among sector professionals from 65% to 28% in the last three months, according to new research published by DNV GL. The pessimistic outlook is also reflected in capex intentions, with those planning to increase capex in the same period dropping from 40% to 12% and those planning to reduce headcount increasing from 26% to 47%.
The findings highlight that senior industry professionals are split over how to tackle the year ahead, according toDNV GL’s fifth annual research report on the outlook for the sector. Those who are most confident about reaching their profit targets plan different cost-management measures, taking a long-term approach to riding out the storm, while those pessimistic about hitting their profit targets are more likely to take short-term cost-cutting measures.
Among the so-called “profit confidents,” 67% intend to increase or maintain capital investment compared to 29% among “profit pessimists” and 70% intend to bolster research and development spending compared to 40% of the pessimists. When it comes to imposing strict cost controls, profit confidents have a greater focus than profit pessimists on improving workflow/work processes (45% vs. 35%), a greater use of automation (11% vs. 1%) and the adoption of new IT technology (13% compared to 4%). The profit pessimists are more likely to take cost-cutting measures such as reducing headcount (35% compared to 15% in the confident group).
Among respondents inNorth America, one-third (33%) are confident about the year ahead, the most confident of any region, but this is still a significant drop from 93% the previous year. The biggest drop in confidence, however, is in Asia/Pacific where 27% are confident about the outlook for 2015 compared to 89% the year before. The lowest confidence globally is reported in Europe (26%).
DNV GL’s report, “A Balancing Act: The outlook for the oil and gas industry in 2015,” provides an assessment of industry confidence and priorities for the year ahead and is based on a global survey of more than 360 senior industry professionals and executives carried out during the week of Jan. 19,2015. The research has been compared with a previous survey carried out from October to November 2014 to monitor shifting sentiment during a period of falling barrel prices, as wellas DNV GL’s 2014 industry outlook report.
02/03/2015
