Cost-cutting across the global oil and gas industry may allow major projects to be sanctioned over the next 12-18 months, Aker Solutions said yesterday.
Break-even costs are reducing to levels which make new activity more affordable, the Norwegian energy-service giant added.
Aker’s glimmer of hope for the international offshore sector’s re-emergence from the bleak impact of low oil prices came as the company suspended its dividend because of an uncertain market.
Fourth quarter results fell well short of expectations – earnings before interest taxes, depreciation and amortisation came in at £14.6million, down from £63.2million a year earlier.
Full-year profits for 2015 slumped to £55million, from £146million in the previous 12 months.
Aker said operating income and other revenue totalled £2.56billion in the latest period, down slightly from £2.65billion in 2014.
On prospects for 2016, the group said: “The market outlook is deemed challenging as the steep and sustained decline in oil prices curtails oil companies’ capital investments.
“Project postponements are increasingly seen across the industry and the commercial environment is tough, with increasing pressure on prices.
“At the same time, there are signs that cost-cutting efforts across the industry are starting to have an effect as project break-even costs are coming down.
“This may enable some major projects to be sanctioned in the next 12-18 months.”
Aker said activity offshore Norway was, with the exception of the North Sea Johan Sverdrup project, likely to remain subdued over the next year.
The company has previously warned it may axe up to 900 jobs in its Norwegian operations.
It sees the most growth potential in parts of the world it has expanded into in recent years, which it said was reflected in its current tendering activity.
Chief executive Luis Araujo said: “We have a healthy order backlog, strong financial position and international presence that will benefit us even as our industry continues to face uncertainty amid very challenging market conditions.”
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