YESTERDAY’s results announcement by Wood Group provided a sobering reminder of just how tough conditions are in the North Sea.
Hopes that brighter times may be ahead have been encouraged by a recent flurry of deals involving firms buying assets off Scotland, some with backing from overseas investors.
However, Wood’s experience suggests it could be a long time before changes in ownership translate into increased spending on North Sea fields following a sharp drop in activity in the area.
The company does not see any of the big oilfield modification programmes that are such a big money spinner in the pipeline.
Chief executive Robin Watson believes new players in the North Sea may eventually invest in developing so-called stranded assets where they can be linked with existing infrastructure.
But with oil trading at around $55 per barrel they won’t be in a rush to sanction even relatively small scale projects.
Wood expects no improvement in the North Sea this year and appears to have little hope of things getting better next year given what Mr Watson described as the stressed state of the basin.
As Wood Group is one of the biggest players in the UK’s prized oil services industry, his assessment has chilling implications for the sector.
Experts note many firms are just hanging on following two tough years during which plenty have fallen by the wayside.
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