On Monday, the Brent crude benchmark hit an eleven-year low of about $36 per barrel, with U.S. West Texas Intermediate only slightly lower at $34. Analysts at Goldman Sachs and CLSA have reiterated their prediction that the market will not bottom out before $20 per barrel, the breakeven point for U.S. shale oil producers. Goldman suggests that OPEC will not reach agreement on production controls in the near future and there is little to stop the price slide as storage capacity fills.
This adds to continued gloom in the offshore industry, which has experienced plummeting utilization, ever-increasing counts of cold-stacked rigs and OSVs, asset sales and liquidations. The privately held Fredriksen Group recently announced plans to invest in distressed offshore assets, primarily in newbuild rigs whose owners do not want to take delivery – a sure sign of overcapacity.
But the pall over offshore is not universal, as Monday's announcement by veteran subsea construction company McDermott shows. McDermott has won a contract for engineering and installation at the Indian offshore fields Vashishta and S1. It will join the Indian arm of Larsen & Toubro, L&T Hydrocarbon Engineering, in providing services to Indian oil firm ONGC at the two finds.
The two firms will install pipelines, manifolds and umbilicals for the developments, including over 60 miles of 14-inch pipeline from shore out to 2,300 feet of water depth.
McDermott owns 12 vessels and barges for pipelay, heavy lift, construction, dive support and floatover functions, with a wide range of capabilities. Executives say that the company's Derrick Barge 30 and deepwater North Ocean 105 will be deployed for the project.
The news follows another recent win for McDermott, a lump sup, long-term agreement secured with Saudi Aramco for integrated offshore services (engineering, procurement, construction and installation) at multiple fields. The contract will run through 2018.