Rystad: $100 Oil by 2020

Jarand Rystad, managing partner at Rystad Energy, told an audience at the Offshore Marine Forum in Singapore Tuesday that offshore firms should hang on to their employees and assets, forecasting that oil prices will rise to $80 by 2018 – and up to $105 by 2020.

2016 is a good "time for the opportunist,” he said, adding that firms with deep pockets and a long term strategy are positioned to reap the benefits of a price recovery.

"Even if you make very aggressive forecasts on current trends such as electric cars, LNG shipping and alternative energies, these won't make any meaningful structural impacts on the oil industry for another 10-20 years," he said.

Rystad warned that offshore firms risked losing out on future upside opportunities if they cut too deeply during the downturn. "The top 400 companies cut 250,000 people last year, and will cut another 250,000 by year end, representing the biggest job cuts of the oil service value chain in history. This is worrying as it could result in large cost inflation from 2018 onwards when the market recovers." 

His co-panelists – Y.Y. Chow, head of Keppel O&M, Ron Mathison, managing director of Swire Pacific, Geir Sjurseth, managing director at DVB Bank, and Carl Arnet, CEO of BW Offshore – agreed that prices would improve, but most suggested that timely cost-cutting measures and diversification were still the primary focus of their strategy.

Mr. Chow, whose firm had just announced 2,800 layoffs and a 28 percent reduction in overhead, said that "it is important that we right-size our organization so that even if our top-line comes down, we can manage our costs. We will also focus on securing non-oil and gas opportunities that can enable us to utilize our offshore equipment, such as power projects."