International Maritime Associates (IMA) is a firm of business consultants specializing in market analysis and strategic planning for companies in the marine and offshore sectors.
April 15, 2017Jim McCaul -- Orders for production floaters have finally begun to flow. The break came early this year when contracts for a production semi for use in the GOM and an FPSO for use off Malaysia were awarded.
December 12, 2016Jim McCaul -- Donald Trump’s presidential win and Republican sweep of the US government in November – along with OPEC’s oil production cuts in December -- have injected new dynamics into the US energy
April 28, 2016Jim McCaul -- No question that the market for new floating production systems has taken a battering. The past 12 to 18 months have been a difficult period for everyone in the business sector. Absence of
by Jim McCaul
US crude inventory declined again last week -- reducing fear of a repeat 2014/16 oil glut occurring. The latest weekly survey by the US Energy Information Administration indicates a small inventory fall of 1.2 million barrels in the week ended 7 December. This follows a 7.3 million barrel decline in the previous week. The decrease over the past two weeks follows ten straight weeks of US crude inventory build.
While EIA data include only US inventory the survey results are considered more reliable than international figures and are often used a surrogate for global inventory status.
Despite the inventory reversal -- and OPEC+ agreement to cut production in H1 2019 -- crude prices remain 30% down from beginning October. Brent as of 12 December is trading around $60.
Oil prices regularly overshoot the level needed to balance demand and supply. Current prices are below the balancing level needed to attract investment to meet growing demand and replace depleting reserves. Assuming OPEC+ production cuts are implemented as planned -- and no major demand disruption occurs -- we should be back in the $65 to $75 price range in Q2 2019. Our 2019/23 production floater forecast is based on oil trading in this price range over the next five years.
But the second half of 2019 is going to see a big jump in US oil production as logistic bottlenecks in the US shale sector are removed. US oil production is expected to grow 11% in 2019 -- and OPEC+ will need to continue to meter supply to prevent a price collapse.
Meanwhile, the recent drop in crude prices has impacted a few marginal offshore projects that were set to move forward. But there has not been any major impact on investment plans of the big offshore producers. Chevron and Hess, for example, have indicated higher spending plans for next year. Petrobras has budgeted $68.8 billion for E&P spending between 2019/23 -- a figure 14% higher than the 2018/22 plan.
Jim is the founder and manager of IMA, a consulting firm providing market analysis, competitive benchmarking and business planning support in the maritime and offshore sectors. Over the past 40 years IMA has performed more than 350 business consulting assignments for 170+ clients in 40+ countries.
One of the firm’s specialties is analyzing requirements for floating production systems. IMA has published more than 60 reports since 1996 analyzing this business sector and has been engaged by numerous clients to assist in analyzing specific market opportunities in the floating production sector.
Jim is also the co-founder of IMA/World Energy Reports, a New York based business intelligence service for the floating production supply chain.