With margins staying “razor thin” and cost pressures continuing to bear down, the offshore supply chain may take on a “whole new look” this year, according to a Wood Mackenzie analyst.
Hoang Lu, from Wood Mackenzie’s upstream supply chain team, said “uneasiness” had been building around the financial health of the sector and that oversupply remained a threat.
The energy transition also has to be taken into account, and firms who can position themselves for the shift to low-carbon energy systems earliest will have a competitive advantage.
“No one can afford to stand idle as customer and investor activism drives this change,” Mr Lu said.
He added that hybrid batteries have been a conduit of transformation: “We saw Transocean’s first-of-its-kind hybrid energy storage system deployed on the Spitsbergen semi-submersible in the North Sea. The technology reduces fuel consumption, leading to lower emissions.
“Seadrill has made similar strides with the West Mira, another hybrid-powered floating rig employing a similar battery energy storage system. We expect any orders of newbuilds will require a renewable element, like Awilco’s two green newbuilds currently on order.”
Environmental, social and governance (ESG) criteria are increasingly important, and, as a result, are shaping offshore supply chain brands.
TechnipFMC’s “SpinCo” announced it will now be known as Technip Energies to highlight its ambition to be a global energy transition player. BHGE has become the Baker Hughes Company in a similar pivot towards energy-focused technology. Look out for much more of this rebranding in the near future.
“A lower margin supply chain is a reality for the near term,” he said. “Contractors will likely seek ways to broaden their scope of services to balance portfolios with the growth of renewables. Offshore wind projects are increasing in complexity, with larger developments being installed ever further offshore. This presents new opportunities for the supply chain. The next phase of offshore will ultimately be highly competitive; adapting early is vital.”