The “stage is being set” for a UK North Sea recovery from the second half of this year, according to the flagship oilfield services report (OFS) from EY.
A year on from a fateful OPEC+ meeting, which, coupled with the onset of Covid, triggered a major oil price crash, the accountancy giant said there are now “reasons to be optimistic” for the industry, with acceleration of recovery expected in H2 2021, 2022 and beyond.
Deferred maintenance projects in 2020 will manifest this year and the vaccine rollout has boosted Brent crude, meanwhile the Oil and Gas Authority (OGA) expects project sanctions and decom work to come through, along with emerging energy transition opportunities.
However the “road to recovery is expected to be long” for portions of the oilfield services sector, with challenging market conditions, and a focus on costs and survival, to prevail in 2021, anticipated to bring further consolidation in the market.
The industry is also dealing with the fact that it still falls behind other sectors in terms of the digital transformation, EY said, and some companies will need “existential change” to embrace new technologies and opportunities for the energy transition.