WoodMac: 2017 Is The Year To Invest In The North Sea

Low supply chain costs are making 2017 the year to invest in the North Sea, according to a new report from Wood Mackenzie.

“For projects that have been being worked up over recent years, there is a real incentive to take the decision and lock in the lowest supply chain costs in 2017,” the report said.

“This is particularly true in Norway where a successful year of exploration in 2017 could inject more heat into the development market,” the report added.

For projects further away from sanction, future cost increases from the supply chain shouldn’t be significant enough to shift an investment decision, however, WoodMac’s latest report stated.

The study even highlighted that there is an opportunity to keep costs at 2017 lows, but the responsibility is on operators to optimize projects hand-in-hand with key suppliers from the earliest phase.

“As our report highlights, some impressive headline reductions have been achieved through a combination of operators’ efforts and supply chain deflation, but it's clear that the work does not stop here,” a WoodMac representative told Rigzone.

“We argue that the onus is on operators to not only use ‘self-help’ measures (project optimization, standardization and execution efficiencies) to cut costs on individual projects…this must shift to a cost efficiency attitude, inherent in every project or operation,” the representative added.

In its report, WoodMac anticipates that 2017 will be yet another turbulent year for suppliers in the North Sea.

“There is a growing concern amongst the North Sea operators that some key suppliers will not survive,” the report said.