Safety Investment Remains Resilient Despite Downturn
Oil and gas companies are continuing to invest in safety research despite the current oil price downturn, DNV GL representatives said.
“Business is tough in the oil and gas sector, but committed customers are still investing in safety improvement. They’re still conducting research into major hazards,” said Gary Tomlin, DNV GL UK’s vice president of safety and risk.
Naturally, the level of this investment was slightly hampered by the drop in crude prices, but investment has started to increase over the last couple of months.
“We saw a hiccup and, to be honest, it’s inevitable. When the oil price drops from USD 110 a barrel to USD 27, you’re kidding yourself if you’re not going to see a hiccup,” said Hari Vamadevan, DNV GL Oil & Gas’ regional manager for the UK and West Africa.
“We’ve seen a pickup I would say over the last couple of months … oil recovery to USD 50 has helped a little bit, I think there’s positive cash flows for some companies, but many companies haven’t stopped [investing],” he added.
Investment in this type of research is expected to rise even further over the not too distant future, as the oil price achieves an anticipated rise and oil and gas firms gain more access to expendable income.
“From an industry perspective we think … we’ll see an upturn 2017–2018,” Tomlin said. “I think that we’ve plateaued. We are a cyclical oil and gas industry … I think we’ve hit the low point, but we do need to be aware that we still need to control costs,” Vamadevan said. “I think companies will become profitable at USD 50 and USD 60 per barrel, and, as the price rises, I think there will be more investment. So I am hopeful that we will see more activity going forward,” he added.