INDUSTRY REVIEWOIL & GAS


Bouncing off the bottom?


Following the shutdown and deferment of many oil and gas industry project pipelines over the last couple of years, heavy lift carriers and forwarders servicing the market are hoping some of the taps will be turned back on again during 2017. Phil Hastings discusses.


(OPEC) agreement to cut oil production by 1.2 million barrels a day from the start of 2017, and the election of a pro-hydrocarbon industry US President Donald Trump – pan out in terms of global investment trends.


T 44 January/February 2017


he oil and gas industry is anxiously waiting to see how two major developments seen at the end of 2016 – an Organization of the Petroleum Exporting Countries


In the case of the former, key questions


include: will the planned production cuts hold through 2017; if they do, and oil/gas prices increase significantly, will the prospect of improved returns on investment encourage production increases elsewhere, either through the resumption of existing operations or the development of new ones; and will that subsequently lead to a return of over-supply?


The continuing uncertainty was


highlighted by Fitch Ratings, the global credit ratings and research organisation, which commented that while the OPEC deal, and a subsequent potential production cut agreement with non-OPEC countries, “should help accelerate market rebalancing and increases the chances of more rapid oil price recovery than previously expected, implementation risks remain”. Expanding on the last point, Fitch said


one significant risk is that OPEC members will produce crude oil above quotas, “as has happened in the past”, which could slow market rebalancing. Another unknown is how quickly US short-cycle crude production reacts to higher oil prices. “In addition, the deal is for six months and there


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