Finally some good news for Norway’s suddenly hard-pressed oil industry: A top energy analyst told a packed conference in Stavanger this week that he thinks the downturn will itself turn around later this year. “A new oil age” will arrive, declared Jarand Rystad.
Newspaper Dagens Næringsliv (DN) described Rystad as one of the world’s most acclaimed analysts in the oil industry. His company, Rystad Energy, is often hired by oil companies, investors and banks keen to use its extensive database of oil field activity around the world.
Rystad told oil industry executives attending Sparebank 1 SR-Bank’s conference in Stavanger on Tuesday that there was no need for them to be down in the mouth. The upturn that he sees coming may also take the industry to new heights.
That’s welcome news for an industry that during the past six months, since oil prices fell by more than half, has seen its revenues plummet, profits shrink, contracts cut and layoffs rise. Environmentalists won’t be happy to hear about any resurgence in offshore oil drilling and production, but oil industry workers clearly want the good times to start rolling again.
Rystad thinks they will, claiming that oil prices have already bottomed out and that oil companies will benefit from increased production at lower costs and with better cash flow. Within engineering, he expects the current downturn to bottom out this year or next year. Equipment suppliers may need to wait as long as two years for a turnaround, but Rystad is confident it will come.
Asked whether he’s simply the industry’s greatest optimist, Rystad told DN “no, I’m a realist.” He disagrees with state statistics bureau SSB’s predictions of a downturn in oil investment, pointing to what’s already been committed to identified fields. “My numbers show that (investment in) 2020 will be higher than in 2014,” he said.
Rystad also thinks oil prices will rise to USD 74 a barrel next year and USD 84 in 2017. “But there are many who predict prices higher than that, and there are many scenarios that can yield a much faster rise in oil prices,” Rystad told DN.
He thinks Stavanger itself has a lot to look forward to, despite all the gloom at present. “Production can go up … with the 10 to 12 new fields that are coming, especially Johan Sverdrup,” he said, adding that Norwegian suppliers “especially here in Stavanger” are the most competitive. He doesn’t downplay some tough times ahead in the immediate future, “but after that, demand will turn around again.”