Thousands of oil and offshore industry players are converging on Stavanger again this week for the latest Offshore Northern Seas conference (ONS). Predictions that the worst effects of the oil price dive is behind them have buoyed spirits and local hotels are very happy indeed.
Newspaper Dagens Næringsliv (DN) reported over the weekend that after months on end of low occupancy rates, Stavanger’s hotels are booked solid this week. It’s a relief for Stavanger’s visitor industry, which has been hit hard by the sharp downturn in the oil business. Only one of Petter Stordalen’s Choice hotels in the area logged a profit last year, so ONS is vitally important for this year’s bottom lines.
“It’s been tough since we had a considerable increase in capacity right when the market fell apart,” Laila Neverdahl, director of both the Clarion Energy Hotel, where the ONS Conference will be held, and the Clarion Air Hotel at Sola, told DN earlier this month. “But we had good help this summer from the favourable exchange rates for tourists, and the autumn looks good with many conferences. ONS is very positive for all the hotels in town.”
It remained unclear how many people would actually attend ONS this year, but there were 91,862 visitors from more than 100 countris at the last ONS in 2014, a big jump from 2012. “We’re expecting lower visitor counts than in 2014,” ONS’ communications director Line Grønhaug told DN on Saturday. There’s been just as much demand for exhibit space, however, as there was two years ago. Space was boosted, from 24,000 to 27,000 square feet, and it’s all taken, with a 30 percent increase in new exhibitors.
The main theme of the conference, Transition, though, reflects the ongoing shakeout in an industry that went from boom to near-bust when oil prices fell from more than USD 100 a barrel to less than USD 30 at one point. The price for a barrel of Norway’s North Sea crude has since risen, even topping USD 50 recently, and more analysts are predicting that the business and Norway’s economy have bottomed out.
Figures released by state statistics bureau SSB (Statistics Norway) last week showed that oil investments are expected to sink again next year, to NOK 150.5 billion, down 32 percent from the top year of 2014, when oil prices crashed. That’s still causing major problems, as firms servicing oil rigs have been forced to lay up vessels and other suppliers have had to slash jobs. The new dive in planned investments for next year came as an unwelcome surprise, but it also fuels the predictions that things then may turn around.
Brokerage firm SEB was the latest to tell DN over the weekend that “the worst is behind us,” and even issue “buy” recommendations on stock in such firms as Statoil, Det norske oljeselskap, Subsea 7, Aker Solutions, Akastor and BW Offshore. “What we’ve seen so far is quite brutal,” said SEB’s chief analyst Harald Øyen, referring to thousands of job losses and the steep decline in investment. “We believe, in the meantime, that this phase of restructuring in the industry is now over. Now we can begin to see a rise in orders for supply firms.”
Neither Statoil’s boss Eldar Sætre nor many others at ONS think the oil industry will return to its previous levels, though. Sætre, poised for a hectic week of speeches and high-level meetings, talked about the pain of the cutbacks since he’s been Statoil CEO on Norwegian Broadcasting (NRK)’s nightly nationwide newscast on Saturday, and said that he doesn’t think those laid off will be able to return to the industry. There’s been a fundamental change in costs and activity, and the “transition” will continue.
Connie Hedegaard, among top climate advocates and environmentalists who also will be following sessions at ONS this week, cautioned as well that it would be “dangerous” to think oil prices can shoot up again and that the industry will boom. She’s involved in forming the Norwegian government’s new “greener” strategy and called the dive in oil prices “a wake-up call” for everyone.
“In Norway, we have lived very well on the financial contribution from a sector that we must expect will not contribute as much in the years to come,” Hedegaard told newspaper Dagsavisen. “I think everyone needs to be careful about hoping the oil price will come up again in two years, or that maybe nothing will come of the climate agreement in Paris if Trump becomes president in the US. Those who sit and think this will just blow over, they won’t win in the future.”
Meanwhile, construction workers were busy inside ONS’ exhibition halls, getting ready for the action that was to officially begin on Monday. In a city that has had the most rapidly rising unemployment rates in Norway, however, DN noted that several of the workers were from Poland.