The operating condition for the dire OSV industry is expected to improve in 2021 as a recovery is delayed by the coronavirus (COVID-19) pandemic’s impact on oil price, according to Wintermar Offshore.
The Indonesian offshore services firm noted that while 2020 is likely to be negatively impacted by COVID-19, the outlook for OSV has improved as demand and supply of vessels has reached equilibrium.
“The OSV industry has already reduced costs significantly and charter rates have not really recovered from the lowest point last year. Therefore, we do not expect a sharp decline in charter rates as a result of the COVID-19 impact because many companies are already operating at low or even negative margins. It is also expected that offshore oil production will benefit from lower shale output as demand recovers over the next two years, which will underpin OSV demand in the coming year,” Wintermar stated.
“With the coordinated response of Opec to reduce output and sharp cuts in US shale oil production, the oil price could recover in 2021 and beyond,” it said.
Sugiman Layanto, managing director of Wintermar, explained that the double impact of COVID-19 and the fall in oil prices has delayed the company’s recovery this year. Due to the sharp decline in travel and flights, oil demand has fallen significantly in 2020. This has caused oil and gas companies to suspend and postpone drilling projects.
The company pointed out that as it is no longer just an Indonesian player, it expects to see a broader range of opportunities and a wider potential market globally as the market recovers.
“Wintermar’s gearing is below 38% and the company has rescheduled short term liabilities into long term loans. As at end of June 2020, the company’s contracts on hand amounted to $71.7m,” Wintermar said.
The company made a profit of $48,327 in the first quarter, reversing from a loss of $2.3m in the same period of last year.
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