Tough Times Continue

It’s been a while since I’ve blogged here, but I’m going to try and be more consistent again.

Although I got back in to work last July after a short 6-week lay off, things haven’t really improved that much in the industry.

Oil prices have stabilised around the $50/bbl mark and it seems that Saudi Arabia (along with most of Opec) and Russia are in agreement that this needs to be maintained – even if they agree about little else.

There is very little movement in the job market and few vacancies advertised so presumably there aren’t many new projects coming along just yet.

I find this really odd, as it’s clear that the oil price dip has stabilised and contractors and suppliers are desperate for work so prices are at rock bottom. Lead times are minimal as workshops are empty and agency rates are down between 30-50% from highs of a couple of years ago.

Many refineries are sitting on significant reserves built up during the period of low oil price but relatively high product prices so now would be an ideal time to use that money to invest – perhaps to expand capacity or allow processing of heavier/ sourer (and hence cheaper) crudes or even look to expand into more downstream units.

The danger of waiting too much longer is that individuals and companies will be forced out of business, so that when the market rallies and projects get started, contracting companies and suppliers will reach their limit more quickly, prices will rise steeply and lead times extend.

If I was in charge, I’d be looking to get in now.