Norwegian oilfield services sector is being hit hard by austerity measures aka ‘capital discipline’ taken by oil companies, mainly Statoil.
Earlier this year, the Norwegian Petroleum Directorate said it planned to receive 13 field development plans from oil companies in 2014, but last month the organization’s chief Bente Nyland told Reuters that most of the development plans have been delayed.
“We don’t expect to receive any plans before the end of the year,” Reuters quoted Nyland as saying.
Subsea 7 is not the only company facing severe job cuts. Bilfinger, engineering and services group, on Tuesday said it planned to let go 600 people, due to the reduction in activity levels of oil companies.
According to Wood Mackenzie, a consultancy firm, investors are increasingly demanding bigger dividends and a better rate of return from oil companies. As a result many companies have committed to stricter capital discipline and are intensely screening projects based on financial criteria. Capital intensive projects are particularly being scrutinised. This means more difficult projects could be delayed, and in some circumstances will simply remain undeveloped, reads a recent report by Wood Mackenzie.
The story of lay-offs does not end with Subsea 7 and Bilfinger. Oceaneering, owner and operator of Remotely Operated Vehicles and provider of subsea hardware, is letting between 20-30 employees in Norway go, Aftenbladet, the Stavanger-based newspaper reports. According to Aftenbladet, Halliburton is eyeing cuts too.
Early in September, Aibel said that in light of continuing cut-backs in the market, it had to reduce its workforce by some 250 people.
“Cuts will be made at several locations. The number of redundancies at each office will be communicated to the employees at the affected locations at internal staff meetings” Aibel’s statement read.
Also, drilling contractor North Atlantic Drilling reportedly said in August it would be forced to cut workforce by 250, as its contracts for two rigs on the Norwegian shelf are set to end this autumn, with no new contracts for the units in sight.
Bloomberg today reported that GE Oil & Gas will make its decision on workforce reduction in Norway at the Board meeting this month. According to Bloomberg, GE Oil & Gas in Norway employs over 1,000 people.
The list does not end here. Aker Solutions, Odfjell Drilling, Baker Hughes, Apply Sorco and others have also been reported to have reduced workforce for the same reasons as the previously mentioned contractors. Lack of spending by the oil firms.