This market is primarily served by businesses in our Precision Machined Components division (PMC) but also by our Cylinders division (CSC). The PMC businesses in the Group are leaders in their markets, supplying high integrity components for subsea and topside applications to global oil services companies. Pressure Technologies has embraced the shift to collaborative working with customers through long- term supply agreements and invested in sales and technical capabilities with measurable benefits for PMC. CSC will also benefit from an upturn in the oil and gas market, with demand for motion compensation systems on offshore oil platforms anticipated to recover in 2021. Growth of the Integrity Management services business in this market is expected to continue.
The low oil price environment of recent years and pandemic-driven collapse saw major delays and cuts in oil exploration investment, resulting in fewer oil discoveries and reduced capex and opex spend. With an oil price now around $50, confidence to sanction project expenditure over the next two years is showing some very early signs of returning. However, our base case expectation is at least a further year of challenging trading conditions in the depressed oil and gas market. The sustained low oil price environment has advanced technical innovation in the oil service industry and reduced the cost of oil exploration and production. Oil service majors, OEMs and component manufacturers now collaborate to produce parts more efficiently, on a ‘cost- out’ basis, while often improving performance and quality.