The low oil price environment of recent years and pandemic- driven collapse in economic activity saw major delays and cuts in oil exploration investment, resulting in fewer oil discoveries and reduced capex and opex spend. From the $50 low point of a year ago, the oil price has gained momentum in recent months, with increasing project expenditure forecast for the next two years. The Rystad outlook suggests in excess of 1,300 subsea trees, which utilise several PMC products, for mainly deepwater territories from early 2022 through to 2025.
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 driving suppliers towards improved on-time delivery and shorter lead times.
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, as secured in 2020 and 2021. The Group has also invested in sales and technical capabilities with measurable benefits seen in new customer acquisition and a broader product range.
Major OEM customers are reporting a stronger outlook for 2022 and while we remain cautious regarding the timing and pace of recovery, we expect a stronger demand for components in FY22.
CSC has also seen the early signs of recovery in the oil and gas market, with demand for motion compensation systems increasing during the second half of 2021. Demand for Integrity Management services for diving support and offshore services vessels is also expected to recover throughout 2022.