The offshore sector can remain resilient to COVID disruption

David Sheret on why the industry is well set to deal with further restrictions

Another wave of disruption?

New coronavirus travel restrictions are just the latest in a long line of challenges for the offshore industry.

Scotland – the hub for much of Western Europe’s offshore activity – has now imposed the toughest quarantine system in the UK. All international arrivals must self-isolate for 10 days (at their own cost).

The devil – as always – is in the detail. It’s prudent to assume that travel limitations will continue to impact how vessels and offshore installations mobilise and demobilise – affecting operations not only in the UK but across the globe. Quarantine measures also place huge limitations on the available workforce, not to mention resources, productivity and cashflow.

Industry aftershocks?

It’s now more than a year since the first COVID cases began to emerge. Since then, we’ve continued to feel aftershocks across the industry. It has led to a crisis in how crew changes work – many offshore workers have had to remain on board vessels long after their set period of work finished.

This has sparked a reaction from industry. The Neptune Declaration, calling for more action to make the maritime sector more resilient, has now gained well over 600 signatures, with demands including recognising seafarers as key workers and giving them priority access to COVID-19 vaccines, and ensuring air connectivity between key maritime hubs for seafarers.

Vaccination programmes are already in full swing, with more than 150 million doses administered worldwide [i] but we are far from out of the woods yet. COVID threatens to further disrupt the offshore industry this year. 

But there’s still hope on the horizon.

This month, Archer Knight launched its report into Western Europe’s saturation diving market. Our research showed that contractors performed well in 2020, but their ability to make attractive returns was limited. The signs for 2021 show, with four well-structured, well-funded top four diving contractors leading the market, the supply/demand pendulum could be swinging back their way.

Our analysis has taken account of the potential for COVID disruption, and despite the latest news on restrictions, there are still reasons for cautious optimism.

Firstly, the demand is still there. Contractors are seeing growing order books and the backlog is probably more secure than it has been over the past few years.

Secondly, we’re seeing real evidence of collaboration. One head of subsea at an operator told me while we were compiling our research:

“We have witnessed an unprecedented level of collaboration between all companies through the supply chain. It took a pandemic for all of us to put collective interest ahead of self-interest.”

What’s been the impact of this working together? Not only is there a feeling of contributing to a common good, but it’s led to more efficient operations and more effective and sustainable working relationships.

We have seen a genuine willingness between companies throughout the sector to work together against a common threat and unite their skillsets in the face of a level of adversity never seen before.

At a time when the oil & gas industry is under great pressure – both in terms of its margins and the court of public opinion, this camaraderie and resilience is needed more than ever. The signs of a changing supply and demand equilibrium in the DSV sector hopefully serve as a sign that the industry can sustain its united front.

Find out more about what’s behind the strength and resilience in Western Europe’s DSV sector? Buy the full report, including a comprehensive look at 2020 activity and the year ahead.

[i] Source: Johns Hopkins Coronavirus Resource Center