At the beginning of this year, the world was hit by a pandemic - COVID-19. The Corona virus is clearly having an enormous global impact, particularly by affecting the health of millions of people and causing loss of life. The economic impact is also enormous: small and large businesses are going through bad times, entire sectors are at a standstill, tourism is declining, and stock markets are suffering from the fear of a second wave of corona attacks.
The shipping industry has also gone through some major changes in recent months. Container ships cancelled numerous sailings, bulk transport is low because of the closure of industries and transport, cruises were at a standstill and ferries were not allowed to carry passengers. Very limited crew changes are taking place, causing stress to seafarers. To survive these difficult times, many shipowners have to take painful measures. However, one shipping industry is flourishing at the moment: the tanker market benefited from the price of oil, which reached a new low.
This collapse in oil prices explains a highly distorted oil and gas market. The economic effects of the low oil price are likely to reduce E&P activity: at least nine of the world's most planned exploration wells for 2020, both onshore and offshore, are at risk of being suspended. It goes without saying that this cutback in E&P investments will have a major negative impact on the offshore services market, including the theme market for this newsletter: Subsea.
For the subsea market, 2020 promises to be a bleak year: contract awards are low. With the expectation of a gradual increase in the price of oil, thanks to the relaxation of lockdown measures and thus the emerging demand for oil, oil companies may re-schedule projects. And also the projects that were previously scheduled to be sanctioned in 2020 are likely to be pursued in the coming years, thereby also boosting the subsea sector. In addition, the subsea sector can certainly benefit from the emerging market within the energy transition: suppliers can provide services to support blue and green hydrogen infrastructure, energy storage or carbon capture and storage. In Europe, for example, investments in offshore wind will surpass offshore O&G investments as early as 2022.