Mediterranean market malaise
There felt to be a genuine unease on the stands of many Italian oil industry service and supply companies at last month's Offshore Mediterranean Conference in Ravenna. Though attendance at the biennial event, according to its organizers, was up this year, little of the commercial buzzor newsgenerated at past OMCs was in the air.
There felt to be a genuine unease on the stands of many Italian oil industry service and supply companies at last month's Offshore Mediterranean Conference in Ravenna. Though attendance at the biennial event, according to its organizers, was up this year, little of the commercial buzz—or news—generated at past OMCs was in the air.
This bearishness is reflective of a growing concern in a regional contracting sector that has, so far, seen few gains feed through from the crude oil price-driven upturn being experienced by the oil industry worldwide.
As the president of the Ravenna Offshore Contracting Association (ROCA), Franco Nanni, notes, there is mystification among its 50-plus members surrounding the fact that better economic times for the oil industry at large hasn't meaningfully trickled down to the supply chain's orderbooks.
More worrying is the poor—to use the stock market catchword—"visibility" many of these regional companies have looking forward. Rising activity levels in the maintenance, modification, and operations sector, in fact, has provided one of the few patches of blue in an otherwise still rather gloomy commercial forecast, said Nanni.
Nevertheless, London-based Infield Systems UK Ltd. believes the longer-term picture for the area's contractors will eventually improve. For now, though, it remains a matter of "marking time," in the hopes that greater political stability in the countries of the southern and eastern Mediterranean leads to future field developments targeting the western European gas market.
As Infield points out, production start-up from Croatia's shallow-water Ivana field in the North Adriatic Sea early last year has since spurred a number of small, neighboring satellite developments, but these fields will not ultimately rescue the regional contracting industry from decline.
One of the few items of news to come out of OMC, however, suggests a direction in which these companies might move to make inroads into a market that could well provide a steadier stream of orders: the Caspian Sea region.
Italy's Rosetti Marino SPA and a delegation from Russia's Astrakhan region announced a joint venture deal at OMC that aims to match Rosetti's "design, procurement, and equipment knowledge with the labor and facilities of local partners" to steal a march on other contractors seeking development work in the Caspian region.
The JV company, ROS-BAR, according to Rosetti's Bruno Dalledonne, is setting its sights on construction work on projects in the North Caspian Sea—and potentially onshore gas gathering facilities—out of the Krasnye Barrikady yard in the Volga Delta—where OAO Lukoil had the Astra drilling rig built for its Khvalynskoye field .
For ROCA, Rosetti's move will doubtless send a clear signal. The association's members have become increasingly familiar with business opportunities in foreign markets, including Egypt, Libya, and Tunisia, but the Caspian Sea itself remains an area viewed chiefly as holding "important new prospects."
The economic upshot for Italian oil industry subcontractors looking to sustain their business at anywhere near the levels once enjoyed—as, in truth, for any contractor that grew up devoted to one regional market, is that international diversification is one way forward. As Dalledonne put it: "The center of gravity for Italian contractors is moving away from Italy. We must accept this."