More Bloodbath, Consolidation for Oil & Gas Industry in 2015

by Ship & Bunker News Team
Friday April 24, 2015

A Sea Asia conference audience Wednesday heard in Singapore that it can expect to see oil and gas players become targets for rivals, governments and private equity firms, while companies also look to move operations to lower cost jurisdictions to stay afloat, ShippingWatch reports.

Lower oil prices have put downward pressure on the value of oil and gas companies, said Steffen Pedersen, Singapore partner for lawyers Wikborg Rein, making the cost of consolidation more manageable for those who can afford it.

Companies are becoming cheaper targets for rivals as well as private equity players, he said, meaning consolidation is likely over the medium term.

This month, Shell made a bid to buy energy rival BG Group.

In addition, Pedersen said that governments, such as that in China, have strategic reasons for investing in oil and gas assets despite the current oil price downturn.

At the same time, he said oil and gas players across the board would be looking to relocate what they can to lower cost jurisdictions.

For example, Pedersen said Singapore players are looking at moves to India to rein in costs in the tighter financial environment.

Also speaking at the conference, Vivek Seth, CEO for Qatar's Halul Offshore said "there will be more bloodbath this year."

Others suggested the pressure will need to mount slightly higher before "real consolidation" of the industry takes place.

Pedersen also said he expects a wave of legal disputes resulting from the dramatic fall in oil prices by the end of 2015.

Ship & Bunker News Team
To contact the editor responsible for this story email us at editor@shipandbunker.com