- By Sagar Shere March 19, 2020
London, United Kingdom
The corona outbreak now has affected the European service market which was expected to stay largely flat this year from the 2019 level of $47 billion in Rystad’s pre-coronavirus estimates, is now facing a number of hurdles.
Cross-border travel limitations, supply insufficiencies, quarantines, and Capex reductions are only some of the market’s challenges, Rystad noted in its report on Tuesday.
According to Audun Martinsen, Rystad Energy’s Head of Oilfield Service Research, “This will have a pronounced effect on the European energy service market, which is heavily dependent on its international workforce and efficient flow of goods and services between nations.”
Most of the lost purchases – worth around $4.5 billion are expected to hit Norway and Britain, mainly within the segments of MMO, drilling rigs and well services.
Bankruptcies will have to follow as a result, especially for mid- and small-sized suppliers which in the UK and Norway add up to more than 1,000 companies, adds Martinsen. As many as 20%, effectively more than 200 companies, could become insolvent, Rystad Energy estimates. More companies could be added to this number when the rest of Europe is included.
“For Europe, this crisis is worse than the one that OFS companies experienced in 2015 and 2016 after the oil-price fall,” says Martinsen, adding that a recovery back to 2019 levels is likely to happen from 2024.