Subsea 7: More awards on the horizon, but market competitive

Industry conditions remained challenging; but awards to market are expected to increase in 1H 2018, says subsea contractor Subsea 7, echoing optimism indicated by rival TechnipFMC last month. 

The firm's boss, CEO Jean Cahuzac, says: "Although the market environment remains challenging, we are seeing a gradual recovery in tendering activity and still expect the number of awards to the market to increase in the first half 2018." 

But, Subsea 7 warns that the market is competitive and margins will be tight. "Assuming that global energy prices sustain current levels and cost reductions identified by the industry are consistently delivered, there is reason to believe that the number of awards to the market could increase in the first half of 2018," says Subsea 7. But, it says while revenues are expected to be higher in 2018, margins are expected to be "significantly lower." 

Cahuzac says the last of Subsea 7's SURF projects, that were awarded prior to the downturn, are now being completed and that major awards to market in the last three years have been few in number and price-competitive. 

Subsea 7's revenues for the nine months ended 30 September 2017 was US$3.0 billion, a 13% increase compared to 2016, aided by a "significant increase" within the renewables and heavy lifting business unit, mainly related to the Beatrice wind farm project. This is partly thanks to Subsea 7 taking over the remaining 50% of Seaway Heavy Lifting it didn't previously own back in March. 

As at 30 September 2017, the firm's order backlog was $5.3 billion. In Q3, new awards and escalations totalled $538 million, including the award of the Fortuna project, offshore Equatorial Guinea, and extensions to three long-term contracts for PLSVs, offshore Brazil.

Subsea 7 has been performing piling operations on the Beatrice wind farm in the Moray Firth, North Sea. Installation of the wind turbine jackets on the project by the heavy lift vessel Oleg Strashnov started in August and 24 jackets had been installed by the end of September.

In Norway, offshore operations were completed on the Maria project and the partnership-led ODA project progressed well.

Offshore Egypt, Subsea 7 is working on the Atoll and West Nile Delta Phase Two projects, as well as the OCTP SURF project, offshore Ghana.

Subsea 7's Subsea Integration Alliance with OneSubsea progressed with engineering and procurement on the integrated Mad Dog 2 project in the US Gulf of Mexico. In the Middle East, Subsea 7 has started working on the conventional Hasbah project.

Subsea 7's i-Tech Services unit is working on an Emergency Pipeline Repair System project, offshore Australia.