COLUMN | 2025 as a pause: scrapping; job losses; oil company restructuring; strategic U-turns [Offshore Accounts]

There’s a general consensus emerging that 2025 will be a year of slower growth for offshore oil and gas and offshore wind than the preceding couple of years. The investment splurge that followed the horrific Russian invasion of Ukraine in 2022 has abated and the oil price is off its highs, with Brent crude standing at around US$75 at the time of writing.

Exploration activity this year is expected to be steady rather than increasing as quickly as it did in 2023 and 2024. The share prices of some of the biggest players in the industry have been hammered as a result, with Tidewater shares down 20 percent year on year, whilst rig owners Valaris, Transocean and Noble are down between 25 and 31 per cent since last February.

As a result of the slower recovery, Noble announced that it was “retiring” two of the long laid-up deepwater drillships it acquired when it bought Pacific Drilling in 2021. Pacific Meltem and Pacific Scirocco will be sold by Noble from their lay-up berths in Las Palmas in Spain “in a manner [that] would effectively retire them permanently from drilling operation, including potentially scrapping the units.”

When will Transocean start to retire its fleet of similar, long-term, cold-stacked deepwater rigs that sit rafted together in Greece?

The offshore construction sector has been the one segment to buck the trend – most implausibly, Saipem is up 88 per cent on the Milan stock exchange, TechnipFMC has risen 64 per cent, and Subsea7 rose 36 per cent on the year, as those companies have benefited from the surge in new projects after 2022. Similarly, SBM Offshore is also up 54 per cent since February 2024.

There is a broad pipeline of new projects under development to sustain these offshore infrastructure providers.

As a result of the pause in the increase in exploration activity (not a fall, I should stress), a lot of companies have found themselves strategically becalmed. Several of the biggest questions facing the industry remain unanswered.

When will Tidewater abandon its mantra of “capital discipline” and invest in new tonnage before its fleet slides into obsolescence? What will happen to Bourbon as it restructures? How will the offshore wind industry manage the delivery of nearly one hundred new build commissioning service operations vessels (CSOVs) and service operations vessels (SOVs) in the coming years, when only half appear likely to have contracts in 2027?

Hanging over everything is a hotter global climate and the progress to reduce emissions. After a record nine billion tons of coal was burnt last year, how quickly can cleaner gas replace coal, the most polluting of fossil fuels?

This week, we take a wander through some events and datapoints that may help provide a roadmap of what to expect in oil and gas 2025 – or perhaps they are simply “a tale told by an idiot, full of sound and fury, signifying nothing.”

Petronas – pressure on staff headcount

In our “Blue Monday” piece in January, we noted how struggling BP had announced plans to cut its 90,000-strong global workforce by around five per cent, resulting in 4,700 job losses, and that additionally, BP had plans to remove/fire/cancel 3,000 jobs held by contractors.

Staff of Petronas attending a company town hall in Kuala Lumpur in Malaysia last week received the unwelcome news that BP is not the only bureaucratic and top-heavy oil and gas company to be laying off staff of reduce costs.

Reuters reported on Friday that the Malaysian state oil company’s CEO, Tengku Muhammad Taufik Tengku Aziz, has launched a voluntary separation scheme to encourage staff to leave, and that in the second half of the year forced job losses would be likely, unless enough staff resigned of their own volition.

The CEO warned that, "the rationale to do this is to ensure the survival of Petronas in the coming decades. If we don't do it now, there will be no Petronas in 10 years."

I know many readers will struggle to imagine a world without Petronas and its enforced racial quotas, opaque contracts and lengthy tendering and contractor licencing processes designed to ensure that only the “correct” local owners win work. How terrible would a world without Petronas really be?

But banish that thought…  the company’s CEO is willing to sacrifice a few of its 50,000-strong workforce to ensure that it can survive in a world of lower margins and fierce competition for investment internationally.

It is not that Petronas or Malaysia faces an immediate existential crisis. In January, Petronas said it aims to grow and sustain the country's oil and gas production to two million barrels of oil equivalent (mmboe, which includes gas and condensate production) per day between 2025 and 2027, up from 1.7 mmboe in 2024.

This target of higher production will be achieved as new projects come into production in the South China Sea, such as the Kasawari gas development off Sarawak state, where McDermott is leading the construction campaign, and the redevelopment of Shell’s deepwater Gumusut-Kakap field, along with efforts by Petronas to improve production from its shallow water Bekok field, ExxonMobil’s shallow water peninsular Malaysian Tabu field and EnQuest’s Seligi oil field.

Petronas reckons that in 2025 and 2026 around fifteen offshore exploration wells will be drilled annually, whilst 69 development wells will be drilled in 2025, compared to 56 in 2024.

For those of us who have seen Petronas as a bloated and privileged state champion and a funnel of political patronage in Malaysia for many years, change may be welcome, but a few job losses don’t equate to a radical rewriting of Malaysia’s oil and gas regulatory system, which many (myself included) believe is long overdue.

Repsol UK – more job losses as production shrinks

And it is not just Malaysia where oil companies are fighting to cut costs. Both Upstream and Energy Voice have reported that Spanish energy player Repsol is looking to drastically shrink its workforce in the UK North Sea, with potentially 2,000 jobs at risk as fields are shut down and decommissioned.

We have covered the crisis in the UK British North Sea as high taxes and a government disinterested in increasing oil and gas production deter new investment, despite a yawning trade deficit in oil and gas.

The UK imports around 800,000 barrels of oil per day, but for ideological reasons, the Labour government seems not to care. Key new projects including Shell’s Jackdaw project and Equinor’s Rosebank oil field are subject to a bitter legal battle, as Greenpeace has attempted to block them in court.

It is not clear to me how paying Saudi Arabia for oil and importing Qatari gas would be better than producing it in the North Sea. Both the high profile Stop Oil movement and Greenpeace have been remarkably silent about the record pollution from China, which released 11.9 billion tonnes of carbon dioxide emissions in 2023, making it by far the world's largest polluter (cumulatively China has already emitted more CO2 in history than all the 27 nations of the European Union combined).

Easier to throw orange paint around art galleries and glue yourself to the road than compel Xi Jinping and Crown Prince Mohammed Bin Sultan to change policy, I suspect.

Without new investment, production in the UK North Sea will plunge, and as platforms and facilities are decommissioned, jobs in oil and gas will fall. The warning from Repsol is a warning to the entire sector.

Is Keir Starmer listening?

Uncertainty in wind – it isn’t easy being green

If oil and gas in the UK faces challenges legally and economically, you might expect wind power to be booming. Unfortunately, this is not the case; the arrival of Donald Trump in the White House has led to the presidential efforts to slow the growth in American offshore wind generation capacity.

The president signed an executive order on his first day in office last month, which paused all leasing of federal waters for offshore wind, and paused all new or renewed approvals for onshore or offshore wind projects on federal land until the outcome of what was described as a “comprehensive assessment and review of federal wind leases and permitting practices.”

Whilst the order described the provisions as temporary, no end date is specified in the decree, observers noted. On the same day, the Department of Interior also issued a broader order for a 60-day suspension of “any onshore or offshore renewable energy authorization.”

“We’re not going to do the wind thing,” President Trump said at a rally after his inauguration. “Big, ugly windmills, they ruin your neighbourhood… And did you see up in New England with the whales? You see what’s happening? So, they had two whales killed in about 14 years. Last year and the year before total, they had 28. So, if you’re into whales, you don’t want windmills either. And they’re the most expensive form of energy that you can have, by far. And they’re all made in China, by the way, practically all of them. And they kill your birds, and they ruin your beautiful landscapes.”

Whilst I don’t know where to start addressing all the nonsense in those few incoherent sentences, one person whose day was definitely ruined by the president’s hostility to wind was the then-CEO of Ørsted, Mads Nipper.

On January 31, Mr Nipper resigned with immediate effect from the wind farm developer in which the Danish state holds a majority stake, after the company announced new write-downs on its US business totalling DKK12.1 billion (US$1.7 billion). Ørsted had invested a lot of cash up front in projects that now appear not to be materialising in the Atlantic off the US coast.

The Danish company’s Sunrise Wind, a 924MW project offshore of New York, and Revolution Wind, a 704MW project offshore of Rhode Island, are both fully permitted and will continue, along with Dominion Energy’s 2,587MW Coastal Virginia Offshore Wind project, which is expected to complete construction by 2026.

However, new wind projects off America look set to be long-delayed or never to happen now.

Equinor also slims back

Another loser from the turbulence was Norwegian state oil company Equinor, which purchased a 10 per cent stake in Ørsted in October last year (as we reported) for around US$2.5 billion, when the share price was about DKK420 (US$58). At close on Friday, the Ørsted share price stood at DKK298 (US$41).

Just as well Equinor has deep pockets and announced that even though its profit after tax fell 26 per cent in 2024, this still amounted to US$8.8 billion.

Both Ørsted and Equinor have announced reductions in their offshore wind targets for 2030. Ørsted said it would cut its 2030 investment program by 25 per cent, and will now only invest US$29 billion to US$32 billion for the period of 2024 to 2030, whilst Equinor announced that it was scaling back its ambition for installed renewables capacity in 2030 by 20 percent at the low end, and 33 percent at the high end, from 12 to 16 GW to 10 to 12 GW.

The previous target range had been set in 2021 amid the renewables hype, which saw Ørsted briefly valued almost as highly as BP.

Equinor also said it is scrapping a previous 2030 target to allocate 50 percent of gross capital expenditures to renewables, Reuters reported.

Should Norwind Gale be renamed Noroil Gale?

The changing fortunes of wind are reflected in two recent developments.

Firstly, a wind SOV arrived in Brazil to perform oil and gas work, demonstrating how a shortage of subsea vessels is encouraging wind farm vessel owners to take on walk-to-work roles for the expanding fleet of SOVs that are being delivered without windfarm contracts.

Compagnie Maritime Monégasque (CMM) announced on social media that it was “proud to be the first Brazilian shipping company to bring an SOV vessel to operate in Brazilian waters,” as it welcomed Norwind Gale into Rio, for what has variously been described by brokers as either a three or four month charter. Crew photos are here.

At the end of January, CMM won six newbuild tender contracts with Petrobras for charters of up to 12 years for 5,000DWT PSVs with oil spill recovery capacity, which it will construct in the local Estaleiro Enseada yard to the Kongsberg UT7420 design. Bringing Norwind Gale to the country is part of an effort to establish the company’s operating track record which has largely been focused in much smaller vessels.

Olympic goes back to subsea roots

Secondly, Olympic Subsea announced late last week that it was building two new “ocean energy vessels” (the new politically correct terms for what appear to be subsea oil and gas vessels) at China Merchants Heavy Industry shipyard in Shenzhen.

These will add to its fleet of nine such vessels already in service in line with the company’s strategy to be a “blue energy company,” whatever that may mean.

What’s interesting here is that Olympic’s last newbuildings in 2022 were a pair of SX222 design CSOVs at Norwegian shipbuilder Ulstein. Olympic Boreas and Olympic Notos delivered in July and November of 2024, but Olympic did not exercise its two optional additional orders at Ulstein.

Now Olympic is joining John Fredriksen-owned Seatankers, Østensjø Rederi, and Rem Offshore in ordering some energy-efficient, multi-purpose, deepwater crane-fitted subsea vessels.

Who else has ordered a subsea vessel? That would be Wind Energy Construction, a Norwegian company… partly owned by the founders and owners of Norwind Offshore, owners of Norwind Gale, which has moved to Brazil for CMM to work in oil and gas.

The symbolism is rich.  

Background reading

You can read more on the Wind Energy Construction vessel order here.

Finally, a quick update on the Dark Tanker Fleet, which we covered last year.

The Organised Crime and Corruption Reporting Project (OCCRP) has a detailed analysis of how the Shadow Fleet of dodgy tankers carrying Russian, Iranian, and Venezuelan crude was sourced.

Who could possibly be selling aged tankers to dubious shell companies linked to despotic regimes? I know readers will be shocked – SHOCKED – to learn that more than half of the tankers identified in the Follow The Money and OCCRP investigation into the Dark Fleet were sold by 54 Greek-operated companies for a total of at least US$3.7 billion. Unethical Greeks in shipping? Who knew?!

The best quote in the investigation does to Belgium’s Euronav, which sold five tankers that appeared to have ended up in the Dark Fleet and netted itself US$135 million in the process.

The OCCRP reporters contacted Euronav spokesperson Katrien Hennin, who said that the company did not know that its former vessels would be added to Russia’s shadow fleet.

“We have no insight into what happens to the ships after the sale and that is not our responsibility,” Hennin said. “To whom the buyer resells a ship or how he operates the ship legally or illegally is beyond our control.”

There you have it: shipping ethics 101.