ProSafe warns of North Sea downturn

ProSafe said the offshore industry needed to prepare for a "prolonged downturn"

A major supplier of offshore accommodation platforms for the oil industry has said the North Sea is the main area where it is finding business affected by the fall in prices.

ProSafe also said it faced a bill for more than £5m as a result of storm damage to the Safe Bristolia vessel.

The 300-person floatel was hit by waves as high as 24m at the Everest field in the UK North Sea last October.

Production had to be shut down as the vessel was taken to Norway for repair.

The company, which claims to be the largest operator in the flotel sector, reported 2014 pre-tax profits down from $204m (£134m) in 2013 to $191m (£125m).

In a presentation for investors, ProSafe said that North Sea operations faced less activity in the short term, as its clients cut back, postponed and cancelled projects.

Karl Ronny Klungtvedt, chief executive of the Norway-based company, said: "That doesn't mean that the work is going away, but it can give them a short-term profit-and-loss impact if they move some of these work programmes. And that is also leading to a longer decision-making process in these oil companies.

"We saw many of the oil companies started cost-saving initiatives a bit ahead of the drop in oil price. But we need to be prepared for this to be a prolonged downturn."

Cut costs

However, the chief executive said there are longer term prospects that are more favourable for the supply of accommodation in the North Sea, including the replacement and decommissioning of ageing infrastructure, and large new fields yet to come on stream.

Meanwhile, the Cypriot-registered company is looking to cut costs.

ProSafe's report showed the index of demand for offshore accommodation vessels in the North Sea has fallen 16% in the past 18 months.

Also in Norway, Statoil has announced a significant oil find in the Krafla field 150km west of Bergen, and near the UK sector.

"Since 2011 we have made five discoveries in the Krafla area," said Irene Rummelhoff, a senior executive in Statoil exploration.

"Altogether we expect to have discovered recoverable resources in a range of 140-220 million barrels of oil equivalent. These are very substantial volumes for a mature area of the shelf," she said.