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Live From Sea Asia 2015
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Discussing the impact of the falling oil price on offshore

The VIP Offshore Marine Breakfast at Sea Asia 2015 was a full house on Wednesday morning.

Over the course of breakfast, participants were treated to the insights of five expert panelists covering the length and breadth of the offshore industry. The panelists represented P&I insurance with Standard Club; offshore broking and consultancy with M3 Marine; OSV owner and operator with Miclyn Offshore Express; a law firm with Holman Fenwick and Willan; and satellite communications provider Singtel.

The discussions centred around the impact of the fall in the oil price. From the insurance and legal perspectives, there were concerns that companies desperate for business were accepting contract terms that they could later come to regret and create legacy issues for the sector. One of the concerns was that contract terms that were now being accepted would become the future standard.

While the current market conditions are widely blamed on the oil price, the point was made that the offshore marine sector would have faced overcapacity even without the lower oil price, and cycles of boom and bust had always been the norm. Risks were seen as highest for speculative buyers and those who had entered the industry in the last decade.

The latest downcycle could drive consolidation with distressed companies potentially making the most interesting acquisition targets rather than individual vessels.

There were also concerns around crew quality and safety with owners looking to either cut crew numbers or replace experienced staff with more junior ones. However, the point was also made that it was making vessel operators look more closely at their costs they had during the boom years and run their vessels more efficiently than they had in the past.

The advent of lower cost satellite communications also provides for opportunities for owners and operators to streamline their operations.

Longer term there was a recognition the sector will bounce back, however, participants were less than sure when this would be.

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