Despite an uptake in activity in 2018 due to new drilling programmes coming on stream, local companies are not feeling optimistic about their business prospects.
Fifty-three per cent of energy services companies polled by the Trinidad and Tobago Energy Chamber (Energy Chamber) indicated that the value of their business was down in the second quarter of 2018. Seventy-two per cent of the respondents indicated that this was due to a decrease in demand for their services and 56 per cent indicated that it was due to less business opportunities.
Forty-six per cent of respondents also indicated that the volume of their business was down in the second quarter of 2018. Seventy-three per cent of respondents indicated that this was due to a decrease in demand for their services. While there are indications in the upstream sector that the volume of work is set to increase, this is not reflected in the views of the service companies polled. One reason could be that there is a smaller group of companies that may be benefitting from the increased opportunities due to consolidation taking place.
The Energy Chamber’s Energy Services Sectors Survey (ESSS) is a quarterly survey of energy services contractors which allows for such an assessment. Overall, a vibrant energy services sub-sector is integral to the overall health of the energy sector. The ESSS attempts to map the performance and optimism of our energy services sector members, providing data on their business confidence and on some of the phenomena which impact on their operations and business prospects. The survey draws on information from survey participants, such as the level of confidence of service contractors and the value and volume of business in the current quarter, as well as what they project for the next quarter.
Regarding employment, in the past three months, 27 per cent of respondents indicated total number of persons employed increased, while 23 per cent indicated that the total number of employees decreased and 50 per cent indicated that there was no change in the number of employees within their organisation.
Capital expenditure (CAPEX) authorisations over the next quarter, according to the survey, suggest that most respondents are seeking to reach and engage new clients (41 per cent) while 34 per cent indicated that they would be seeking to increase efficiency and exploit new technology. The energy services sector is an important sector of the economy: firstly, it is the largest employer in the energy sector, accounting for over one third of total energy sector jobs. Secondly, the sector includes a large number (around 300 - 400) of small to medium-sized Trinidad and Tobago-owned and operated companies. This contrasts with the rest of the oil and gas sector, which is dominated either by multinational companies or State-owned companies. The energy services sector grows best when there is a constant stream of projects, such as drilling for oil and gas and construction of new petrochemical plants. Whenever there is a hiatus in the pipeline of energy projects, the energy services sector either baselines or shrinks. With increased activity in the upstream energy sector, we anticipate that the energy services sector would benefit from seeing an increase in their value and volume of business.