Despite an uptake in activity in 2018 with new drilling programmes coming on stream, local companies are not feeling optimistic about their business prospects. Service companies are also feeling a downward pressure on their margins from the operators despite an increase in commodity prices. This might be leading to the low levels of optimism still felt by service companies.
Sixty-four per cent of energy services companies polled by the Energy Chamber indicated that the value of their business was down in the last quarter of 2017. Fifty per cent of the respondents indicated that this was due to less business opportunities and 44 per cent indicated that it was due to a decrease in the demand for their services.
Sixty-one per cent of respondents also indicated that the volume of their business was down in the last quarter of 2017. Seventy per cent of respondents indicated that this was due to the lack of contracts/projects. While there are indications from the major upstream companies 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.
With most contractors indicating that the value and volume of their business are down, this certainly paints an alarming picture of this subsector.
Thirty-seven per cent of ESSS respondents indicated that their level of optimism was more than the first quarter of 2017. Thirty per cent of respondents indicated that they were less optimistic while 33 per cent indicated that there was no change in their level of optimism compared to the previous quarter. When asked why their levels of optimism were less than the last quarter, 89 per cent indicated that it was due to worsening overall economic environment.
Regarding employment, in the past three months, 48 per cent of respondents indicated that the total number of persons employed decreased.
Capital expenditure (CapEx) authorisations over the next quarter according to the survey suggest that most respondents (59 per cent) are seeking to reach and engage new clients. In addition, 30 per cent of respondents used CapEx to provide new services.
Due to the uncertainty in demand in Trinidad and Tobago, the energy services sector is facing its share of challenges and decline in opportunities available. Energy services 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.