The energy services sector has been badly impacted by the current overlapping coronavirus and oil price crises. While most of the activities undertaken by these companies are essential services, the volume of activity has significantly decreased since mid-March, as operator companies have implemented measures to reduce the possible transmission of the virus.
A survey of our membership at the beginning of April indicated that their revenue was down, on average, by 56%, with some reporting a 100% decline in revenue. Margins in the energy services sector have significantly declined since the 2014/15 oil price crash and many of the service companies, both locally and internationally, have relatively weak balance sheets. Many companies have been asked to offer additional discounts, given the low commodity price environment. A significant number of local service companies also still have long-outstanding unpaid bills from the state enterprise sector.
All of these factors make it difficult for companies to be able to sustain any long period with reduced revenue and hinders their ability to continue meeting all their current costs, including payroll.
There were major maintenance projects in the downstream sector that were due to take place during the current period, which have now been postponed. This means that there are many temporary workers who would have expected to be employed in this period, who now no longer have work. To further complicate matters, the Trinidadian service companies who had projects in other countries have not been able to execute the work due to travel restrictions.
The energy services sector will not recover until there is a significant increase in activity in the sector.