Nordea Sees Tough Years Ahead in Norway’s Oil Services Industry

File photo: Statoil/Thomas Sola

OSLO, Jan 26 (Reuters) – Subcontractors to the oil industry, including supply vessel owners, seismic shippers and rig firms, will continue to face difficult times in 2017 and 2018 as energy companies hold back investments, the head of Nordea’s Norwegian unit said.

Snorre Storset made the following comments to Reuters on the sidelines of Nordea Norway’s earnings presentation in Oslo:

** Rig, supply and seismic (companies) all experience significant oversupply and we believe it’ll take time before something positive happens that leads to improvement. 2017 will be a really tough year. 2018 will probably also be tough, and then there may be some improvement in 2019

** We’ll work closely with these customers every day to find solutions so that they can manage throughout this period. We did this with about 10 companies in 2016 and then we expect to do so with perhaps another 10 in 2017, to allow them to safely move on to 2019-2020

** The (oil services) industry is far too fragmented and would benefit from consolidation, as it’s difficult to imagine that the current structures will remain competitive over time

** Ultimately the market and investors must decide which structures are formed

** Says it’s also key to preserve the offshore service industry’s combined knowledge and competence

Storset added the following on Nordea’s overall lending losses in Norway:

** The smaller growth in lending losses in the fourth quarter should not be seen as a trend

** “In 2016 our losses were twice as high as they were in 2015. We believe the 2016 levels are the representative level with regards to what can be expected in 2017.”

** Several companies, including Solstad Offshore and Havila Shipping, have undergone balance sheet restructurings in recent months. Farstad Shipping, which has net interest bearing debt of about 11.6 billion Norwegian crowns ($1.39 billion), recently said it aims for a restructuring that allows it to operate for 4-5 years ($1 = 8.3451 Norwegian crowns) (Reporting by Terje Solsvik, editing by Ole Petter Skonnord)

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