On Friday 13th November, the “OPEC Reference Basket” of oil prices had dropped below the $40 mark, and stood at $39.21 a barrel.
By comparison, the average price in October 2014 was $85.06 and it dropped very sharply to $44.38 in January 2015. While remaining fairly static around $45 from August 2015, the basket price has dropped every day bar once since 4th November, and the currently daily price is now the lowest for around ten years.
The impact of the fall in oil price is already seeing drastic changes in the helicopter market, affecting operators and leasing companies alike as oil companies put expansion of existing fields and new drilling on hold, or reduce output to cut costs. All this in turn means lower demand for offshore helicopters, and problems are rising fast now as committed-for deliveries are now reaching the delivery end of the production line. We are aware of one leasing company that will soon need an injection of funds to stay afloat, and the possibility of one or two major operators changing owner is becoming more and more real.
In a number of situations, the only reason the oil companies continue extracting oil in particular fields at a cost above their selling price is that the additional cost of – at a minimum – mothballing a field would create even higher losses. The previous upwards surge in price had started to make a number of oil producers look to try and develop oilfields further offshore or in more obscure locations with higher costs – such as Alaska or the South Atlantic.
The OPEC Reference Basket (ORB) was introduced on 16 June 2005, and is currently made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
Jeremy Parkin – HeliHub.com
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