Fugro Hit by O&G Downturn, Sees More Opportunities in Offshore Wind

Fugro posted a revenue of EUR 2.36 billion in 2015, down from EUR 2.57 billion in the previous year, due to the high volatility of the oil and gas market, on which 74% of the company’s business is focused.

Nevertheless, Fugro managed to decrease its net loss to EUR 372.5 million, compared to EUR 458.9 million in 2014. Fugro’s Seabed Geosolutions division recorded a strongly improved performance in 2015, which brought in EUR 119 million in revenue, the company’s annual financial results show.

Even though Fugro said energy from fossil fuels will continue to dominate for years to come, and that the market will eventually rebalance and new field developments will be required, it highlighted that the low-carbon energy is gaining momentum, bringing increased investments.  Fugro sees opportunities in offshore wind and other low-carbon energy developments, such as tidal, hydropower, geothermal, and nuclear.

The company pointed out that the cost of offshore wind power is continually decreasing, with the technology now being installed globally.

The challenges within the oil and gas market so far resulted in lower work volumes and price pressure from oil companies.

Paul van Riel, Fugro’s CEO, said: “We are dealing with an unprecedented downturn in our largest market: oil and gas services. We are reducing capacity, operating costs and investments, as well as divesting non-core assets.”

The company reduced its workforce by 1,577 people, compared to the initially planned reduction of 750.

Furthermore, Fugro now owns 4 geotechnical vessels less, and has reduced its survey vessel fleet (including seasonal charters) by some 20%. The company has also terminated 2 long-term subsea vessel charters.

At the end of the last year, GloMar Shipmanagement B.V. bought Fugro’s DP shallow draft geotechnical vessel Fugro Commander. The new owner will convert it into a diving support vessel (DSV).

“The year 2016 will be another challenging year for the oil and gas industry based on indications that the present over-supply conditions will continue. In our building, infrastructure and power markets, we see good opportunities in several regions. We will continue to manage through the downturn by proactively adjusting our cost and asset base in line with activity levels. Generating positive cash flow continues to be our number one priority,” Paul van Riel said.

Offshore WIND Staff