Douglas-Westwood has warned of a shock for the subsea market in 2016.

The analyst said a backlog of subsea orders supported high levels of offshore installation activity in 2015 when major pipelines such as Ichthys (SEN, 32/18) and Polarled (32/19) were installed.

Subsea installation activities in West Africa and Latin America also continued to thrive due to Petrobras’ commitment to deepwater production – all despite considerable financial constraints. Large deepwater developments such as Total’s Egina field and Shell’s continued development of the Bonga field are highlights among capital-intensive projects offshore West Africa in 2015.

However, DW says that it is important to note that backlogs are falling rapidly – only a few projects were sanctioned in 2015.

Of these, notable examples of fields receiving final investment decisions (FIDs) over the past year include Statoil’s Johan Sverdrup field, Shell’s Appomattox field and BP’s Shah Deniz Phase 2 subsea development. DW believes that subsea installation activity is yet to bottom out, with current backlog disguising the reality of the industry. A decline of at least 15% is forecast in global subsea tree installations in 2016.

The sinking oil price—which is currently hovering around the $34/bbl mark—has claimed its first victim of the New Year in the U.K. sector.

Iona Energy’s U.K subsidiaries, Iona Energy Company (UK) and Iona UK Huntington, which amongst other things were developing the Orlando (32/12) Field in the U.K. Northern North Sea as a subsea tieback to the Ninian platform, have been forced into administration.

This could be the tip of the iceberg for the region as far as casualties go this year, with dire warnings emerging towards the end of last year—when oil prices were around $50/bbl—that a third of companies operating in the U.K. North Sea are under threat.

Wood Mackenzie expects upstream M&A activity to increase in 2016, although it says the shape of that activity will be dictated by oil prices.

Should they remain low, balance sheets will become ever more stretched and it expects to see more forced sellers, the analys said.

Woodmac said financing options will be more limited than in 2015. Few companies are safe; while the top tier of IOCs can largely ride out a further year of low prices, the next tier down may have fewer alternatives. Corporate actions will follow, including asset sales.

It added, “Despite the gloomy outlook there will always be counter-cyclical buyers willing to bet on an eventual recovery. Major players will be looking toward long term strategic deals, while the more ambitious, better funded small caps will be looking to come out of this downturn ahead of peers. Private equity continues to remain poised for action.”

From Houston (BN): Petrobras reported November 2015 presalt oil and natural gas production rose 1.8% from October, reaching 1.023 MMboe/d. Of that total, presalt oil represented 820,000 bbl/d, up 1.3% from October. Petrobras reported total worldwide production of 2.71 boe/d, down 1.8% from October, citing shutdowns of some facilities due to a strike of oil workers. Another factor in the worldwide production drop was maintenance work in the Gulf of Mexico’s St. Malo, Lucius and Hadrian South fields, of which Petrobras owns a share.

Moody’s and Fitch has downgraded Petrobras debt. Collapsed world oil prices, economic recession, the bribery-kickback scandal roiling Petrobras and threatened impeachment of President Dilma Roussef were factors. Moody’s rated Petrobras Ba3 with a negative outlook, down from Ba2. Fitch rated Petrobras BB+ with a negative outlook, down from BBB-.

Norwegian Energy Co. (Noreco) has sold its petroleum interests in Norway to Djerv Energi. The owners of Djerv will be a U.S-based investment fund (70%) and Noreco (30%). Noreco Norway also has agreed to transfer its 4.36% participating interest in the Enoch licence to CapeOmega.

Statoil has awarded two new, long-term contracts worth $1.2 billion for insulation, scaffolding and surface treatment services to Beerenberg Corp. and Prezioso Linjebygg.

They will provide services to 20 of Statoil’s 29 installations on the Norwegian Continental Shelf when the contracts take effect in first-quarter 2016. They have a 15-year contract period and will replace Statoil’s existing contracts with these two suppliers. In addition, Statoil said it has contracts with Bilfinger Industrier and Kaefer Energy, which the company intends to extend by exercising its contract options at a later date.

Norwegian subsea specialist DeepOcean is understood to be shedding 90 workers as lower activity levels bite. The company has been switching focus to the renewables sector in the past few months, but this has not proved enough to make up for the downturn in the oil and gas industry.

New-start Norwegian oil firm OKEA has taken over Repsol’s 60% stake in the Yme (32/7) Field off Norway. Trondheim-headquartered OKEA (32/14) was set up to focus on developing discovered oil and gas fields on the Norwegian Continental Shelf and the Yme transaction is its first deal. The field was initially due to begin production in 2010, but there were problems with construction of the platforms legs, which were found to have cracks.

OKEA will now present a new plan for development of Yme to Norwegian authorities, although production is not expected to start until autumn 2018 at the earliest.

Talisman Energy is no more after its new owners Repsol canned the name. The Canadian company will now be known as Repsol Oil & Gas Canada Inc. following the Spanish major’s purchase of Talisman in a $8.3 billion deal in February 2015. Repsol said the name change does not create any new legal entities or effect any existing agreements or oil and gas licences.

Subsea UK said that two new board members were appointed and seven were reelected on a members’ ballot at the subsea supply chain organisation’s annual general meeting. Cameron Mitchell, technical disciplines assurance manager for Shell UK, and Mark Richardson, projects group manager for Apache North Sea, joined the board. Matt Corbin of Aker Solutions, Peter Blake of Chevron, David Sheret of Bibby Offshore, Brian Green of Severn Subsea Technologies, Geoff Lyons of BPP-Tech, Ian Mitchell of BP and Tim Sheehan of Ashtead Technology were reelected. They will all serve on the 2016-2017 term.

Due to weak market conditions, seismic specialist TGS said it expects multi-client investments of about $220 million in 2016.

Robert Hobbs, CEO of TGS, said, “TGS' 2016 operational multi-client investments will be reduced by more than 50% compared to 2015. This is partly a result of lower cost of acquiring seismic data as average vessel day rates will be substantially lower than in 2015.

“Furthermore, the activity level will be reduced as oil companies have become less willing to prefund new surveys.”