The bankruptcy news, announced yesterday, of Norwegian seismic offshore company Dolphin will make local impact as the energy-sector firm had been commissioned to conduct seismic survey work for Greece’s ELPE (Hellenic Petroleum) in the Gulf of Patras, western Greece.
The company’s demise emerges as yet another bankruptcy in the international oil industry that has been attributed to the continuing decline of crude prices, which has prompted cancellations of hydrocarbon-related business plans and research work around the world.
The Norwegian company, specializing in seismic surveys, has, in the past, conducted survey work for Energean in Prinos, northern Greece. Dolphin, which filed for bankruptcy to Norwegian authorities yesterday after failing to restructure its debt, cited low oil prices and limited investments by petroleum companies, internationally, for the development.
The company’s Polar Empress survey vessel was located in Maltese territory, preparing to arrive in Greece to take on the Gulf of Patras project for ELPE, at the time of the bankruptcy’s announcement.
The ELPE board has ordered its legal department to examine the legal details concerning its agreement with Dolphin before any next step is taken by the Greek petroleum company.
ELPE had signed an agreement with Dolphin’s UK subsidiary, not the parent company which declared bankruptcy.
“British law differs to Norwegian law and might provide some safeguards. In any case, our legal department is examining the issue and we will have a clear picture on our options within the next few days,” an ELPE official told energypress yesterday, whose concern was evident.
A worst-case scenario for ELPE as a result of Dolphin’s bankruptcy would entail needing to find another partner for the Gulf of Patras seismic survey, which will cost more time and money.
Over more recent years, Greece appeared to be making some progress on its hydrocarbon research and exploitation prosects. However, the industry is being drastically reshaped by the current adverse market conditions.
More corporate debacles in the sector can be expected. Oil producers around the world, from large to small, are suspending investment plans, while contractors are downsizing and going out of business as the apparent standoff between OPEC and the USA has hammered oil prices down to less than 40 dollars per barrel, rendering much research work unfeasible.
Crude has shed roughly 65 percent of its value compared to levels in April, 2014. Over 250,000 job losses have been reported in the sector, while the cutback in investments over 2014 and 2015 is estimated at nearly 250 billion dollars.
The price of US crude yesterday momentarily dipped to less than 35 dollars per barrel. Prior to the drop, an International Energy Agency (IEA) report had been released forecasting that global oil demand will drop to 1.2 million barrels per day in 2016, from 1.8 million barrels per day this year.
Goldman Sachs has forecast crude will drop to less than 20 dollars per barrel, while most industry analysts agree low price levels will be maintained over a long-term period.
OPEC’s decision to maintain output at high levels, despite the price plunge over the past year-and-a-half, has been the key driving force behind plummeting crude prices. The cartel is believed to be attempting to drive US shale oil producers out of business and protect its global market share. The operating costs of US shale oil producers are higher than those of Saudi Arabia and other OPEC members.