Low oil prices to last longer, says Lloyd’s Register Energy Director

Low oil prices are likely to last longer than expected, if the current posturing of oil producing countries is an indicator, says Alasdair Buchanan, Energy Director of the Lloyd’s Register Group.

“Upstream oil and gas companies that have diversified portfolio are surviving in this suppressed price situation…or those which have vertical integration – both oil and gas assets as well as refineries,” he said.

Lloyd’s Register is wholly-owned by the Lloyd’s Register Foundation, a UK charity dedicated to research and education in science and engineering.

In the energy sector, its biggest client globally is Shell.

In India, its biggest client is engineering, procurement, and construction major L&T.

Buchanan told BusinessLine that globally most of the international oil companies are in a consolidation mode and smaller players, though holding licences for assets are finding it difficult to survive. “Banks are also being conservative when lending to oil and gas companies. However, the situation is different for national oil companies such as India’s ONGC. The national oil companies have their own commitments and cannot limit their growth plans purely on oil prices,” he acknowledged.

What is common between national oil companies and international oil companies is that both will like to see a “stabilised oil price” scenario, Buchanan said.

Buchanan, who was here to review his company’s India prospects, said all countries have to have a balanced portfolio of sources – coal, gas, renewable, nuclear -- for energy security.

“In India gas -- both LNG as well as domestically produced – is gaining importance, which is encouraging,” he said, adding that “at Lloyd’s Register we have also diversified our portfolio and nuclear has taken a centre stage.”

With a focus on low carbon power, the company has been focusing on diversification of services to try and maintain its technical advantage.

In fact, the company’s nuclear team based out of Mumbai is providing expertise for nuclear plants in other parts of the world.

Elaborating on low carbon power, he said, his company wants to focus on solar, tidal and wind energy projects. While nuclear is still taking baby steps in India, it will be an important part of the energy mix in years to come, he added.

“We have number of different product offerings. In wind, we have floating and land-based wind projects, especially with regard to grid hook up. In solar, we have done consulting work for a number of projects. We see a huge potential in India in this category,” he added.

COMMENT NOW