With global demand for oil products expected to peak within the next 10 years and the underlying market for oil production forecasted to experience a rebound, there continue to be opportunities for harvesting value for the oil-related businesses, as well as significant profits from oil production.
Maersk has a long tradition in energy and through strong skills developed over decades – as demonstrated on Culzean, a complicated high-pressure, high-temperature (HPHT) field that requires particular expertise – it is well positioned to compete in a sector that continues to offer ample long-term growth opportunities.
“The businesses in the Energy division have the capabilities, strengths and talented and dedicated people required to be strong players in the industry transition that will take place over the next couple of decades,” says Claus V. Hemmingsen, Group Vice CEO, responsible for the Energy division.
The overall strategic intent for the oil-related businesses is to create strategic agility and focusing on growing Maersk Oil as an energy company. The businesses – Maersk Oil, Maersk Drilling, Maersk Supply Service and Maersk Tankers – will be managed with an active owner mindset to develop structural solutions to the strategic challenges.
Maersk Oil will build on its strengths in the North Sea, where it has a strong track record and can utilise the capabilities and cost-efficient operational set-up that has allowed it to make money, even with oil prices below USD 50 per barrel.
Continuous improvements have been made in operational performance and sustainable cost reductions in 2016, underpinned by a commitment to being incident free. Maersk Oil is maturing key development projects like Culzean and Johan Sverdrup, and aims to strengthen its portfolio through acquisitions or mergers and to keep exploration activities and expenses at a low level.
For Maersk Drilling, the focus will be on continuing to deliver high-quality performance with existing assets such as the Maersk Highlander, enabling the best possible utilisation of the fleet with its workforce of skilled and dedicated employees. It will continue to take out cost, and investments will be limited to maintenance and selective investments in technology and innovation that provide immediate returns.
Despite the very difficult markets it is currently operating in, Maersk Supply Service is well positioned to broaden its scope of operations, into both the solution space as well as adjacent offshore segments. After a near term market decline and an expected longer term rebalancing, Maersk Tankers is a vehicle for growth as market leader in the product tanker segment.
“The new strategy gives the businesses in the Energy business the freedom and agility to pursue individual solutions for future development,” Claus V. Hemmingsen says. “There is an exciting time ahead of us as we explore the potential in the Energy division.”