By Mikael Holter

(Bloomberg) — The variety of Norwegian offshore vessels with nothing to do has gone from zero to 100 in only a 12 months. And the woes are removed from over, the business’s prime lobbyist mentioned.

“The worst is still to come,” Sturla Henriksen, chief government officer of the Norwegian Shipowners’ Association, mentioned in an interview in Oslo on Friday. “2016 and 2017 will be very demanding years.”

With Brent crude slumping beneath $45 a barrel from $115 1 1/2-years in the past, Norway’s offshore fleet, the world’s second largest after the U.S., of seismic surveyors, drilling rigs and provide ships is being hit by a drought of recent contracts and a plunge in charges as oil explorers slash investments and postpone drilling.

The variety of stacked floating drilling rigs, a key indicator for the entire fleet, will double to about 20 by subsequent summer season, Henriksen mentioned. Out of the full fleet, about one in six vessels has already been pushed out of the market, with that determine anticipated to extend in 2016.

While a restoration is inevitable because the world will want oil and fuel “for generations to come,” it’s now “anybody’s guess” whether or not it is going to begin in 2017, 2018 and even 2019, he mentioned. Excess capability out there will create a lag between the eventual uptick in crude costs and that of constitution charges for these vessels, he mentioned.

Investments by oil corporations in Norway will fall by 19 p.c subsequent 12 months to 149 billion kroner and an additional 11 p.c in 2017, in response to forecasts final week by the Norwegian Oil and Gas Association, an business foyer.

Statoil ASA, the operator of greater than 70 p.c of the nation’s manufacturing, is chopping spending by 18 p.c this 12 months, sending ripples by way of the nation’s provide business. In lower than 1 1/2 years, the state-controlled firm has minimize the equal of 4 years of drilling for one rig by suspending or terminating contracts with rig operators similar to Songa Offshore and Saipem SpA, in response to Bloomberg calculations.

Statoil will most likely additional cut back the variety of exploration wells offshore Norway subsequent 12 months, Executive Vice President Tim Dodson mentioned in an Oslo interview Monday. “It’s likely to be smaller,” he mentioned.

By the time the market turns, as many as 20 floating rigs might have been scrapped completely in Norway and the U.Ok., Nordea Markets analyst Janne Kvernland mentioned earlier this month. “We’ll have a graveyard out in the North Sea,” she mentioned.

Crude Drop

The crude-price drop and the funding cuts are a blow to Norway, which depends upon the oil business for a fifth of its gross home product and is planning to make the primary ever withdrawal from its $850 billion sovereign wealth fund subsequent 12 months to stability its finances. The business as an entire has already misplaced between 25,000 and 30,000 jobs because the starting of 2014.

Statoil must be cautious that the cuts don’t jeopardize its suppliers’ capacity to ship companies and tools when the restoration comes, Henriksen mentioned.

“It’s easy to build down organizations and get rid of competence,” he mentioned. “To put it back together is difficult and takes a lot of time.”

Statoil CEO Eldar Saetre acknowledges that problem is essential.

It’s not cheap to chop capability a lot that a rise would then be wanted in two years, the Statoil CEO mentioned in an interview Monday. “We must think long-term at the same time as we realize the cost measures we need.”

©2015 Bloomberg News

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