MMO, the attraction of predictable returns

The oil and gas business has a reputation as an exciting sector, awash with huge multi-billion dollar field development projects grabbing the headlines worldwide. But the inherent downside is in the resulting cyclicality as projects come and go and external factors impact on the industry’s best-laid plans. Meantime however, the other part of the global oil and gas industry continues to quietly increase its consumption of operator dollars.

The less glamorous maintenance, modifications and operations (MMO) business exists to keep a massive worldwide infrastructure operating and the oil and gas flowing. For example, offshore there are near 9000 platforms worldwide and more than 24 000 km of subsea pipelines together with subsea wells and other hardware. Moreover, there is an increasing drive to maximise production from aging assets, resulting in major modifications to boost field’s production as they approach end of life. Douglas-Westwood’s latest estimates put offshore MMO spend at US$ 112 billion in 2013 and forecast it to total US$ 672 billion over the next five-years. And onshore the infrastructure totals are even greater; in the US alone there are over half a million wells and 2.5 million miles of oil and gas pipelines. Then of course there is the downstream sector with its more than 700 refineries, plus petrochemical and gas processing plant.

Despite the industry drive to cut capital costs of new projects the oil and gas has to continue to flow and the operator’s slowly increasing spend on MMO attracts savvy investors seeking predictable exposure to the energy business without the cyclicality.

Calum Shaw, Douglas-Westwood London

Edited from a press release by David Bizley

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/15012014/mmo_the_attraction_of_predictable_returns/