In March Volga-Dnepr Airlines deployed one of its Antonov An-124 freighters to deliver 130 tonnes of industrial equipment to Sabetta in the Russian Arctic for Yamal LNG, one of the world’s largest gas recovery projects. The cargo included a 30-tonne high pressure pump and other gas recovery equipment.
Ten years ago such news would have been routine, but the global economic downturn and the slump in oil prices took a heavy toll on the oil and gas industry, forcing companies to slash costs and shelve projects. Now such project work feeds growing optimism that the industry is coming back to life and showing renewed appetite for cargo services.
Carriers and charter brokers are reporting a marked uptick in activity. Pierre van der Stichele, group cargo operations director at charter broker Chapman Freeborn, reported that the number of freighter flights for the energy sector is up significantly this year.
“We can see an increase with oil and gas,” confirmed Michael Goodisman, director of business development at Antonov Airlines. In the first three months of this year this segment more than doubled its share of freight ton-kilometres that the carrier flew.
To be sure, the level of activity has been relatively modest compared to the heyday before the downturn, when oil prices were above US$110 a barrel. In recent months they have moved up and down between US$60 and US$70, which is some 40% higher than a year ago.
“Oil and gas is coming back. It’s not where it was, but it’s coming back. A lot of projects are happening,” said Mike Hill, director, group freight at charter broker Air Partner. Forwarders have reported clear signs of the industry’s revival, he added.
For Aerodyne Services, a charter broker and GSA that focuses primarily on the oil and gas sector, business has gone strong this year, said managing director Ron Buschman. He has been busy organizing flights to oil and gas producing regions in the Middle East and Asia.
Energy companies have embarked on new projects or brought postponed plans back from the shelf. In Europe they are poised to invest about £5 billion (US$6.53 billion) in new capital projects in the North Sea. Up to 16 oil and gas developments could go ahead there.
In Southeast Asia 50 oil fields are likely to be approved between this year and 2020, estimates consultancy Rystad Energy. Already projects in Malaysia and Vietnam have gone under way this year.
The rise in activity has been somewhat patchy. While deepwater drilling has gone up again, work in oil sands and LNG has not picked up significantly so far.
There are question marks how sustained and strong the recovery of the oil price is going to be. Most pundits rule out a return to prices above the US$100 mark in the foreseeable future. Boeing predicts that the price will remain in the US$60-70 band in the next eight years, notwithstanding occasional fluctuations. If prices were to rise sharply, such a development would trigger off increased activity in the shale oil industry, which has not shown any strong reaction to the rise in oil prices so far, the planemaker reckons.
A trade war could also affect the momentum. The Canadian Association of Petroleum Producers has called the tariffs on steel imposed by the US administration a “troubling development” that will affect every part of the oil and gas industry.
At this point the increase in activity raises questions about freighter capacity, especially in the Boeing 747 bracket. With its nose-loading capability, the aircraft can take on long pieces that freighters like the 777-200F cannot accommodate, and the oil and gas sector tends to have a strong demand for this. 747 freighters are in high demand, said van der Stichele.
Hill finds it is too early to sound the alarm. There is still sufficient 747 capacity in the market, despite the fact that some freighter lift has been snatched up by forwarders for dedicated flights and scheduled airlines’ diminished interest in charters, he said.
During the downturn, some scheduled 747 operators tried to cultivate charter business or offered diversions on scheduled routes in order to boost their loads and revenues, but with full aircraft loaded with regular traffic, they have less room for such activities.
Volga-Dnepr is keeping some slack in its system to accommodate charters and diversions, said Robert van de Weg, vice-president of sales and marketing. The oil and gas sector is one of four strategic areas that his company intends to focus on more in the future, he added.
By Ian Putzger
Air Freight Correspondent | Toronto
