Subsea specialists Flexlife confirm Newcastle operation is under review in light of oil price crash

The umbilicals engineering firm stressed it had not come to a final plan yet

Ciaran O'Donnell, Flexlife CEO
Ciaran O'Donnell, Flexlife CEO

Subsea umbilicals specialists Flexlife is reviewing its Newcastle operations amid the uncertainty facing the oil industry.

The Flexlife Group, which opened its Baltic Place operation in 2011, provides engineering, design and delivery services in the flexible pipe and umbilicals sector.

It has bases in Aberdeen and North America and has catered for major clients such as oil and gas exploration and production company Apache North Sea.

The Newcastle team has worked on a number of contracts including a flexible pipe project in the Irish Sea.

In 2014 the Flexlife Group posted an operating loss of £46,000 for its 2014 year and warned that a sustained downturn in oil and gas prices and a resulting slowdown in industry activity could negatively impact its profitability.

Flexlife chief executive officer Ciaran O’Donnell said: “We announced recently with the publication of our annual results that, like many companies in the oil and gas sector, we expect to feel the effects of the well-documented challenges facing the oil industry this year as the commodity price continues to fall.

“With regard to our Newcastle facilities, we are currently reviewing our response to the current market situation, but I must stress that we haven’t established the details of what our final plan is yet, and any further comment at this stage would be speculative.

“We will, though, continue to engage with our staff over plans.”

The news follows the decision of oilfield services provider Archer to pull out of its Blyth operation, putting nearly 70 jobs under threat.

Archer decided to pull out of the Blyth operation follow a global review of its operations, despite signing a ten-year lease on its property in 2013 – when it promised to create around 130 jobs.

The price of Brent crude oil recently fell below $50 a barrel for the first time since May 2009, as prices have been falling for around seven months.

Ian McClelland Photography Ltd George Rafferty, chief executive of NOF Energy
George Rafferty, chief executive of NOF Energy
 

Speaking to the Journal in December, NOF Energy chief executive George Rafferty played down fears the oil price crash could impact the North East supply chain.

He said: “The industry is facing challenges but it was facing those challenges before the oil price fell.

“This is a cyclical industry and we happen to be in a trough at the moment. It’s true that the number of exploratory wells has declined but is still immense opportunity in the aging infrastructure in the North Sea.

“Our members are working on opportunities in the operation, maintenance and lifespan extension of this infrastructure.”

But Robin Allan, chairman of the independent explorers’ association Brindex and a Premier Oil executive, said the price drop made it “almost impossible to make money” and warned of a collapse in the industry.

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