The recent outbreak of the coronavirus, known as COVID-19, has already had a resounding impact on the global economy, sending the oil price below US$50 a barrel, with Brent sitting at $49.23 a barrel and West Texas Intermediate lower at $44.30/bbl.
However, it won't stop there, according to research firm Rystad Energy, which predicts long delays for operators waiting for newbuild FPSOs which will in turn affect exploration and production investment.
Rystad expects the outbreak of COVID-19 to cause "extensive staffing and supply shortages" throughout Asia, which will in turn delay project deliveries by three to six months.
If the COVID-19 epidemic escalates, delays will increase up to 12 months, the research firm warned.
"Although operators and contractors are looking into ways to make up for some of the time that will be lost by fast-tracking other stages of development, we anticipate first oil or gas for these projects will face clear delays," Rystad head of oilfield service research Audun Martisen said.
Workforces across shipyards are expected to cut hours by 50% this month.
Another major problem is the delivery of bulk materials required for construction, with supplies of modules and equipment to be hampered by transportation restrictions both within and outside mainland China.
Delays are expected to continue through this month, and as a result see investment in exploration and production stall.
"Our current assessment forecasts that COVID-19 could result in global E&P investments falling by around $30 billion in 2020 - a significant hit to the industry," Martinsen said.
Last week Baker Hughes released its rig count noting that the total oil and gas rigs had fallen by 248 when compared to this time last year.
