Babcock has won a five-year offshore transport contract from Integrated Aviation Consortium (IAC) to operate more than 100 helicopter flights per month between Shetland and the North Sea for three offshore oil firms.
The contract will see Babcock operate the flights from Sumburgh, Shetland to offshore rigs on behalf of CNR International, EnQuest and TAQA. Babcock hopes to start the flights on 1 July 2020.
Simon Meakins, Babcock’s offshore director, said: “We are delighted to welcome this new customer group to Babcock Offshore and look forward to working with them. We are committed to delivering the safe and efficient aviation support they require.”
The consortium also includes a fixed-wing contract to transport workers from Aberdeen International Airport to the Shetland Islands which was awarded to LoganAir.
IAC is an almost 30-year-old partnership between oil and gas companies and aviation companies to conduct aviation logistics missions in the North Sea. Bristow held the IAC contract for the past decade, having first been awarded it in 2010 and then securing a renewal in 2015. The contract has now passed to Babcock.
‘Potential impacts’
Responding to losing the contract, Matt Rhodes, Bristow’s director of UK and Turkmenistan oil and gas, told Shetland News: “We are of course disappointed the new IAC contract has not been awarded to Bristow following many years of continuous strong performance. We are currently working to understand any potential impacts as a result of this outcome and will work to provide support our local employees who may be impacted.”
Consolidating operations
Notwithstanding winning this new major offshore contract, Babcock has downsized its presence in the oil and gas sector over recent years due to mounting competition and a dwindling number of contracts.
Babcock wrote down £85m on the book values of its “predominantly oil and gas” aviation assets and leases in 2019, according to a trading update posted in February. And it is consolidating its oil and gas operations, having terminated offshore missions in the Congo and Ghana and currently downsizing its Aberdeen operations.
Archie Bethel, CEO of Babcock International said in a recent earnings call that Babcock has “no intention to join the chase to the bottom” of the oil and gas transport market.
“It’s a difficult business to see long term what’s going to happen when there’s so much disruption going on,” said Bethel. “We are still seeing companies that have committed a sharp turn… in a price war with each other, which as I say, we don’t really want to join.”
No one from Babcock was available to answer Helicopter Investor’s questions.
