Oil prices have been on a roller coaster ride in recent years, with an equivalent impact on logistics providers, writes Neil Madden.
From 2011 through 2013 the Brent crude benchmark price surged through $100 a barrel. But this only prompted oil exploration and production (E&P) firms to pump more black gold onto world markets, notably from unconventional sources, such as Canada’s tar sands and shale plays in the USA.
The resulting glut saw prices tumble to the low $40s by 2016.
Worried about losing market share to America’s shale roughnecks, Saudi Arabia cajoled fellow OPEC countries to limit production in the hope of driving many shale producers out of the market.
The ploy worked in helping to lift prices out of the doldrums. Brent, for example, has touched $70 a barrel for much of this year. But shale production has also rebounded, arguably stronger than ever, with the hottest play in town shifting from the Bakken region of North Dakota to the Permian Basin of West Texas.
These peaks and troughs have a delayed effect on demand for cargo shipments as E&P companies usually wait to see whether a spike in oil prices looks set to last before taking a final investment decision on new drilling or reopening a plugged well.
Antonov Airlines business development director Michael Goodisman points out that the oil and gas (O&G) sector is unusual in that relatively few decision makers can cause big changes in prices by agreeing to adjust production levels.
“Such large swings in prices do have an impact on activity, and this reaches us in a delayed manner as it takes time for the O&G companies to ramp up or ramp down their activities including their requirements for project cargo airlift,” he tells Air Cargo Week.
But with oil prices buoyant once more, the heavy lift carrier is seeing greater confidence and optimism across the sector, which is translating into additional flying.
“We have seen an increase in requests as of the second half of 2017 which continued well into the first half of 2018. Within the first half of 2018, we have already achieved 73 per cent of the tonne-kilometres (TKM) flown for the whole of 2017 for this sector,” says Goodisman.
Over the past 12 months, Antonov has operated more than 22 O&G flights. In terms of TKM flown, the sector made up seven per cent of total activity in 2017; but this has sharply increased to 18 per cent so far in 2018.
The main destinations for Antonov’s O&G flights are Europe, Middle East and Asia including Azerbaijan, Kazakhstan, UAE, Saudi Arabia and China but the carrier also had flights to Africa and the US.
Last year, regions of origin for flights were primarily from North America and Asia, while in 2018 the trend has changed to Europe and Asia.
“We are hoping to see the US business significantly increase following the recent opening of our Houston office,” Goodisman continued, “as it’s hard to win business and engage properly with customers without having a physical presence in the region.”
Being a Ukrainian airline, Antonov benefits from being the only AN-124 operator with an Open Skies Agreement with the USA, which means it can carry all cargoes, not just outsized, freely into and out of the US, without needing to go through the no-objection process each time.
As cargoes for the O&G and wider energy sectors are becoming larger and even heavier, Antonov is continuing to invest in fleet modernisation and life extension programmes. To date, Antonov is the only operator to offer two AN-124-100M-150 versions, which feature airframes modified to carry 150 tonnes, with the rest of the AN-124 fleet to be modernised in due course. O&G installations are often in fairly remote places, which can prove tricky for logistics providers.
Antonov normally provides airport-to-airport service. Most of the time flight enquiries entail forwarders and brokers that arrange the door-to-door aspect of the delivery. But on occasions, Antonov can provide assistance if asked to help with door-to-door aspects.
Goodisman also points out that the AN-124 can land on a relatively short runway compared to the similar-sized B747F.
“This allows us to operate to more airports, hopefully closer to final destination,” he adds.
“In addition, as an operator of ramp aircraft, we do not require high loaders, so again this can get us closer to final destination for some projects.”
A further benefit of the Antonov fleet is that some aircraft have been designed to operate from unprepared airstrips and their robust landing gear can handle different type of runway surfaces.
“The AN-22, for example, is an excellent aircraft for unprepared strips and has been used for particularly challenging airfield conditions,” says Goodisman.