CHC says contract price cuts could impact safety

Aviation: Warning over future investment comes after loss of major deal

Helicopter operator CHC has warned that “unsustainable” contract pricing could affect training and development after losing a major deal with oil and gas firm Total.

In a thinly-veiled swipe at the French giant, CHC indicated copter firms were being asked to provide services at precariously low prices, which threatened investment in technology and safety.

CHC has flown to and from Paris-headquartered Total’s UK North Sea oil platforms for many years.

But the relationship seems to be ending in

“Unsustainable pricing will ultimately see an end to...industry investment”

acrimony after Total’s decision to switch to rival copter operator Babcock for some of its services.

Under a five-year deal, from October Babcock will fly crew to a number of Total platforms from Aberdeen aboard Sikorsky 92 and Airbus H175 choppers.

Babcock Offshore director Ian Cooke said the award was a clear sign of the firm’s commitment to the offshore market and its “determination to deliver safe and reliable services”.

CHC appears to have taken the snub badly, saying: “We are disappointed not to see this contract renewed. The current economic challenges facing the global oil and gas industry are greater than anything we have seen in previous downturns.

“Here in the UK, outcomes like this, with unsustainable pricing, will ultimately see an end to future industry investment in technology, safety improvements and the next generation of engineers and pilots.”

Total and Babcock declined to comment.

CHC’s warnings may chime with supply chain firms amid reports customers are pressuring them to lower costs.

In June, CHC made the “incredibly difficult decision” to lay off more than 20 Aberdeen staff due to “challenging market conditions”.

At the time, Jake Molloy, chairman of the Offshore Co-ordinating Group, a coalition of trade unions, warned “commercial pressures” would impact safety and the supply chain should not be expected to “underwrite the survival of oil and gas companies”.

CHC’s remarks could be dismissed as sour grapes.

Babcock is an established helicopter operator and Total already has experience of working with the firm in the UK North Sea.

Flights to the Culzean and Gryphon fields are currently provided by Babcock under a separate agreement. Total has operated both fields since its acquisition of Maersk Oil in 2018.

CHC provides crew transfer flights for Total’s Alwyn, Dunbar and Elgin installations.

Babcock has enjoyed other contract successes. It recently took over from Bristow to provide transport to EnQuest, Taqa and CNR International’s northern North Sea platforms.

But Babcock chiefs conceded in June the deal’s pricing reflected the current “tough environment”.

Babcock International chief executive, Archie Bethel, said its oil and gas division was an “area of weakness”, challenged by “lower pricing”.

Babcock said pricing had effectively been “reset” after the emergence from Chapter 11 bankruptcy protection of Bristow and CHC in 2019 and 2017, respectively.

CONCERNS: From October CHC will lose a contract with Total that it has held for decades to serve a number of North Sea installations