Power generation markets closely follow global macroeconomic development. Based on the difficult market situation seen during 2014 and the GDP forecasts for 2015, the overall market for liquid and gas fuelled power generation is expected to continue to be challenging. Ordering activity remains focused on emerging markets and countries benefiting from a stronger US dollar. The low oil prices may impact investments in new power generation capacity in oil and gas production based economies. In the OECD countries, there is still pent-up power sector demand, mainly driven by CO2 neutral generation and the ramp down of older, largely coal-based generation.
Our outlook for shipping and shipbuilding is cautious, due to the current uncertainties in the market. Overcapacity continues to affect demand for traditional merchant vessels. Vessels are being scrapped at a younger age, which along with a more balanced fleet growth, supports a gradual recovery in the freight market. Low oil prices are expected to impact investments in exploration and development, thus limiting the demand for offshore vessels. In other vessel markets, lower bunkering costs may have a positive impact on the operating expenses for ship owners. The outlook for gas carriers continues to be positive, although the strong ordering volumes seen in 2014 are expected to normalise. The importance of fuel efficiency and environmental regulations are clearly visible, driving interest in environmental solutions and gas as a marine fuel for the broader marine markets.
The overall service market outlook remains stable, with interesting developments in selected regions. An increase in the installed base of medium-speed engines and propulsion equipment offsets the slower service demand for older installations and the continued emphasis of merchant marine customers on reducing operating expenses. The service outlook for offshore and gas fuelled vessels remains favourable. Demand for services in the power plant segment continues to be good. Marine and power plant customers show healthy interest in long-term service agreements. From a regional perspective, the outlook for the Middle East and Africa is positive, and is supported by demand for power plant related services.