By Robert Wall 

PARIS--Sharp cuts in oil and gas exploration budgets at companies from BP PLC to Royal Dutch Shell PLC are expected to crimp near-term helicopter demand as providers of these reassess operational priorities in a period of low crude prices.

The rapid decline in oil prices has created a large amount of uncertainty about market prospects, said Guillaume Faury, president of Airbus Helicopters. Users are scrambling to redeploy assets to projects that are still profitable at oil below $50 per barrel.

Oil prices have declined more than 50% since June forcing exploration companies to shelve projects no longer economical at such prices. Oil companies have slashed capital expenditure plans to ease pressure on their bottom line.

"We see a trend of cost reductions in this industry and this will trigger contracts being postponed," Mr. Faury said on Tuesday.

The Airbus Group NV rotorcraft unit generates about 15% of its business from sales to the oil and gas sector. Those customers typically use larger more capable rotorcraft that also cost more and deliver better margins for manufacturers.

"The offshore oil and gas production industry is already responding to the falling oil prices by switching off rigs, cutting staff and putting on hold new projects. As a result we will see reduced demand for helicopter services," Usman Ahmed, a senior analyst at the International Bureau of Aviation said.

Delivery rates for rotorcraft are likely to come under pressure in the next two years "as operators adjust to the new market conditions and respond to reduced growth in the exploration sector," Mr. Ahmed said.

Airbus is already seeing some effects with a contract for its new EC175 helicopter to a Russian customer in limbo. UTAir was a launch customer for the rotorcraft with a commitment to take 15 of them to service the oil and gas sector. It received its first one last year but additional deliveries are suspended for now amid Russia's difficult economic situation, Mr. Faury said.

Volatility is affecting not just the makers of rotorcraft. Shares in helicopter operators such as CHC Group and Bristow have performed poorly in recent months as big oil and gas customers reviewed new projects. Industry analysts say they believe these buyers of rotorcraft may hold off on placing big additional orders until greater certainty emerges about plans of exploration companies.

Still demand won't disappear entirely as many oil companies have long-term services agreement and still need to access and maintain rigs that remain operational. "It is unlikely that the current long-term transportation contracts will be canceled as these account for only small percentage of the overall rig operations cost," Mr. Ahmed said.

Mr. Faury said the renewed focus on costs in the oil and gas sector could also spur long-term fleet replacement needs as customer favor new, more efficient models over existing equipment. Some of the company's Super Puma helicopters have amassed as many as 40,000 flight hours and need replacing, he said.

Airbus Helicopters, which saw orders dip to 402 net bookings in 2014 and deliveries slump to 471 rotorcraft, is hoping military contracts this year may help offset weakness in other markets. Poland and South Korea are among the countries looking to place deals for their armed forces.

The European helicopter maker faces tough competition in some of those overseas markets from rivals including United Technologies Corp.'s Sikorsky unit, the world's largest maker of military helicopters. United Technologies on Monday reported a 19% sales jump at Sikorsky for last year though the unit's operating profit retreated.

Mr. Faury said deliveries this year should be similar to last year's level, though with a greater mix of the larger, more lucrative models. Order intake should surpass deliveries even though the market for police and emergency medical services helicopters will likely remain weak for another two years.

Write to Robert Wall at robert.wall@wsj.com

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