Mar 23 | 2021
(Global) Spending to Hit US$156 billion in 2021
Spending on global oilfield services is expected to reach US$156 billion in 2021 and further growth through 2025, according to the latest research from energy consultancy Westwood.
The firm predicts that the sector is entering a growth trajectory, following a challenging year in 2020, with spending forecast to increase year-on-year until at least 2025. The forecast, published in Westwood’s recent drilling and wells services report, adds to optimism for the medium-term breakbulk outlook.
“Total expenditure over 2021-2025 is forecast to total U$950 billion. Year-on-year growth is expected, with spend in 2025 36 percent higher than 2021. However, spend is expected to remain below 2018 and 2019 levels throughout the forecast,” the report’s authors noted.
OPEC+ Boosts Outlook
A renewed commitment from OPEC+ to restrict production and help balance oil markets was cited as a key factor in driving an increase in oil prices, along with the promising progress of the global vaccine rollout.
“The commodity price environment remains highly sensitive, and Westwood expects activity levels to grow slowly, remaining constrained as the industry slowly recovers from one of the deepest pricing shocks on record,” a spokesperson said.
Headquartered in London, Westwood Global Energy provides market research and consulting services to the energy industry worldwide.
US, China and Russia to Drive Growth
Longer term, Westwod expects the global oilfield services market to reach US$213 billion by 2025, driven by onshore activity in three countries: the U.S., China, and Russia.
“Combined, these three account for 62 percent of total forecast spend, with the U.S. leading with an estimated spend of US$323 billion 2021-2025 compared to US$150 billion for China and US$118 billion for Russia,” a spokesperson for Westwood said.
Drilling and well services expenditure in the U.S. is forecast to reach U$75 billion by 2025, still below 2018-2019 levels, as caution from operators is magnified by the threat of tougher legislation around oil and gas from the Biden administration.
“Conversely, both China and Russia are forecast to experience growth in forecast expenditure compared to the previous 5-year period … an estimated 96 percent of all wells drilled are expected to be onshore. Despite this, onshore will account for only 76 percent of DWS expenditure over the forecast due to much higher dayrates for rig and crew services, longer average days to drill a well and greater safety requirements for those drilled offshore in comparison to onshore,” Westwood states.
Spending in Latin America is also anticipated to grow strongly, driven by offshore activity in Brazil and the emergence of Guyana’s oil and gas sector.
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