Mar 08 | 2021
(Global) Deepwater to Drive Largest Growth
Offshore project commitments are set to hit record levels by 2025, driven by growth in deepwater development, according to research firm Rystad Energy.
The firm predicts that the commitment count for projects will reach almost 600 in the next five years, defined as the number achieving more than 25 percent of their overall greenfield capex. This growth is expected to drive breakbulk demand as operators explore ever deeper depths.
“The search for large new fields in deep and remote waters became much more economically viable after dayrates for drilling rigs and offshore supply vessels fell in the wake of the oil price crash in 2014 and 2015. This offers significant support for companies interested in deepwater,” said Rajiv Chandrasekhar, energy service analyst at Rystad Energy.
Rystad noted that total offshore project commitments declined in the period 2016-2020 to 355 projects, down from 478 in 2011-2015, but expects this trend to reverse in the period through the end of 2025, with a forecast for 592 commitments.
Deepwater commitments are predicted to post the largest growth over this period, as costs have become more competitive against greenfield continental shelf reserves.
“The most impressive growth is that of deepwater commitments, with the number of projects rising to 181, from 106 in 2016-2020 and 115 in the five years before that,” Rystad notes.
South America to Drive Ultra-deepwater
Ultra-deepwater is also expected to see growth in breakbulk demand as new fields are explored, but risks to the downside remain for projects in water ranges beyond 1,500 meters.
“We expect ultra-deepwater activity to be primarily concentrated in South America, with over 50 percent of the total committed value, while the Middle East is likely to lead shelf developments with 40 percent of the total value. Deepwater investments are forecast to be less dependent on any particular region, with a quarter of greenfield expenditure expected in Europe,” Chandrasekhar said.
In total, the firm expects offshore commitments for greenfield projects in 2021-25 to be worth more than $480 billion, compared to the 2016-20 tally of about $320 billion.
“The growth in commitments will stimulate rising demand for floating production, storage and offloading vessels as well as subsea tiebacks,” Chandrasekhar notes.
Subscribe to BreakbulkONE and receive more industry stories and updates around impact of COVID-19.