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Friday, March 5, 2021
Offshore project commitments are expected to not only recover going forward, but their number is also set to reach a new record in the five-year period towards 2025, cumulatively almost 600 projects, a Rystad Energy report shows. Deepwater commitments will enjoy the largest growth as their cost has now become much more competitive against greenfield continental shelf reserves.
For the purpose of this analysis, we have defined that a project is committed when more than 25% of its overall greenfield capex is awarded through contracts.
Looking at five-year intervals, total offshore project commitments declined in the period 2016-2020 to 355 projects, down from 478 in the period 2011-2015. From the beginning of 2021 and up until the end of 2025, Rystad Energy’s exact forecast is for 592 commitments, with growth across all water depth levels – shallow water (0-125 meters), deepwater (125-1500 meters) and ultra-deepwater (beyond 1500 meters).
Although shallow water commitments will take the largest share of the total offshore project pie, rising to 356 from just 206 in the last five years, the increase is more modest – about 10% – compared to the 2011-2015 count of 323 projects. 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.
Ultra-deepwater commitments will also tick up but not by similar margins, as costs still bite. We are expecting about 55 projects from this year until 2025, up from 43 in the previous five years.
“The growth in commitments will stimulate rising demand for floating production, storage and offloading vessels as well as subsea tiebacks. 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,” says Rajiv Chandrasekhar, energy service analyst at Rystad Energy.
For the full release with graphics, visit Rystad here.
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