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The outlook for subsea investment remains optimistic, according to Westwood Global Energy Group. The company's World Subsea Vessel Operations and Hardware Market Forecast projects a rebound in offshore activity, with subsea vessel operations and hardware expenditure reaching $152 billion over the forecast period of 2019–2023. The recovery in the subsea market has significantly supported project sanctioning, with Westwood noting a 154% increase from 2016 to 2018 in greenfield projects reaching final investment decision (FID) stage. Operators have called for more tenders, and Mark Adeosun, an analyst at Westwood, said that lessons learned from the lowest points of the oil price downturn could help make them more cost-effective. "During the downturn, we saw a lot of project simplification, which actually meant that operators have defined a number of development concepts for these fields, which makes them a bit more economically viable compared to a couple of years back," he said.
In recent months, oil prices have fallen dramatically, resulting in concerns about the viability of some large and ultradeepwater projects. Capital expenditure (Capex) and operational expenditure (Opex) have also been on the rise, placing more pressure on budgets. Some operators have announced reduced budgets and delayed deepwater project sanctions. Now is the time to refocus on standardization in the oil and gas industry and reduce costs to ensure the viability of high Capex deepwater developments. Douglas-Westwood expects deepwater Capex to rise post-2016, driven by the continued development of deepwater fields off Latin America and West Africa, as well as new developments off East Africa.
The 2013 outlook for the deepwater business indicates significant long-term opportunity. As deepwater projects become increasingly capital intensive, there are economic challenges for exploration and production (E&P) companies and a potential prize for international oilfield service and equipment vendors. Douglas-Westwood's report, the Deepwater Market Forecast 2013–2017, forecasts global capital expenditure (Capex) of more than USD 223 billion over the period, double the amount spent in the preceding 5-year period. The Golden Triangle of deep water--which includes west Africa, the Gulf of Mexico (GOM), and Brazil--will account for 80% of this expenditure. African and Brazilian developments are expected to drive the forecast spend, with developments of the former largely concentrated in Angola, Ghana, and Nigeria. Brazil is likely to experience substantial growth, exceeding Africa's deepwater expenditure toward the end of the forecast period.
A continuing trend toward newbuilds and conversions compared to redeployments as well as projects that have already been sanctioned will ensure that spending in the floating production system (FPS) sector will remain high over the 2015–2019 period, forecasts Douglas-Westwood's World Floating Production Market Forecast 2015–2019. The report expects USD 81 billion to be spent on FPS capital expenditure (Capex)--an increase of 73% over the preceding 5-year period. A total of 110 floating production units are forecast to be installed--a 41% increase. Though the FPS market will still grow, it is significantly less than expected due to the collapse in oil prices, and installations in 2018 will decline significantly as a result. The dip in the orders expected in 2015 is anticipated to last well into 2016 and reduce the number of installations in 2018.
Deepwater activity is booming in the Golden Triangle (Brazil, west Africa, and the Gulf of Mexico), which is forecast to account for 44% of total subsea hardware expenditure. The downturn in offshore installation activity between 2009 and 2011 is being followed by strong recovery and this is expected to continue to 2017. Trunkline projects are of particular significance with major deepwater connections planned for, and extending beyond, the forecast period. Douglas-Westwood's Subsea Hardware Market Forecast analyses the market to 2017, examining hardware activity trends to provide detailed insight for major players and new entrants alike. It is vital that declining production from maturing basins is replaced, and with demand for oil and gas increasing in developing regions, there is added pressure to explore and produce in deeper waters.