Capital expenditure in oil and gas and offshore wind projects will rise significantly in the next five years, delegates learned at Riviera Maritime Media’s Annual Offshore Support Journal Conference on 17 November
Low oil prices and the Covid-19 global pandemic has delayed investment in offshore projects, with spending on oil, gas and renewables approximately US$300Bn in 2016-2020, according to Westwood Global Energy head of offshore energy services Thom Payne.
He said spending on offshore oil and gas alone in 2021 to 2025 is forecast to be US$300Bn. On top of this, there will be another US$300Bn for offshore renewables projects.
Of this US$600Bn investment, 25% will be in western Europe, another 15% in Latin America, 10% in North America, 10% in China, 8% in the Middle East, 6% in Australia and 6% Africa; the rest is mixed across the rest of the world.
Mr Payne said these investments would result in expenditure on 115 floating production systems, more than 1,480 subsea wells, around 30,000 km of subsea pipelines, 191 substations and 10,000 fixed wind turbines.
This capital investment surge across offshore will stimulate demand for offshore support vessels (OSVs) in key regions.
During the conference, market experts provided data-driven overviews of demand and supply.
Fearnleys Offshore Supply market analyst Jesper Skjong explained how demand for OSVs in the North Sea will significantly increase between 2023 and 2025. “Demand for anchor handlers will increase significantly, up from 52 vessels [in 2021] to 77 vessels [in 2025],” he said. “Things will be pretty tight.”
He also said demand for platform supply vessels (PSVs) is expected to rise from 177 vessels in 2021 to 214 in 2025.
Rystad Energy senior vice president for energy service research Oddmund Føre said demand in Brazil for OSVs will double from a low of 435 vessels in 2020 to around 700 in 2028.
“There will be a lot of field developments and there will be growth in anchor handlers and PSVs, and a doubling of work for offshore construction vessels from now to 2028,” said Mr Føre.
Maritime Strategies International director James Frew was more pessimistic about the OSV market in Asia Pacific.
Although more offshore projects will be sanctioned and fields developed, there remains “A lot of [OSV] supply overhang dragging down utilisation and prices,” said Mr Frew. “Vessel supply is the most important driver of this market.”
Synergy Offshore chief executive Fazel Fazelbhoy explained how Covid-19 had delayed multiple offshore projects and billions of dollars of investment in the Middle East.
But he expects expenditure on these projects will pick up from 2022 as national energy companies resume their drive to ramp up production of gas and oil.
“National oil companies have their five-year production plans, but projects have been delayed,” said Mr Fazelbhoy.
This will improve vessel demand and utilisation in key markets. “Day rates are up around 30% from 2019 for anchor handlers and PSVs,” he said. Rates have increased 40% for diving support vessels since 2019.
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