2015-2019 deepwater spend to total US$210 billionNews // April 7, 2015
Despite imminent project delays, spending on deepwater projects in the period 2015-2019 will still total US$210 billion.
Deepwater expenditure is expected to increase by 69 per cent, compared to the preceding five-year period, according to Douglas-Westwood’s (DW) World Deepwater Market Forecast 2015-2019.
Report author, Mark Adeosun, said: "As production from mature basins onshore and in shallow water declines, development of deepwater reserves has become increasingly vital, particularly to the world’s oil majors. However, the recent oil price decline has intensified pressure on operator budgets. Consequently, numerous operators have deferred sanctioning of capital intensive developments.
“DW has identified a trough in global expenditure in 2015 and 2016 primarily driven by delays to delivery of FPS units in Latin America. We expect 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. However, in the short-term, delays as a result of the oil price are causing significantly slower growth than was expected a year ago.”
Assistant report editor, Balwinder Rangi, said: "Africa, Latin America and North America will continue to dominate deepwater Capex, with US$173 billion set to be spent over the next five years with Africa forecast to experience the greatest growth.
"The development of East African natural gas basins has not been aided by the plunge in Asian gas prices; however, the development of these gas basins is inevitable. The expected recovery of oil prices will spark a revival in LNG-related activities in the region towards the end of the forecast period.
"Latin America will, however, remain the largest market and North America is expected to experience the least growth.
“In addition to the low oil price environment and building oversupply, the lack of rig demand will impact capex growth over the forecast period. Current, industry consensus indicates that an oil price recovery is expected in the mid-to-long term. Whilst the economic feasibility of deepwater fields varies, typically long-term oil prices of US$80 per barrel would ensure the viability of the majority of developments.”
The World Deepwater Market Forecast is now in its 13th Edition and includes forecast capex for each region and drilling and completion (subsea and surface completed wells), subsea production hardware, SURF and trunklines forecasts.
Read more: http://marketreports.douglas-westwood.com/report/oil-and-gas/world-deepwater-market-forecast-2015-2019