Analyst predicts supply overhang but gradual recovery in subsea marketNews // September 30, 2015
Douglas Westwood says the recent volatility of hydrocarbon prices, coupled with excessive newbuilding programmes, will result in low utilisation impacting day rates and overall expenditure in the subsea market.
However, with eventual recovery, subsea vessel day demand is set to grow at a 5.2 per cent CAGR over the next five years.
Global subsea vessel operations expenditure is expected to increase by 29 per cent compared to the preceding five-year period, totalling US$97.7 billion from 2016 to 2020.
North America, Africa and Latin America are to account for 47.5 per cent of global expenditure between 2016 and 2020.
"The 'golden triangle' remains vital to subsea vessel demand," said Douglas Westwood, "despite falling oil prices, project delays and political instability. The development of East African gas basins in the Indian Ocean will contribute to subsea vessel demand in the latter years of the forecast period.
"Asia will be the single largest market with an anticipated 18.7 per cent of expenditure over the next five years, largely driven by shallow water (IMR) and pipelay-related activity.
Australasia has the fastest growth rate of all of the regions at a 46.8 per cent CAGR due to massive offshore gas field developments required to support its ambitious LNG export commitments. Activity in the Middle East will represent 9 per cent of the total global subsea vessel expenditure.
Field development (36 per cent) and IMR (40 per cent) will remain the principal drivers of global subsea vessel demand and expenditure.
As production in shallow water basins declines, activities in deeper water are set to increase as deepwater development becomes inevitable. However, operators will continue to invest in the optimisation of existing shallow water fields.