Infield Systems’ new Interim Subsea Market Report to 2019 sees potential for growth in thesubsea market over the next five years. If oil prices recover, subsea capex could grow at a compound annual growth rate of 11.1% from 2015-2019.
Historical high oil prices and advances in technology have allowed for increasing oil and gas activity in deeper, more remote waters, where economics previously made developing prospects challenging. These trends have had a positive effect on the subsea market in recent years. However, market conditions created by the current uncertainties in global oil prices could put some subsea projects at risk, particularly those associated with field developments with high costs and high risks.
Subsea demand is likely to continue to be dominated by developments in Africa, Latin America and North America, influenced largely by their continued focus on deepwater activity. Infield Systems’ subsea market forecast expects these three regions combined to account for 75% of global subsea capex demand and 59% of subsea tree installations over the next five years.
Africa’s subsea demand will continue to largely come from projects in West Africa, with Angola, Nigeria and Ghana projected to account for 87% of West African capex demand. Total is anticipated to continue to maintain a significant presence in the West African subsea market, with Infield Systems projecting the company to hold a 40% share of the region’s subsea capex demand, focused on developments in Angola, Nigeria, Congo (Brazzaville), and the Ivory Coast. Noteworthy projects that the company is expected to develop over the next five years include the Kaombo, Egina, and Moho Nord Marine developments.
In Latin America, the subsea market will continue to be predominantly driven by developments in Brazil. The country’s large presalt and post-salt reserves, which are mainly situated in deep and ultra-deepwater, will continue to influence the country’s high demand for subsea production equipment, with Petrobras expected to continue to inject significant amounts into the Latin American market as part of its five year $220.6-billion investment plan (2014-2018). Noteworthy projects that have the potential to require significant subsea investment over the next five years include Petrobras’ Sururu (formerly Iara Horst), Lula Central (BM-S-11) and Berbigao (ex-Iara Northwest).
The US Gulf of Mexico is likely to continue to drive subsea activity in North America, accounting for 97% of the region’s subsea capex demand and 87% of subsea tree installations. In terms of subsea activity, Chevron, Shell, ExxonMobil, and BP could still hold the largest share of capex demand in the GoM, and along with independents like Anadarko, the majority of subsea capex is anticipated to be focused on projects situated in water depths of more than 1,000 m (3,280 ft). Noteworthy projects which are expected to require significant subsea investment over the next five years include Shell’s ultra-deepwater Stones and Appomattox fields and Anadarko’s ultra-deepwater Heidelberg field.
Although the regions outlined above will dominate market activity, the global subsea market is also likely to be supported by developments in Europe and Asia/Pacific. In Europe, the bulk of subsea activity will emanate from Norway and the UK, which are major hubs of offshore oil and gas activity in the region. Together, Infield Systems anticipates Norway and the UK to account for 94% of Europe’s total subsea capex demand over the forthcoming period with the largest amount of subsea investment focused on fields situated in water depths between 100 and 499 m (328 and 1,637 ft).
In the Asia/Pacific region, Australia is likely to be a major focus for subsea expenditure, driven by the country’s determination to become a major LNG exporting nation. In Southeast Asia, Malaysia and Indonesia are anticipated to continue to fuel subsea demand as both nations try to develop their resources in order to supply both domestic and foreign markets. South Asian subsea activity is driven by India, which is expected to see increasing demand for subsea production systems due to the development of a number of fields situated in the ultra-deepwaters off its eastern coast.
While the subsea market has the potential to see healthy levels of growth during the next five years, low global oil prices will undoubtedly affect subsea developments going forward. Recently, a number of exploration and production companies publicly announced reductions to their budgets as a response to falling oil prices. As budgets are cut, some offshore projects are likely to be delayed or abandoned which could potentially affect the overall growth rate of the subsea market. In summary, while challenges exist, the subsea market could see an increase in expenditure and installation activity compared with the last five years, largely driven by the deepwater activity offshore West Africa, Brazil and the GoM and new areas, such as offshore Mozambique and the eastern Mediterranean.
Infield Systemsis exhibiting at the 2015 Subsea Tieback Forum & Exhibition at booth #640.