LONDON – Twenty-eight major subsea production equipment contracts were awarded in 2021 according to Wood Mackenzie.
This represented an increase of three over 2020, but still down from the record 54 contracts issued in 2019.
Higher construction vessel utilization rates coupled with moderate cost inflation will lead to day rates rising by 5-8% year-on-year through 2026, the consultant claimed.
At the same time, competition for vessels is set to intensify, with Subsea 7 reporting 94% utilization of its active fleet in 3Q 2021, the highest for five years.
Wood Mackenzie says that it expects contract awarded this year for installation campaigns in 2024 and 2025, and the expectations for demand will increase the competition for a shrinking option of vessels.
Last year vessel day rate costs rose, and a further increase of 7% looks likely in 2022, according to Krsytal Alvarez, senior research analyst, Upstream Supply Chain.
Growing offshore wind demand will add to the backlog of shared vessels, with the result that preferred vessels may become hard to secure – increasing the risk of project delays and higher day rates, compounded by rising labor and fuel costs, which on average account for 37% of a deepwater pipelay asset, Alvarez said.