With more than $200 billion of greenfield investments expected by 2025, the offshore oil and gas sector is expected to get back in the spotlight, according to Rystad Energy, an energy market intelligence group.
Rystad Energy’s research shows that annual greenfield capital expenditure (capex) broke the $100 billion threshold in 2022 and will break it again in 2023, which is the first breach for two straight years since 2012 and 2013. The company claims that the offshore oil and gas sector is set for “the highest growth in a decade in the next two years,” with $214 billion of new project investments lined up.
The energy market intelligence provider outlines that offshore activity is expected to account for 68 per cent of all sanctioned conventional hydrocarbons in 2023 and 2024, up from 40 per cent between 2015-2018, as global fossil fuel demand remains strong and countries look for carbon-friendly production sources.
In terms of total project count, Rystad highlights that offshore developments will make up almost half of all sanctioned projects in the next two years, up from just 29 per cent from 2015-2018.
Furthermore, the new investments will be a boon for the offshore services market, with supply chain spending to grow 16 per cent in 2023 and 2024, a decade-high year-on-year increase of $21 billion. In line with this, offshore rigs, vessels, subsea and floating production storage and offloading (FPSO) activity are all set to flourish.
Rystad underlines that one of the leading global drivers is the sizable expansion of offshore activities in the Middle East, as offshore upstream spending in the region will surpass all others for the first time, lifted by mammoth projects in Saudi Arabia, Qatar and the UAE.
The region’s offshore spending growth looks set to continue at least for the next three years, growing from $33 billion this year to $41 billion in 2025. Rystad underscores that these countries are tapping into their vast offshore resources to meet rising global oil demand, backed by the necessary capital and infrastructure to outpace other producers.
Audun Martinsen, head of supply chain research at Rystad Energy, remarked: “Offshore oil and gas production isn’t going anywhere, and the sector matters now possibly more than ever. As one of the lower carbon-intensive methods of extracting hydrocarbons, offshore operators and service companies should expect a windfall in the coming years as global superpowers try to reduce their carbon footprint while advancing the energy transition.”
Even though the Middle East is leading the way, Rystad explains that South America, the UK and Brazil are just slightly behind, as investments in the North Sea from the UK and Norway are also expected to rise in the next two years. As a result, the UK’s offshore spending is set to jump 30 per cent this year to $7 billion, while Norwegian investments will hit $21.4 billion, an increase of 22 per cent over 2022.
On the other hand, Brazilian upstream spending is projected to approach $23 billion this year, with Guyana investments totalling $7 billion. In North America, spending on U.S. offshore will top $17.5 billion and $7.3 billion in Mexico.
Moreover, Brazil’s state-owned energy giant Petrobras plans to deploy 16 FPSOs across six fields before the end of this decade, while growth in the Guyanese Stabroek Block will also contribute to regional expansion. Regarding long-term forecasts, Rystad Energy emphasises that Middle Eastern growth is set to continue, if not accelerate, while South American spending will slow in 2025.
Offshore Energy
