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, a Rystad Energy study has shown.
Rystad Energy research shows that annual greenfield capital expenditure will break the $100 billion threshold in 2023 and in 2024—the first breach for two straight years since 2012 and 2013.
According to a statement by the Oslo-based energy think-tank, as global fossil fuel demand remains strong and countries look for carbon-friendly production sources, offshore is back in the spotlight.
“Offshore activity is expected to account for 68 percent of total production in 2023 and 2024, up from 40 percent between 2015-2018. Comparisons against this period are prudent as it predates the Covid-19 pandemic and related oil price crashes.
“In terms of total project count, offshore developments will make up almost half of all sanctioned projects in the next two years, up from just 29 percent from 2015-2018,” Rystad said.
These new investments will be a boon for the offshore services market, with supply chain spending expected to grow 16 percent in 2023 and 2024, a decade-high year-on-year increase of $21 billion. Offshore rigs, vessels, subsea and floating production storage and offloading (FPSO) activity are all set to flourish.
“Offshore oil and gas production isn’t going anywhere, and the sector matters now possibly more than ever,” Audun Martinsen, head of supply chain research, Rystad Energy.
“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.”
One of the leading global drivers, according to Rystad, is the sizable expansion of offshore activities in the Middle East. For the first time, offshore upstream spending in the region will surpass all others, lifted by mammoth projects in Saudi Arabia, Qatar, and the UAE.
Rystad said that the area’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.
“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.”