The offshore oil and gas (O&G) sector is set for the highest growth in a decade in the next two years. It is with $214 billion of new project investments in line. Rystad Energy’s research shows that annual greenfield capital expenditure (capex) will break the $100 billion threshold. This is a projection in 2023 and in 2024 – the first breach for two straight years since 2012 and 2013.
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% of all sanctioned conventional hydrocarbons in 2023 and 2024. This is up from 40% 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. This is up from just 29% from 2015-2018.
The New Offshore Oil And Gas Investments
These new investments will be a boon for the offshore services market. With supply chain spending to grow 16% 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.
One of the leading global drivers 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. 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.
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Source: Oil Price
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