Spending for deepwater to see global increase in five years

deepwater ken hodge flickrAs production from mature basins onshore and in shallow water declines, development of deepwater reserves has become increasingly vital. (Image source: Ken Hodge/Flickr)Deepwater expenditure is expected to go up by 130 per cent, totalling US$260bn from 2014 to 2018, according to a recent report released by Douglas-Westwood 

The energy research group has released its 12th forecast in The World Deepwater Market Forecast 2014-2018, suggesting that deepwater spend will surge from 2016 onwards.

“Africa and the Americas continue to dominate deepwater capital expenditure, with US$213bn set to be spent over the next five years. Africa is predicted to experience the greatest growth among the three regions, as East African natural gas developments begin production and become more prominent in the latter years of the forecast period," report author Balwinder Rangi stated. 

As production from mature basins onshore and in shallow water declines, development of deepwater reserves has become increasingly vital. Robust oil prices support investment in deepwater developments – the sustained high oil prices over the past few years have increased confidence in the sector.

“Douglas-Westwood (DW) has identified a temporary trough in global expenditure in 2015 primarily driven by delays to delivery of FPS units in Latin America. African projects have also experienced delays resulting in a surge in capex from 2016 onwards," adds Rangi.

Steve Robertson, report editor, concludes, “The deepwater market requires significant continued investment in infrastructure. Whilst the economic feasibility of deepwater fields varies, typically oil prices of $80/bbl (WTI) over the long-term ensure the viability of the majority of developments.

However, despite robust oil prices, a number of flagship projects have been cancelled through surging E&P costs. Challenges in project execution, cost and local content are not unique to deepwater. Ultimately, the maturity of onshore and shallow producing areas is driving increased and unprecedented levels of activity in deepwater.”

The World Deepwater Market Forecast 2014-2018 covers all key commercial themes relevant to players across the value chain in the deepwater sector with comprehensive examination, analysis, and 10-year coverage of deepwater expenditure.

Alain Charles Publishing, University House, 11-13 Lower Grosvenor Place, London, SW1W 0EX, UK
T: +44 20 7834 7676, F: +44 20 7973 0076, W: www.alaincharles.com

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