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Subsea Hardware spend to double to US$ 124 billion

World Pipelines,

Douglas-Westwood (DW) has forecast that the gloabal spend on subsea hardware for oil and gas exploration and drillingis likely to double to US$ 124 billion during 2013-17 compared with the previous five year peiod. The Subsea Hardware Market Forecast analyses the market through to 2017, examining the key activity tends. 

“The prospects for the subsea hardware sector look good, however, players will face significant challenges over the forecast period,” said report lead author Angela MacCormack, an example is

For example, in Brazil which accounts for 14% of our forecast subsea Capex, project execution is a major issue for Petrobras with 70% local content requirements and engineer shortages placing pressure on the supply chain, inflating costs and delaying delivery of production systems (predominantly FPSOs). Such delays could impact the timing of subsea hardware installations and spend profiles.

“Consensus is that oil prices will not grow at the same rate as the last cycle or will, in fact, fall slightly from current levels,” commented DW director Steve Robertson. “Whilst we believe that oil supply constraints will support the price in the long term, it should be recognised that the free cash flow of E&P operators will be steady or trending downward, given that most are also seeing flat or declining production levels. The E&P companies will, therefore, not be positioned to absorb cost increases and indications from our oil company clients suggest that they are already putting pressure on the supply chain to control costs and increase efficiency.”

Most of the forecast subsea field developments are viable at US$ 60 to US$ 80 oil prices and Douglas-Westwood believe that fundamentals strongly support long-term oil prices significantly above these levels.

Reducing conventional opportunities, high oil prices and more advanced subsea hardware solutions are resulting in fields being increasingly developed in deeper waters, in remote locations and in more extreme metocean conditions. In addition, the offshore industry is being challenged to recover smaller, more widely scattered reserves.

The growing use of subsea processing technology, such as subsea separation, multi-phase pumping and gas compression, as an alternative to the use of fixed processing platforms will also tend to provide upside potential. Moves in the industry, particularly from operator BP, to develop 20,000 PSI technology could unlock fields that are currently inaccessible with existing hardware.

Adapted form press release by Peter Farrell.

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