Subsea Vessel Operations Driven by Growth in Deep Water Developments and Increased Operator Confidence
Between 2012 and 2016, some $77bn will be spent on worldwide subsea vessel operations, according to new research from energy business advisors Douglas-Westwood (DW). This represents an increase of 63% over the previous five-year period. Subsea vessel demand is expected to total 326,500 days – a 33% increase – and annual expenditure nearly double, from $11.3bn in 2012 to $20.3bn by 2016. These are amongst the findings presented in the new 2nd edition of DW’s World Subsea Vessel Operations Market Forecast 2012-2016.
Report author, Joseph Corrigan, commented, “The move towards deep water in underdeveloped regions, and ultra-deep in developed ones, is driving an increase in vessel demand. Greater competition for high-capability vessels is causing inflation in dayrates and driving up market value.
“By 2016, there will be more complex deepwater projects sanctioned and this should benefit the vessel contractors with deepwater capability and engineering experience. Deepwater awards will suit contractors with modern vessel fleets, strong project execution skills and a solid track record in delivering deepwater projects.
“Between 2006 and 2012, 169 vessels entered the market, increasing capacity by 60% to 446 vessels operated by 83 contractors – a highly fragmented and competitive supply chain. Saturation of the market is now evident for some vessel categories, but high demand continues for others.
“The deepwater ‘Golden Triangle’ of West Africa, Gulf of Mexico and Brazil is expected to account for 34% of global expenditure over the forecast period. Latin America is forecast to be the largest market with spend of $14bn during 2012-2016 – an increase of 94% on the previous five year period. The North American market has now recovered following a dip in activity during 2011-2012 – due to the economic crisis and the fallout from the Deepwater Horizon moratorium. North American expenditure is expected to total almost $13bn making it the world’s second largest market. This is a 23% increase on the previous five years ($10.3bn).”
Report editor, Thom Payne, at DW’s Singapore office adds, “The general outlook for the subsea vessels market shows long term growth potential and a very sizable business opportunity. Despite this the market will retain its long-term cyclicality as vessel owners over-react to the up-cycles. The best vessels will, however, always find a market and niche-players will continue to thrive in any downturn. As with any cyclical industry, taking a long-term view and careful timing of asset investment is therefore essential.”
DW suggest that even more market opportunities for subsea vessels lie beyond the timeframe of their report, including the major pre-salt developments offshore Brazil and potentially West Africa, the prospects in the eastern Mediterranean and for the commercially brave the ultimate subsea challenge – the Arctic.