22
SUBSEA
By Tsvetana Paraskova
SUBSEA SECTOR SET FOR SUBSEA SECTOR CONTINUED RECOVERY IN 2022
SET FOR CONTINUED
RECOVERY IN 2022 By Tsvetana Paraskova
Higher exploration activity and an uptick in offshore project sanctioning are set to support the subsea sector in 2022 and beyond. Deepwater oil and gas exploration will likely lead in new discovered resources as operators prioritize highly productive reservoirs offshore South America, while decommissioning projects and subsea tiebacks to satellite developments will also drive an increase in subsea operations, vessel demand, and subsea tree orders, analysts say. The global upstream sector is on the rebound and will continue to recover in 2022, Wood Mackenzie said in its outlook for this year.
www.ogv.energy I February 2022
Upstream spend set to rise Total upstream oil and gas investment is set to grow by 9% in 2022 over 2011, to take overall spend to US$400 billion again. Despite the uptick in investment, capital discipline will continue to prevail as global reinvestment rate is expected at 40% – calculated as capital investment divided by pre-dividend post-tax operating cash flow. This is near record lows for oil prices at above US$80 per barrel, according to WoodMac. More than 40 projects over 50 million boe are expected to be sanctioned in 2022, with a focus on advantaged barrels. Low-breakeven, low-carbon deepwater projects will dominate greenfield final investment decisions (FIDs), Wood Mackenzie reckons. Along with robust project economics, operators will be looking for short payback periods and low emissions while sanctioning projects this year. Yet, the services sector will see inflation of 4-10%, depending on the sector, with hotspots like Norway for example impacted first, said Fraser McKay, Vice President, upstream research, at WoodMac. In exploration, operators will prioritise deepwater plays with highly productive reservoirs, including giant prospects in Brazil, Guyana, Suriname, Namibia, and South Africa. Deepwater is likely to account for half of all new volumes, according to Wood Mackenzie.
Gas, LNG to lead rise in global investments Overall investment in oil and gas, including upstream, midstream, and downstream, is projected to rise by 4% to US$628 billion this year from US$602 billion in 2021, Rystad Energy said in an analysis in January. The growth will be led by a 14% increase in gas and LNG investments, the independent energy research firm said. Offshore oil and gas investments are expected to rise by 7 %, from US$145 billion last year to US$155 billion in 2022. Offshore projects will provide ample opportunities for contractors as TotalEnergies’ North Platte project enters the final stage of its tender process and LLOG Exploration’s Leon and Chevron’s Ballymore developments in the US Gulf of Mexico look to proceed to the development phase this year. There are around 80 projects worth a total of $85 billion in the global approvals pipeline for offshore field sanctioning for 2022. Of these, 10 are floating production storage and offloading units (FPSO), 45 involve subsea tiebacks, and 35 are grounded platforms, Rystad Energy has estimated. Latin America and Europe will account for around 24% each of the total offshore sanctioning values, with deepwater expansions expected in Guyana and Brazil, as well as Norway following recent tax changes.
