Rystad: Offshore greenfield investment expected to exceed $200 billion by 2025

March 7, 2023
The offshore oil and gas sector is set for the highest growth in a decade in the next 2 years, with $214 billion of new project investments lined up, according to Rystad Energy.

The offshore oil and gas sector is set for the highest growth in a decade in the next 2 years, with $214 billion of new project investments lined up, according to Rystad Energy.

Annual greenfield capital expenditure (capex) will break the $100 billion threshold in 2023 and in 2024—the first breach for 2 straight years since 2012 and 2013, Rystad said.

Offshore activity is expected to account for 68% of all sanctioned conventional hydrocarbons in 2023 and 2024, up from 40% between 2015-2018, Rystad said. In terms of total project count, offshore developments will make up almost half of all sanctioned projects in the next 2 years, up from just 29% from 2015-2018.

These new investments will boost 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 rise.

One driver is the expansion of offshore activities in the Middle East, Rystad said. For the first time, offshore upstream spending in the region will surpass all others, lifted by projects in Saudi Arabia, Qatar, and the United Arab Emirates (UAE).

The area’s offshore spending growth could continue for at least the next 3 years, growing to $41 billion in 2025 from this year’s $33 billion. The countries are tapping into vast offshore resources to meet rising global oil demand, backed by the necessary capital and infrastructure to outpace other producers, Rystad said.

“Offshore oil and gas production isn’t going anywhere, and the sector matters now possibly more than ever. As one of the lower carbon-intensive methods of extracting hydrocarbons, offshore operators and service companies should expect a windfall in the coming years as global superpowers try to reduce their carbon footprint while advancing the energy transition,” said Audun Martinsen, head of supply chain research, Rystad Energy.

While the Middle East leads the way, South America, the UK, and Brazil are just slightly behind, Rystad said.

Investments in the North Sea from the UK and Norway will rise in the next 2 years. UK offshore spending is set to jump 30% this year to $7 billion, while Norwegian investments will hit $21.4 billion, an increase of 22% over 2022. Brazilian upstream spending is projected to approach $23 billion this year, with Guyana investments totaling $7 billion. In North America, US offshore spending will top $17.5 billion and $7.3 billion in Mexico.

Brazil state company Petrobras plans to deploy 16 FPSOs across six fields before the end of this decade, while growth in the Guyanese Stabroek Block will also contribute to regional expansion.

In long-term forecasts, Middle Eastern growth is set to continue, if not accelerate, while South American spending will slow in 2025.