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56Maritime Reporter & Engineering News (Photo Petrobras) Since Douglas-Westwoods cov- erage of the deepwater sector in the 1990s, it has developed into a vast multi-billion dollar busi- ness. The growth has been supported by some astonishing technological ad-vances. However, the industry has seldom been free from political interference, en-vironmental debate and commercial chal-lenges. The intention of this article is to examine the present state of play, drivers of activity and future outlook for the deepwater sector, drawing upon Douglas- Westwoods industry-leading research. Industry Drivers Deepwater exploration and production (E&P) activity is driven by a variety of supply-side and demand-side factors: ?The potential for world-class (multi- billion barrel) discoveries ?The lack of new opportunities on- shore or in shallow waters and the need to offset decline from existing reservoirs ?New technological advances that im- prove technical and economic feasi- bility of deepwater developments In recent years, the world has witnessed oil price shocks driven by situations where supplies have become very tight as spare capacity is absorbed by growing demand for energy across the world. Fu- ture projections of oil supply and demandsuggest that this situation is likely to be repeated again within the next few years. Fossil fuels are becoming more expen- sive as the resources we extract become more technically demanding and indeedenergy intensive to access. Ultimately, a future peak in world oil supply is in- evitable; the only question remaining is the date that this will happen. The impli- cation of this supply scenario for theglobal energy markets is that we will ex- pect to see a sustained increase in oilprices as supplies tighten in the run-up tothe peak year. This will impact on deep- water developments to the extent that they will become even more economi- cally viable as the oil price rises. Devel- opments that were marginal at $60/bbl will undoubtedly be more vigorouslypursued in an environment where the long-term expectations of oil price are $80/bbl and upwards. For oil companies the overall outlook for 2012 is positive, with Barclays Capi- tal estimating that worldwide E&P budg- ets will increase by 11%. The longer-term outlook indicates that subsea, predomi-nately deepwater, developments will con- tinue to play a major part in the portfoliosof the majors independent oil companies(such as Total, Shell, BP and Exxon) and some national oil accompanies (such asPetrobras and Statoil).Regional UpdatesAfrica Africa is one of the key regions of the deepwater Golden Triangle and is cur- rently the largest region of deepwater capital expenditure. However, it is likely to be eclipsed by Latin America over the forecast period. Most of the major deep-water developments in Africa are located off Angola, Ghana and Nigeria. Notable exceptions include West Nile Project (Egypt) and Windjammer (Mozam- bique).? Angola:The country has had a rep-utation in recent years as a deepwater tiger?, with its output at 1.7 million bpdin 2011. Major projects that have recently come onstream in Angola include Pazflor and Platina, while those planned or un-derway include developments of the Canela and Kaomba fields. ? Ghana: The Jubilee field is one of the biggest discoveries offshore West Africa in recent years. Operated by Tul- low Oil, the field commenced production in November 2010. Production was re- ported to be 70,000 barrel of oil per dayin May 2011 and further development is planned to include integration with other DW forecast a Global Capex of more than $232 billion for the 2012-2016 period ? 90%more than the amount spent in the preceding five year period. By Jennifer Harbour, Douglas-Westwood The Power of Oil&Gas