Page 22: of Offshore Engineer Magazine (Jan/Feb 2016)

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GLOBAL OFFSHORE MARKET FORECAST

Bringing subsea projects “in the money”subsea projects “in the money”

Jon Fredrik Müller and Audun Martinsen, of Rystad Energy, take a look at rising costs and the downturn and share how these two will affect the subsea market going forward.

ith high development activity and cost differs from other industries. In most other industries, in? ation in the industry since 2010, the one can maintain an established production capacity with

W breakeven prices for subsea developments a small amount of maintenance. However, the inherent have increased signi? cantly. With cost levels as in 2014, production decline within oil and gas ? elds results in large many of the discoveries not yet sanctioned would be continuous investments needed, just to keep production unpro? table at the current oil price regime. So how are the ? at at the current level. To be able to grow production and costs reacting to this downturn? in order to meet growing global demand, signi? cant invest-

The oil market is currently oversupplied resulting ments will be required towards 2020. In terms of produc- in a sluggish oil price. Going into 2016, Rystad Energy tion growth, there are mainly two sources of growth pos- believes the oil price will continue at the levels seen sibilities – shale/tight and offshore resources. It is Rystad in 2015 and trade in the range of US$35-60/bbl (Brent). Energy’s view that it is not a question of one or the other.

However, from 2017 the market balance is forecasted to We need production growth from both sources to be able to improve as supply responds to lower prices, and demand deliver on projected demand by 2020.

is forecasted to continue to grow. Moving towards 2020

Cost reductions the oil price is expected to strengthen signi? cantly, potentially reaching the same price level as seen in 2014 The reduction in offshore activity, in conjunction with ($100 real). growing capacity in many of the offshore segments like

In terms of supply capacity, the oil and gas industry rigs, platform supply vessels (PSVs) and anchor handling

January 2016 | OE oedigital.com 24 024_OE0116_Feature1_Rystad.indd 24 12/24/15 12:58 AM