Page 12: of Offshore Engineer Magazine (Nov/Dec 2022)

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Market Forecast 2023

OFFSHORE OILFIELD

SERVICES SPENDING

TO KEEP RISING IN 2023

Ofshore E&P capex will shake of the pandemic-induced declines and rebound by 20% in 2022, reaching a total $165B spent on exploration, wells, and facilities.

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By Matt Hale, a Lead Analyst at Rystad Energy, based in Houston, Texas be/3reajS83pWI ffshore exploration and production (E&P) cipline in an environment of high service price in?ation are capital expenditures (capex) will shake off the expected to limit the growth of US oil production. With pandemic-induced declines of the past two this outlook for crude prices, offshore E&P operators are years and rebound by 20% in 2022, reaching expected to continue investing in production, lifting capex

O a total $165 billion spent on exploration, wells, and facili- by another 8% to $178 billion next year.

ties (Figure 1). This is slightly less than half the all-time Since the offshore spending peak in 2014, operators high for offshore E&P investment of $332 billion in 2014, have shifted their capital projects toward short-cycle in- set at a time when the average Brent crude oil price had vestments, including shale and other tight resource plays in stayed above $100 per barrel for a fourth consecutive year. North America, which quickly boost short-term produc-

Following several years of lower crude prices and demand tion, similar to in?ll drilling in proven geologic areas. In uncertainty, crude has jumped again this year to average a sustained high commodity price environment, operators over $100 per barrel. now feel more con?dent deploying capital into long-cycle

While Brent prices have cooled from a peak of $128 ear- offshore developments, like we saw in the last offshore in- lier this year, demand is expected outstrip supply beginning vestment cycle. These investments can take the form of in December this year and lasting through the end of 2023, seismic and FEED activity as well as more concrete invest- translating into an average price of $89 per barrel next year. ments in new wells and offshore facilities.

This is largely driven by the EU embargo on Russian oil In the offshore drilling arena, state-owned producers in- which takes effect on 5 December, constraining Russian cluding Saudi Aramco, ADNOC, QatarEnergy, and Petro- exports by limiting the ?eet of tankers to deliver crude to bras are taking a lead in well construction, aided by inter- “friendly” countries including India and mainland China. national majors and other operators. One particular region

In addition, natural gas takeaway capacity and capital dis- of increased activity is the Middle East (Figure 2), where 12 OFFSHORE ENGINEER OEDIGITAL.COM