Subsea Market Report to 2017

Infield Systems has just released the latest edition of its Global Perspectives Subsea Market Report To 2017. The ninth edition of this highly respected report is devoted to the global subsea market and provides a comprehensive analysis of its many facets. The report presents information on the expected capital expenditure and level of subsea equipment installations in all the major subsea regions and the related countries, by the most significant oil companies and major manufacturers, relating to different types of investment and equipment. Information is presented in such a way as to highlight the differing market dynamics, the changing investment opportunities, key developments and prospects, and the dominance of different companies and manufacturers in each regional market.

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High oil prices, technological developments and the need to counterbalance declining production in mature shallow-water basins have been driving the move of offshore oil and gas operations into deep and ultra-deep waters. As a result, the last few decades have seen a steady increase in the number of subsea developments. Increasingly operators are cost-effectively targeting reservoirs over a much wider area, tying back subsea wells both to fixed platforms in shallow waters and to floating infrastructure in deeper waters. In fact capital-intensive ultra-deepwater developments are expected to capture 48% of Capex and 23% of tree installations in 2013-2017, in contrast to 37% of Capex and 15% of installations in 2008-2012. The subsea industry therefore shows very positive prospects for growth in the next five years.

Latin America and West Africa account for over half of subsea capital expenditure (Capex) expected to be spent between 2013 and 2017. This is driven by large deepwater and ultra-deepwater discoveries offshore Brazil, particularly in the pre-salt basins, and offshore Angola and the Gulf of Guinea. As an operator, Petrobras dominates the subsea sector and is expected to account for 24% of global subsea Capex in the next five years to further key projects such as Papa Terra, Lula and Franco. However, the fast pace of development anticipated by the Brazilian government depends on Petrobras' ability to overcome capacity constraints and keep costs under control.

The highest investment levels and number of installations of subsea trees in Africa are expected to occur in 2017 driven by large developments such as the Kaombo and Cabaca fields in Angola, and the Bonga Southwest and Nsiko projects in Nigeria. However, Nigeria has yet to secure investor confidence by adopting stable fiscal policies, which would enable IOCs and international independent operators to more readily take final investment decisions. Simultaneously, emerging countries such as Ghana, Congo-Brazzaville and Equatorial Guinea are expected to increase their presence in the subsea sector.

As mature regions, Europe and North America still present significant opportunities for the subsea sector. Norway and the UK are characterised by high drilling activity on producing fields and the completion of subsea tie-backs on smaller, remote accumulations mostly in shallow waters. In the North Sea, this is linked to efforts to reverse declining oil and gas production. Despite a decrease in global Capex market share due to less capital intensive shallow water activity relative to other regions, Europe is expected to attract an increasing share of subsea tree installations.

In the USA the shift from shallow water developments where production is in decline towards large oil and gas discoveries further offshore is well underway. The deepwater Gulf of Mexico is expected to host many new floating platform developments, combined with the tie-back of subsea satellite fields later on in the forecast period.

Asia, Australasia and the Middle East present emerging opportunities for the subsea market. These three regions will together increase their market share from 8% in the last five years, to 15% in the next five years. Operations in Asia are increasingly moving exploration and production into deeper waters in a bid to boost and sometimes reverse declining oil and gas production. As a result, Malaysia, Indonesia, India and China are becoming major subsea industry hot spots attracting a range of operators: from NOCs, CNOOC and ONGC, to IOCs Shell and Chevron and independent international companies like Murphy and Husky.

Australasia's subsea sector is driven by its fast-growing LNG export industry, which is racing to meet rising demand for natural gas in emerging Asian economies. Fields such as Chevron's Gorgon area fields are being tied back to large onshore LNG producing facilities.

New large gas discoveries in the last five years in the Eastern Mediterranean are also driving subsea investments in the Middle East region. The start-up of the deepwater Tamar field in April 2013 offshore Israel is expected to be only the start of increased subsea activity in the Levant Basin, where Noble Energy is a major player.

Report Contents

• Executive Summary provides an overview of the Subsea market highlighting the main points of the report and identifying the most important countries, operators and market characteristics in each subsea region.


• Macro Overview provides an overview of: current economic conditions in both developed and emerging markets, oil price trends and field sanction points, offshore production and reserves, as well as key industry trends, including the impact of unconventionals and the growth of LNG on the global oil market


• Global Overview provides a more in-depth analysis of the main subsea participants and the expected evolution of the global subsea market from its current state. This section analyses each major operator's current strategy, their key regions for investments and future projects. In addition, an analysis of the major subsea equipment manufacturers' current market shares, main operating regions and recent subsea awards is provided along with a presentation of their current subsea frame agreements. Capex and subsea installations are also reviewed by sector, development type and water depth. Key changes in the cost methodology from last year's report are discussed together with any significant forecast changes with regard to specific projects.


• Regional Overview contains a detailed analysis and forecast for each of the following regions: Africa, Asia, Australasia, Europe, Latin America, the Middle East and Caspian and North America. For each region, subsea capital expenditure and subsea equipment installations are detailed by operator and country in light of regional political and market developments. Subsea tree awards by manufacturer and information on the most significant developments and prospects is also provided. Finally, investment figures are analysed by sector (development drilling and equipment), equipment type, development type and water depth.

Why You Should Buy This Report

• The report contains data developed by Infield Systems' market modelling process, OFFPEX, which is based on a unique "bottom up approach" to forecasting. OFFPEX's component by component and project by project forecasting process is robust and has a proven track record.


• The report presents information on the expected capital expenditure and level of subsea equipment installations by all the major subsea regions and the related countries, the different oil companies, the major manufacturers, the different types of investment and the different types of equipment.


• The report provides an independent and comprehensive analysis of the issues and risks impacting the Subsea market today, and how these will affect future developments over the next five years.