The subsea supply chain is gaining increasing work from the offshore wind sector as the North Sea takes the lead on cleaner energy projects, while oil and gas operators continue to rein in spending, according to consultancy Wood Mackenzie.
Speaking at the Subsea Expo in Aberdeen on Tuesday, Mhairidh Evans, principal analyst for the upstream supply chain at WoodMac, said: “The subsea market picked up significantly in 2018, after a 20-year global low for new contracts in 2016.
“The North Sea was a big part of that recovery — with almost 30% of new subsea wells sanctioned in 2018 and 2019 being in the UK or Norway,” Evans said.
However, as oil and gas operators continue to rein in spending, WoodMac expects 2020 to be flat due to a gap in the chain between supply and demand.
“That means we may yet see more consolidation in the supply chain,” Evans added.
She warned the industry not to bank on a new oil and gas upcycle because “past levels of activity and spend are no longer relevant”.
“The future of offshore will be shaped by brand-new forces such as digitalisation and decarbonisation. The most successful companies will be those who rip up the reference book and adapt to change quickly,” Evans said.
“The oil and gas market remains by far the largest sector for the subsea supply chain today, but offshore wind is starting a big growth trajectory,” she added.
WoodMac forecasts investment in offshore wind will more than double between now and 2025 to reach €45 billion ($49.2 billion) per year and expects much of this investment to be in Europe.
“There are opportunities all across the subsea supply chain in offshore wind, and it is turning the heads of many of the industry’s biggest players,” Evans said.
Recently, the International Energy Agency (IEA) said offshore wind investments stand to grow and could attract about $1 trillion by 2040.
The Paris-based agency said that due to the expected growth in the clean energy sector, the oil and gas industry could be staring at a $400 billion business opportunity through synergies over the next two decades.
IEA analysis found that offshore wind capacity in the European Union stands at almost 20 gigawatts and is set to rise to between 130GW and 180GW by 2040.
China could also be set to play a major role in offshore wind’s long-term growth, because farms can be built off the major population centres spread around its east and south.
“By around 2025, China is likely to have the largest offshore wind fleet of any country, overtaking the UK,” the IEA report said.
China’s offshore wind capacity is set to rise from 4GW today to 110GW by 2040, but policies designed to meet global sustainable energy goals could push that even higher to above 170GW, the IEA said.
Recent Comments