Data from energy analysts Rystad Energy shows that offshore oil and gas is set for its highest growth in a decade in the next two years, with $214bn worth of new projects lined up.
The research found that annual greenfield capital expenditure (capex) broke the $100bn threshold in 2022, and will likely break it again in 2023. This would be the first time this has happened in two consecutive years since 2012 and 2013.
Global fossil fuel demand remains strong, despite more than 100 countries having proposed or committed to a net zero target to reduce global warming to 1.5⁰C by the year 2050.
According to Rystad Energy offshore activity will account for 68% of all sanctioned conventional hydrocarbons in 2023/2024.This marks a 40% increase from 2015-2018, the period prior to the Covid-19 pandemic.
Supply chain spending is set to grow 16% in 2023 and 2024, an increase of $12bn. This would represent the highest year-on-year gain in a decade.
Audun Martinsen, head of supply chain research at Rystad Energy, said that “offshore operators and service companies should expect a windfall in the coming years as global superpowers try to reduce their carbon footprint while advancing the energy transition”. He describes offshore oil and gas production as “one of the lower carbon-intensive methods of extracting hydrocarbons”.
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The analysts predict that offshore expansion in the Middle East will drive this increase, with the region surpassing all others in offshore upstream spending. Rystad predicts that offshore spending growth in the region will go from $33bn this year to $41bn in 2025.
The UK and Brazil sit just behind the Middle East in spending, with Brazilian upstream spending set to reach $23bn this year and $7bn in the UK.