Offshore O&M Expenditure Forecast

More than $335 billion worth of expenditure is expected over the next five years on offshore oil & gas operations & maintenance (O&M), according to a new report, The World Offshore Operations & Maintenance Market Forecast 2012-2016, by Douglas-Westwood (DW). Growth of 8% in expenditure is forecast annually 2012-2016.

Industry Drivers

1.Growing global energy demand The underlying driver for all activity, both onshore and offshore, is the growth in global energy demand which, for the medium term at least, means demand for hydrocarbons (predominantly oil and gas)，driven mainly by demand growth in the developing economies of China and India.
2.Oil supply pressures we are likely to see global oil production limit within the next decade (DW estimate 2016).
3. Cost Inflation & Oil Price Buoyant oil prices have caused rampant cost inflation in the upstream oil and gas sector over the past five years:

Role of Offshore Production

As onshore reservoirs continue to mature and new prospects become few and far between, a greater proportion of oil and gas production will be met by the offshore sector. DW believe that by 2018, 37% of global oil supply will come from offshore with 11% coming from deep water. Gas is growing in importance as its potential production peak is in 2032, much later than that of oil.

Regional Forecast

Historical dominance of mature western basins is to be challenged. Between 2007-2011, 40% of global demand was accounted for by Western Europe and North America. Although we expect market growth in all regions (despite the UK and Rest of Western Europe regions facing terminal production decline) we expect the Western Europe and North American share of global demand over the forecast period to drop by a few percent. This shift will be driven by a combination of increasing offshore production in regions such as the Middle East and the movement towards deepwater in less mature regions such as Africa and Latin America.

Industry Sectors

Production services dominate O&M market expenditure. Over the 2007-2011 period demand for production related services accounted for 44% of global O&M demand. The inevitable maturing of offshore fields will drive compound growth of over 7% in the production services sector.
The Asset Services market is set to outgrow all other market sectors. Between 2012 and 2016 136 new units are expected to be installed of which over half are likely to be leased which will drive significant growth in the Asset Services market over the next five years.