Offshore Oil and Gas to Witness Growth by 2025
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Offshore Oil and Gas to Witness Growth by 2025

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Anmol Motwani By Anmol Motwani | Journalist & Industry Analyst - Thu, 03/16/2023 - 17:19

Rystad Energy, a leading energy market intelligence group, has forecasted that the offshore oil and gas sector will grow significantly by 2025 as it expects more than US$200 billion of greenfield investment.

Rystad Energy said that the upcoming two years will mark the growth of the offshore oil and gas sector since 2022 breached the US$100 billion threshold. According to the same report, this breach is likely to happen once again in 2023.

The company predicts a significant growth from 40% of all sanctioned conventional hydrocarbons observed between 2015 and 2018 to 68% in 2023 and 2024. The upsurge is due to the increased demand for fossil fuel following the COVID-19 pandemic as well as countries seeking sustainable energy sources. 

The pandemic not only disrupted the oil and gas global supply chain but also caused a decline in its demand and led to a crash in oil prices. However, with the situation now under control, the demand for oil and gas has subsequently recovered. The regions that seem to benefit the most are Latin America and the Middle east.

Indeed, Offshore service providers may witness an increased demand for their products and services, such as rigs, vessels, subsea equipment as well as floating production storage and offloading (FPSO) vessels, as offshore production is deemed to emit less harmful CO2. According to Schreiner Parker, Senior Vice President and Head of Latin America, Rystad Energy, deepwater upstream activity has the advantage of a lower emission intensity: 9kg of CO2/boe is produced on average in deepwater, around half the global upstream average. This would help oil-producing companies meet their global energy demand while being environmentally considerate.

Furthermore, the projected increase in offshore oil and gas will have a positive impact on the service market, as supply chain spending will increase by 16% in 2023 and 2024. 

This might translate to US$7.3 billion of spending in Mexico. However, Alma América Porres Luna, former Commissioner, CNH, pointed out the disparity between the upstream sectors in Mexico and the US. In the past 6 years, the US drilled 303 deepwater wells in the Gulf of Mexico, compared to just 50 drilled by Mexico. In the same period, from 2015 to 2022, Mexico drilled 110 shallow-water wells compared to the US’s 22, outlining a clear contrast in the respective countries'’ offshore strategies. Similarly, Parker highlighted the need for a faster pace in Mexico to get its deepwater projects going as the country showcases great potential.

Nevertheless, excess offshore activity can accelerate climate change and prove harmful to marine life through oil spills and explosions. Since deepwater operations are relatively complicated, they bring along a different set of risks. 

Photo by:   wasi1370 ,, Pixabay,

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