The offshore oil and gas (O&G) sector is set for the highest growth in a decade in the next two years, with $214 billion of new project investments lined up, energy industry intelligence firm Rystad Energy said in a report on Tuesday.
The annual greenfield capital expenditure (capex) in offshore oil and gas (O&G) will exceed the $100 billion threshold in 2023 and in 2024, led by mammoth projects in Saudi Arabia, Qatar and the UAE.
This will be the first breach for two straight years since 2012 and 2013, the report noted.
"As global fossil fuel demand remains strong and countries look for carbon-friendly production sources, offshore is back in the spotlight. Offshore activity is expected to account for 68% of all sanctioned conventional hydrocarbons in 2023 and 2024, up from 40% between 2015-2018," Rystad said.
These new investments will be a boon for the offshore services market, with supply chain spending to grow 16% in 2023 and 2024, a decade-high year-on-year increase of $21 billion. Offshore rigs, vessels, subsea and floating production storage and offloading (FPSO) activity are all set to flourish.
The Middle East region's offshore spending growth looks set to continue at least for the next three years, growing from $33 billion this year to $41 billion in 2025. These countries are tapping into their vast offshore resources to meet rising global oil demand, backed by the necessary capital and infrastructure to outpace other producers, Rystad said.
Meanwhile, the International Energy Forum (IEF) and S&P Global Commodity Insights said in a report last month that the current global spare production capacity is at only 2.0-2.5 million barrels per day (mbpd); nearly all of it is held by Saudi Arabia and UAE.
Saudi Arabia plans to increase capacity to 13.2 mbpd from their current 12.2 mbpd by 2027 while UAE plans to expand to 5 mbpd from 4.2 mbpd by 2027.
(Reporting by Brinda Darasha; editing by Daniel Luiz)