Douglas-Westwood (DW) forecast subsea hardware spend is set to double to $124 billion during 2013-2017 compared to the preceding five-year period.
Online PR News – 25-April-2013 – Canterbury, England – Douglas-Westwood (DW) forecast subsea hardware spend is set to double to $124 billion during 2013-2017 compared to the preceding five-year period. The new third edition of Douglas-Westwood’s Subsea Hardware Market Forecast launched today analyses the market through to 2017, examining the key activity trends to provide detailed insight for major players and new entrants alike.
“The prospects for the subsea hardware sector look good, however, players will face significant challenges over the forecast period,” said report lead author Angela MacCormack, “an example is Brazil which accounts for 14% of our forecast subsea Capex. Project execution is a major issue for Petrobras with 70% local content requirements and engineer shortages placing pressure on the supply chain, inflating costs and delaying delivery of production systems (predominantly FPSOs). Such delays could impact the timing of subsea hardware installations and spend profiles.
“Our outlook takes a conservative view of stated future prospects, with some 60% additional slated projects that we have removed from our forecast. Given capacity constraints evident in the industry, we believe that this approach provides a realistic appraisal of future prospects.”
“Consensus is that oil prices will not grow at the same rate as the last cycle or will, in fact, fall slightly from current levels,” commented DW director Steve Robertson. “Whilst we believe that oil supply constraints will support the price in the long term, it should be recognised that the free cash flow of E&P operators will be steady or trending downward, given that most are also seeing flat or declining production levels. The E&P companies will, therefore, not be positioned to absorb cost increases and indications from our oil company clients suggest that they are already putting pressure on the supply chain to control costs and increase efficiency. However, most of our forecast subsea field developments are viable at $60 to $80 oil prices and we believe that fundamentals strongly support long-term oil prices significantly above these levels.”
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Established in 1990, Douglas-Westwood is an independent employee-owned company and the leading provider of business research & analysis, strategy and commercial due diligence on the global energy services sectors. We have offices in London & Canterbury (England), Aberdeen (Scotland), Singapore and New York (USA) and to date have completed more than 750 projects to clients in 70 countries.