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Driven by rising operator expenditure on equipment and installation services, the subsea market segment will see a 10% annual compound growth rate from 2024 to 2027 with total spending exceeding $42bn by the end of this period, a new Rystad Energy report suggests.
Investment activity in the sector has been strong in South America and Europe, where major projects attract new investments. Brazil, for example, is driving strong demand for subsea equipment and subsea umbilical risers and flowlines (SURF). Anticipated expenditure in the country is set to surge 18% from the previous year to $6bn in 2024.
Rystad believes cumulative spending is expected to reach $32bn by the end of 2024, representing a 6.5% increase from the previous year. This growth is driven by strong activity across services, equipment and SURF, largely fueled by significant investment in deep and ultra-deepwater projects.
The subsea sector is also expanding beyond traditional oil and gas applications, creating new opportunities within the carbon capture and storage (CCS) segment.
“The subsea market has rebounded robustly from the impacts of the pandemic which caused a significant 20% drop in expenditure in 2020. By 2021, the industry began to recover, with spending increasing by 5% to reach $23bn. This recovery highlights the industry’s resilience and suggests a promising trajectory of consistent progress,” said Sanwari Mahajan, a Rystad Energy analyst for supply chain research.
Around 45% of the market from 2024 to 2028 will be deepwater developments. Significant greenfield projects include the Barracuda Revitalization in Brazil, Johan Castberg and Breidablikk in Norway, and Golfinho in Mozambique. Key brownfield initiatives include Balder Future, Gullfaks South, and Schiehallion in Norway and the UK.
Ultra-deepwater projects driven by major FPSO initiatives in Brazil and Guyana are projected to capture 35% of the market. South America is expected to lead globally with 500 subsea tree installations over the next five years. Such greenfield projects include Yellowtail, Tilapia, and Redtail in Guyana, alongside Buzios VIII, Buzios IX, Sepia, and Atapu in Brazil. Notable brownfield projects are Trion in Mexico, Egina in Nigeria, and Argos otherwise known as Mad Dog Phase 2 in the US.
Rystad noted that the subsea sector has made notable strides since 2022 amid more sanctioning activity for deepwater and ultra-deepwater developments. In that year alone, deepwater projects saw expenditures of $12bn, with Europe contributing 28% of this total.
Between 2020 and 2023, Norway led globally by installing 200 subsea trees out of a total of 600 placed in deep water – ranging from 125 to 1,500 m. During the same period, Norway also installed 1,400 km of SURF in deep water, surpassing Brazil’s 1,200 km.
This year, Exxon’s expanded operations, especially in Guyana, will boost subsea tree installations and the company is projected to contribute 12% of installations, just behind Equinor’s 17%.
In the SURF sector, global installations are anticipated to reach 3,500 km in 2024. Brazil will lead with 22% of this total, while the US and Angola are projected to contribute 15% and 10%, respectively. The installation rate is anticipated to grow at a compound annual growth rate of 15% from 2024 to 2028.
In a breakdown of suppliers and operators poised to shape the market in the coming years, Rystad pointed out that TechnipFMC would supply around 400 subsea trees between 2024 and 2029 with 35% going to Exxon’s Guyana developments and 22% to Brazil and Petrobras. OneSubsea is anticipated to supply around 270 trees within the same period, 40% of which to Brazil. Aker Solutions – now OneSubsea – is expected to supply 150 trees with 80% earmarked for Norway. |
