Originally published by Offshore Magazine on 8 January 2026.
Despite a 20% YoY drop in 2025 EPC awards, the subsea sector shows resilience with strong demand for subsea trees and pipelines across the globe.
Key Highlights:
- Subsea EPC award value in 2025 was about US$17bn, down 20% YoY, influenced by low oil prices and supply chain costs.
- Despite cost increases since 2021, E&P budgets grew by 69%, indicating ongoing project development amid economic pressures.
- Demand for subsea equipment remains strong, with forecasts of up to US$90bn in EPC opportunities from 2026 to 2030, supporting about 1,300 subsea trees.
- Market challenges include an oversupplied oil market, with 3 MMbbl/d expected in first-quarter 2026, limiting new investments and causing project delays.
Subsea engineering, procurement and construction (EPC) award value in 2025 closed at c.US$17bn, a 20% YoY decline, underpinned by 53 field final investment decision (FID), c.230 subsea tree units, c.2,200km of subsea umbilical, riser and flowline (SURF), c.1,560km of pipeline. Contracting activity was stifled by the lower-than-expected oil prices and high supply chain costs, which negatively impacted E&P’s investment appetite.
The subsea EPC cost index rose by approximately 25% in 2025 compared to the 2021 baseline but was 14% lower compared to 2024. In parallel, selected operators increased their E&P budgets by around 69% compared to 2021, reflecting a continued commitment to project development despite rising costs.
However, the average oil price in 2025 declined by 20% relative to the 2021-22 average of US$85.9/bbl. This price contraction has placed pressure on operators’ free cash flow, prompting a renewed focus on cost efficiency across the value chain. This led to a revision of the development timelines for projects such as Repsol’s Polok and Chinwol fields offshore Mexico and PTTEP’s Lang Lebah offshore Malaysia, with operators citing high supply chain costs and the need for project optimisation.
In response, the supply chain is under increasing pressure to adopt new approaches and deliver cost reductions of approximately 15-20% from the 2024 subsea EPC cost index. This level of continued cost revision is considered essential, given the expectation of a persistently oversupplied oil market and continued downward pressure on oil prices.
Selected E&P Capex vs Brent Oil Price vs Subsea EPC Cost Index
Source: Company Investor Relations, Westwood SubseaLogix, Westwood Analysis
Whilst E&P companies sanctioned major subsea developments that required floating production systems in 2025 such as ExxonMobil’s Hammerhead development (Guyana), BP’s Tiber (US Gulf), Shell’s Gato do Mato (Brazil), Eni’s Coral Norte (Mozambique) and Petrobras’ SEAP II (Brazil), subsea contracting was widespread with several subsea tieback projects. Those tieback projects included Equinor’s Fram Sor, Johan Sverdrup Phase 3 and Isflak, all offshore Norway; ConocoPhillips Previously Produced Fields project (Norway); Chevron’s Gorgon Stage 3 (Australia); Beacon Offshore’s Shenandoah South (US Gulf); and Shell’s Mina West (Egypt), as E&Ps continue to utilise existing infrastructure.
Looking ahead, the demand for subsea production equipment is forecast to remain strong over the next five years, providing up to US$90bn in EPC contracting opportunities for the supply chain during 2026-2030, with subsea trees demand estimated at 1,300 units, averaging 260 units annually. However, challenges remain, as an oversupplied oil market, which is expected to reach 3mmbpd in 1Q 2026, the highest since 2020, continues to put downward pressure on oil prices, which will limit investments by E&P companies, who are poised to stay capital-disciplined, leading to project delays and deferred investment.
2026 Subsea EPC Spend by Region
Source: Westwood SubseaLogix
In 2026, Westwood anticipates subsea EPC spend will total US$17bn, mirroring investment levels seen in 2025. However, the number of field FIDs could increase 13% YoY, totalling 60, as unit cost is projected to continue its downward trend, as seen since 2H 2025, to support planned investment.
Subsea tree demand is forecast at 264 units, with Africa and Latin America accounting for 29% and 32%, respectively, but will only account for 19% and 21%, respectively, for subsea EPC award value, due to demand for rigid line pipe in Asia, Middle East and Europe.
Key projects to watch for Africa in 2026 include Azule Energy’s PAJ development (Angola), Chevron’s Agbami Infill Programme (Nigeria) and TotalEnergies’ Venus Phase 1 development (Namibia), following reports that TotalEnergies received attractive bids from contractors for the project’s work scope. However, the operator awaits regulatory and fiscal clarity, which, if negotiations are protracted, could delay the FID currently anticipated in 4Q 2026.
In Latin America, Petrobras’ continued investment in its pre-salt basin offshore Brazil will remain key, with equipment callout from several of its global frame agreements (GFA) signed with multiple contractors for subsea trees and SURF, including from the 82 subsea trees and associated services that was awarded to Baker Hughes and TechnipFMC in 3Q 2025.
In addition, ExxonMobil’s activities offshore Guyana will see the sanctioning of its Longtail development, whilst Karoon Energy plans to sanction its Neon project offshore Brazil.
Subsea contracting in the Asia-Pacific region will be weighted towards gas developments, with Eni’s Kutei North development (Indonesia) a key project to watch. Inpex is also evaluating the development of the Ichthys Ph. 2c project offshore Australia, while CNNOC is expected to sanction its Kaiping 11-4 and Kaiping 18-1 development offshore China, following the prequalification of contractor that commenced in 1H 2025.
Western Europe will account for 20% of forecast subsea EPC award value in 2026, with activities offshore Norway and Cyprus dominating, as the fiscal and regulatory posture in the UK continues to stifle investment appetite in the UK North Sea and the West of Shetlands.
Projects to watch in the region include brownfield investments by Equinor, including the Troll Phase 3 Stage 3 project, the Johan Castberg Expansion and the Heidrun Expansion. Var Energi plans to sanction the next phase of its Balder project offshore Norway, with greenfield tieback fields such as Dugong/Beta and the Ofelia fields reportedly under consideration to be sanctioned in 2026.
Offshore Cyprus, Eni is advancing its Cronos gas field, having recently signed commercial agreements to connect it to Egypt’s infrastructure.
The SURF market and the subsea pipeline sector will each account for 35% of subsea EPC award value in 2026, with activities in the Middle East accounting for 33% (c.US$1bn) of subsea pipeline spend. Key subsea pipeline awards anticipated in 2026 in the region include Brownfield infrastructure demand across Aramco’s Safaniya, Marjan Berri and Abu Safah developments offshore Saudi Arabia, ADNOC’s Belbazem Phase 2, the Umm Shaif project and the Abu Dhabi Offshore 2 developments offshore the United Arab Emirates. The Karish to Larnaca Pipeline (Israel) and Durra export pipeline (Kuwait) will also support demand for rigid line pipe in 2026.
Overall, a total of 4,200km of subsea pipeline is forecast to have an EPC contract award in 2026. The SURF market will remain robust, with a 20% YoY increase in demand, with 3,950km. Demand from Petrobras will account for 20%, leading demand from E&Ps, whilst Western Europe will lead regional demand at 30%, accounting for c.1,200km.
2026 Subsea EPC Spend by Component Type
Source: Westwood SubseaLogix
Beyond 2026, contracting opportunities abound across all regions, with exploration successes in the Eastern Mediterranean Sea, offshore Brazil and Namibia, including the recently acquired Mopane discovery offshore Namibia by TotalEnergies from Galp Energia, which could progress in the latter years of the forecast.
Long-delayed projects, such as Equinor’s Bay Du Nord (Canada) and Wisting (Norway), Woodside’s Browse gas development (Australia), Shell’s Bonga SW (Nigeria), and Inpex’s Abadi development (Indonesia) are all expected to be sanctioned before the end of the forecast. However, these projects are susceptible to delays should downward pressure on oil prices continue, given an oversupplied oil market.
Mark Adeosun, Director – SubseaLogix & PlatformLogix
[email protected]
