Westwood Global Energy Group’s World Drilling & Well Services Market Forecast presents the latest view on prospects for one of the largest areas of total oilfield services expenditure.
The latest edition of Westwood’s World Oilfield Equipment Market Forecast has been released this week, with a notable improvement in the outlook for North American floating production systems. The report shows a continuation of recent improvements in the oilfield equipment sector, with global expenditure now expected to total $679bn over the forecast period.
In North America’s offshore sector, improvements in oil prices through the quarter have boosted investor confidence, with total expenditure of $28bn expected over the forecast period (compared to $27bn last edition). Westwood expects $18bn of this to come from FLNG developments, with 8 LNG FPSOs expected to be ordered by the end of 2020 (construction Capex phased equally between the order and delivery year for each unit). As a result, Westwood expects offshore growth rates in the region to exceed that of onshore (10% and 6% CAGR respectively), despite the ongoing recovery in US land activity, although US onshore will remain dominant in terms of expenditure levels.
Further afield, the optimism around floating production is not limited to North America. Globally, Westwood has seen considerable uplift in expectations, with a total of $148bn expected to be spent in the Fixed & Floating Production category, which includes Capex on the engineering, procurement, construction and installation of fixed platforms and floating production systems (FPS). This is a 7.5% uplift on the last edition of the report. The majority of this uplift has come in the FPS market, with a total of $72bn to be spent (compared to $66bn last edition), with a CAGR of 7% over the five-year forecast. Meanwhile in the fixed platform market, an uptick in phased expenditure seen this year is not expected to be maintained, resulting in a -7% CAGR over 2018-2022, with a total expenditure of $76bn (compared to $72bn last edition).
In offshore rig construction, the expenditure outlook remains weak given the exceptionally-low utilisation levels of the current fleet as a result of the previous build cycle. A total of just four orders have been placed since the start of 2015 – two in the last six months (1 Jackup and 1 Semisub) – for more information see RIGLOGIX. Given a relatively flat outlook for offshore drilling from 2018, Westwood does not expect any material increase in MODU utilisation globally, except for in select niche markets. The order outlook is similarly bearish, with a total of just 8 orders expected to be placed over 2018-2022, including the 2 already placed. This volume of ordering will be insufficient to offset the declining backlog for rig builders, with a corresponding global phased expenditure outlook of -13% CAGR over the forecast.
The World Oilfield Equipment Market Forecast offers unique insight into over 60 different equipment types across upstream and midstream and is an essential product for business planners and those looking to make informed investment decisions. Drawing from Westwood’s SECTORS product and a wide-range of other internal databases (including land rigs, pipelines, helicopters and upstream infrastructure), the World Oilfield Equipment Market Forecast also takes account of the latest macro-economic trends through daily updated databases and explicit commodity price, global inflation and supply chain pressure inputs.
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