DW: Africa to dominate deepwater capex over next 5 years
Deepwater expenditure is expected to increase by 69%, compared to the preceding five-year period, totalling $210 billion (bn) from 2015 to 2019, Douglas Westwood, an energy intelligence group has said.
As production from mature basins onshore and in shallow water declines, development of deepwater reserves has become increasingly vital, particularly to the world’s oil majors. However, the recent oil price decline has intensified pressure on operators’ budgets. Consequently, numerous operators have deferred sanctioning of capital intensive developments.
Africa, Latin America and North America will continue to dominate deepwater Capex, with $173bn set to be spent over the next five years with Africa forecast to experience the greatest growth.
The development of East African natural gas basins has not been aided by the plunge in Asian gas prices; however, the development of these gas basins is inevitable.
The expected recovery of oil prices will spark a revival in LNG-related activities in the region towards the end of the forecast period. Latin America will, however, remain the largest market and North America is expected to experience the least growth, DW has said.
In addition to the low oil price environment, building oversupply and the lack of rig demand will impact Capex growth over the forecast period. In recent years, record deepwater rig demand has resulted in unprecedented levels of rig orders.
Douglas-Westwood (DW) has identified a trough in global expenditure in 2015 and 2016 primarily driven by delays to delivery of FPS units in Latin America.
Source: Douglas Westwood