The subsea industry, encompassing key players in production and processing systems such as subsea umbilical risers and flowlines (SURF), trees, wellheads, and manifolds, is on the brink of a substantial capital infusion, as indicated by Rystad Energy’s latest report.
This sector is expected to witness an impressive growth trajectory, driven by an increasing operator expenditure on equipment and installation services.
Projected Growth and Regional Investment Surge
Rystad Energy anticipates a compound annual growth rate (CAGR) of 10% from 2024 to 2027, with total spending forecasted to exceed $42 billion by the end of this period.
This surge in investment is particularly notable in South America and Europe, where major projects are advancing rapidly and attracting considerable capital.
Brazil continues to be a central focus, with its extensive pre-salt reserves driving a robust demand for subsea equipment and SURF.
Expenditure in Brazil is projected to escalate by 18% from the previous year, reaching $6 billion in 2024.
In Europe, Norway is experiencing renewed activity, supported by favorable market conditions and advancements in technology, such as the Subsea Hydraulic Power Unit and the SWIFT remotely operated tubing hanger tool, which are enhancing operational efficiency and reducing the need for heavy topside equipment.
Rising Expenditure and Sector Growth
Overall, cumulative spending is expected to hit $32 billion by the close of 2024, reflecting a 6.5% increase from the previous year.
This growth is largely attributed to the substantial investments in deepwater and ultra-deepwater projects, with significant activity observed across services, equipment, and SURF.
The subsea sector is also diversifying beyond traditional oil and gas applications. The growing focus on carbon capture and storage (CCS) is opening new avenues for suppliers, driving research and development in this emerging field.
Post-COVID Recovery and Future Outlook
The subsea market has shown remarkable resilience, bouncing back strongly from the COVID-19 pandemic, which had caused a significant 20% decline in expenditure in 2020.
By 2021, the industry had started its recovery, with spending increasing by 5% to reach $23 billion.
Looking ahead, the sector is expected to experience steady growth, propelled by advancements in deepwater exploration and CCS initiatives.
According to Sanwari Mahajan, Analyst for Supply Chain Research at Rystad Energy, the sector’s recovery underscores its resilience and suggests a promising trajectory of sustained progress.
Dominance of Deepwater and Ultra-Deepwater Developments
Deepwater projects are set to play a dominant role in the subsea sector, accounting for 45% of the market from 2024 to 2028.
Notable 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, led by major floating production, storage, and offloading (FPSO) initiatives in Brazil and Guyana, are expected to capture 35% of the market.
South America is projected to lead globally, with 500 subsea tree installations anticipated over the next five years.
Key Projects and Market Leaders
Significant ultra-deepwater greenfield projects, including Yellowtail, Tilapia, and Redtail in Guyana, as well as Buzios VIII, Buzios IX, Sepia, and Atapu in Brazil, are set to make a notable impact.
Important brownfield projects include Trion in Mexico, Egina in Nigeria, and Argos (Mad Dog Phase 2) in the U.S.
The subsea sector has made substantial progress since 2022, marked by increased sanctioning activity for deepwater and ultra-deepwater developments.
Deepwater projects alone saw expenditures of $12 billion in 2022, with Europe contributing 28% of this total.
From 2020 to 2023, Norway led the global market by installing 200 subsea trees out of a total of 600 placed in deep water (ranging from 125 to 1,500 meters).
During this same period, Norway also installed 1,400 km of SURF in deep water, surpassing Brazil’s 1,200 km.
The Role of Major Players in Future Developments
In 2024, ExxonMobil’s expanded operations are expected to significantly boost subsea tree installations.
Following Equinor, which installed 17% of the total subsea trees this year, ExxonMobil is projected to contribute 12%, with a primary focus on Guyana.
This growth is driven by major projects such as Yellowtail, Redtail, and Payara, highlighting Guyana’s increasing importance in the subsea sector amid heightened sanctions and a shift towards more sustainable and efficient operations.
SURF Sector Projections and Global Installations
In the SURF sector, global installations are projected to reach 3,500 kilometers in 2024, with Brazil accounting for 22% of this total.
The US and Angola are expected to contribute 15% and 10%, respectively. The installation rate is anticipated to grow at a CAGR of 15% from 2024 to 2028, with Brazil, Norway, the US, the UK, and Angola emerging as major markets.
Key Suppliers and Operators Shaping the Market
Looking forward, TechnipFMC is expected to supply around 400 subsea trees between 2024 and 2029. Of this total, 35% is estimated for ExxonMobil’s developments in Guyana and 22% for Petrobras in Brazil.
Simultaneously, OneSubsea is anticipated to supply close to 270 trees during the same period, with around 40% projected for Brazil.
Aker Solutions (now OneSubsea) is expected to supply 150 trees, with 80% earmarked for Norway.
Petrobras continues to be a dominant operator, particularly in South America, where it has heavily invested in pre-salt developments.
In Europe, Equinor and Aker BP stand out for their extensive subsea portfolios, with significant tieback projects on the Norwegian Continental Shelf underscoring their strategic importance.
In the U.S., Shell and BP lead with substantial investments in deepwater and ultra-deepwater exploration and production, while TotalEnergies maintains a strong presence in Africa, particularly in Angola and Nigeria.