Deepwater expenditure is expected to increase by 130 per cent, compared to the preceding five-year period, totalling $260 billion from 2014 to 2018, with growth driven primarily by Africa and the Americas, a report said.

As production from mature basins onshore and in shallow water declines, development of deepwater reserves has become increasingly vital, added the 12th edition of its World Deepwater Market Forecast 2014-2018 launched by Douglas-Westwood (DW), which supports clients across industry, financial services and government.

Robust oil prices support investment in deepwater developments – the sustained high oil prices over the past few years have increased confidence in the sector.

Balwinder Rangi, report author, said: “Africa and the Americas continue to dominate deepwater capital expenditure (Capex), with $213 billion set to be spent over the next five years. Africa is forecast to experience the greatest growth among the three regions, as East African natural gas developments begin production and become more prominent in the latter years of the forecast period. Latin America will remain the largest market and North America is expected to experience the least growth.

“Douglas-Westwood (DW) has identified a temporary trough in global expenditure in 2015 primarily driven by delays to delivery of FPS units in Latin America. African projects have also experienced delays resulting in a surge in Capex from 2016 onwards.”

Steve Robertson, report editor, said: “The deepwater market requires significant continued investment in infrastructure. Whilst the economic feasibility of deepwater fields varies, typically oil prices of $80 per barrel (WTI) over the long-term ensure the viability of the majority of developments.”

“However, despite robust oil prices, a number of flagship projects have been cancelled through surging E&P costs. Challenges in project execution, cost and local content are not unique to deepwater. Ultimately, the maturity of onshore and shallow producing areas is driving increased and unprecedented levels of activity in deepwater,” he added. – TradeArabia News Service