Europe & Africa Subsea Market Outlook subsea uk... · High costs of development drilling in deep...
Transcript of Europe & Africa Subsea Market Outlook subsea uk... · High costs of development drilling in deep...
The Subsea Sector in Africa & Europe Overview of Current Activity and Market Forecast to 2018
Marine Richard – Associate Analyst at Infield Systems Limited
12th November 2013
I. Subsea Market Overview: Drivers and Current Award Activity
a. Oil and Gas Price Dynamics
b. Subsea Market Drivers
c. Global Subsea Tree Awards
II. European Subsea Market Forecast
a. Subsea Market by Country
b. Subsea Market by Operator
c. Subsea by Type, Build Phase and Water Depth
d. Manufacturing Capacity
III. African Subsea Market Forecast
a. Subsea Market by Country
b. Subsea Market by Operator
c. Subsea by Type, Build Phase and Water Depth
IV. Conclusions
V. Administration
a) Contacts
b) Disclaimer
Table of Contents
2
Subsea Market Overview Drivers and Current Award Activity
SECTION I
Oil and Gas Price Outlook
Brent Oil Price Forecast (Annual Average)
Gas Price in Key Regions
Brent prices will likely fall in 2014, while the divergence in gas prices will gradually narrow
Sources: Infield Systems, 2013; U.S. Energy Information Administration, Petroleum and Other Liquids Database, 2013, BP Statistical Review of World Energy, 2013; Bloomberg, 2013.
• We anticipate Brent prices to fall in 2014 from their 2013 average
Downward pressure from increasing production
Better economic outlook in major economies
• Oil prices may fall in the second half of the decade
• Major divergence in global gas prices
US gas prices have been suppressed by abundant shale supply
Asian LNG prices have increased following Fukushima
European gas prices have stayed somewhere in the middle
• By 2020 gas prices will likely continue to rise in the US and fall gradually in the rest of the world
A fully traded global gas market remains unlikely by 2020
4
0
20
40
60
80
100
120
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
$/b
bl
Brent
2
4
6
8
10
12
14
16
18
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$/m
mB
tu
US (NYMEX) UK (NBP) Japan (LNG)
Oil production trends – onshore vs. offshore
Source: Macro Market Overview in Global Perspectives Reports to 2017 (published 2013).
0
10
20
30
40
50
60
70
80
90
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
mb
pd
Onshore Offshore Shallow Offshore Deep & Ultra-Deep
Undeveloped Deepwater Reserves by Country
6
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
MM
bb
loe
Oil Reserves Condensate Reserves Gas Reserves
Source: Macro Market Overview in Global Perspectives Reports to 2017 (published 2013).
Oil fields by On-Stream Year, Reserves Size and Water Depth
7
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Wat
er D
epth
(m)
Source: Macro Market Overview in Global Perspectives Reports to 2017 (published 2013).
Subsea Market Drivers – Deepwater Economics
8
Field Sanction Points by Water Depth
Production cost curves
• The vast majority of developments are sanctionable at an oil price of $90/bbl
• Field economics expected to be favourable for most developments
0
40
80
120
160
200
0
400
800
1,200
1,600
2,000
Produced MENA Conventional Other Conventional CO2 EOR Other EOR Deep Water Arctic Heavy Oil Bitumen Shale Oil
Ava
ilab
le Q
uan
tity
(b
n b
bl)
Available Quantity (Left) Cost Range (Right) Low Oil Price Medium Oil Price High Oil Price
$/b
bl
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0 10 20 30 40 50 60 70 80 90 100 110
Wat
er d
epth
(m
)
Sanction Price ($/bbl)
Shallow
Deep
Ultra Deep
Source: Macro Market Overview in Global Perspectives Reports to 2017 (published 2013).
Maximum Tieback Distance (km), 1970-2017 Average Tieback Distance (km), 1970-2017
Subsea Market Drivers – Going further The average tieback distance is increasing
9
• 1997: Shell’s MC Mensa in US GoM
Ultra deep subsea tieback to fixed platform – 110km
• 2007: Statoil’s Snøhvit/Albatross (Melkoya Island) in Norway
Shallow subsea tieback to shore – 156km
• 2016+: Chevron et al Gorgon area fields in Australia
Deepwater subsea tiebacks to shore – up to 188km
• The average length of tiebacks is increasing in line with the development of more remote and deeper fields
• Development of tiebacks featured across both green and brownfield work
• Subsea equipment used to target reservoirs over a wider area
• Technological developments have pushed the frontiers for deepwater E&P and use of SURF-only developments
0
5
10
15
20
25
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Avg Tieback Distance (km)
Source: Infield Systems
Mensa
Snøhvit/Albatross
Gorgon Area
Browse Basin CCS
0
50
100
150
200
250
300
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Max Tieback Distance (km)
Source: Infield Systems
Source: Macro Market Overview in Global Perspectives Reports to 2017 (published 2013).
Subsea Tree Awards by Quarter and by Region 2006-2013 Historically Africa, Europe and Latin America have accounted the majority of awards
Source: Subsea Match & Track Report Q2 2013 10
0
50
100
150
200
250
2006Q1
2006Q2
2006Q3
2006Q4
2007Q1
2007Q2
2007Q3
2007Q4
2008Q1
2008Q2
2008Q3
2008Q4
2009Q1
2009Q2
2009Q3
2009Q4
2010Q1
2010Q2
2010Q3
2010Q4
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
Africa Asia Australasia Europe Latin America Middle East & Caspian Sea North America
Recent Subsea Tree Award Activity in 2013
Subsea Tree Awards per Quarter 2008-2013
2013 YTD Market Share (%) by Manufacturer
The number of awards in 2013 shows that investor confidence has returned
• FMC
Call-off of frame agreement with Petrobras
Egina (Nigeria)
Awards in Gulf of Mexico
• Cameron:
Frame agreement with Petrobras
Many UK awards
Shah Deniz 2 (Azerbaijan)
• Aker Solutions
Frame agreement with Petrobras
Total’s operations in Africa
Kraken (UK)
• GE O&G
Gehem and Gendalo fields (Indonesia)
West Africa and the UK
11 Source: Subsea Match & Track Report Q2 2013
Aker Solutions
28%
Cameron 28%
FMC 37%
GE O&G 7%
0
50
100
150
200
250
FMC Cameron Aker Solutions GE O&G Dril-Quip
0
200
400
600
800
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Africa Asia Australasia Europe Latin America Middle East & Caspian Sea North America
Global Subsea Tree Awards by Region
Global Subsea Tree Awards (%) by Region 2014-2018
Africa 30%
Asia 8%
Australasia 6%
Europe 25%
Latin America 18%
Middle East & Caspian Sea
2%
North America 11%
Global Subsea Tree Installations by Region
Where do Europe and Africa fit in? Europe and Africa are expected to account for a major share of global subsea tree awards
Source: Subsea Match & Track Report Q2 2013
12
• Europe and Africa awards in 2014-2018
• Asia and Australia emerging markets for subsea
• North America: stable activity
• Latin America: 18% of future awards
Expected decrease in annual awards in 2014-2018
Europe and Africa to counterbalance decline
0
200
400
600
800
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Africa Asia Australasia Europe Latin America Middle East & Caspian Sea North America
European Subsea Market Forecast
SECTION II
European Subsea Equipment by Country
Subsea Equipment Installations by Country
Subsea Equipment Installations (%) by Country 2014-2018
A record number of trees are set to be installed in Europe in the next five years
• Subsea units expected for installation in 2009-2018
Includes trees, manifolds, templates and plems.
• Subsea units to be installed in next 5 years
24% of global installations
• Drivers
Economies coming out of recession
High oil prices
Favourable fiscal regime
Incremental drilling on producing fields
Development of marginal fields
New large developments
• Challenges
Dependent on continued financial incentives
Manufacturing Capacity
Source: Subsea Dataset Q2 2013
0
50
100
150
200
250
300
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Norway UK Netherlands Italy Others
UK 48% Norway
45%
Italy 2%
Others 5%
European Subsea Capex by Operator
Subsea Equipment Capex (US$m) by Operator
Subsea Equipment Capex (%) by Operator 2014-2018
The European subsea sector is characterised by a broad operator base led by Statoil
• Subsea Capex expected for 2014-2018. Includes all build phases:
Detailed Engineering
Procurement and Construction
Development Drilling
Installation
• Many operators
Mix of Majors, Independents and NOCs
Top 7 operators account for nearly 2/3 of subsea Capex
• Statoil’s dominant position:
Entirely in Norway
Aasta Hansteen, Gullfaks South, Oseberg, Johan Castberg, Troll, Visund
• Chevron: Rosebank
• BP: Schiehallion redevelopment, subsea tiebacks to Skarv FPSO
• Eni: Goliat
Source: Subsea Dataset Q2 2013
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Statoil BP Chevron Shell Eni Total EnQuest Others
Statoil 27%
Chevron 9%
BP 7%
Eni 6%
Shell 6%
Total 5%
EnQuest 4%
Others 36%
0
50
100
150
200
250
300
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Manifold Plem Satellite Well Subsea Compression Subsea Separation Template Templated Well
Subsea Equipment Installations by Type
Subsea Equipment Installations (%) by Type 2014-2018
Manifold 13%
Plem 2%
Satellite Well 54%
Template 8%
Templated Well 23%
Subsea Equipment Capex (%) by Water Depth 2014-2018
European Subsea Equipment by Type and Build Phase Shallow water developments are expected to account for over 75% of subsea Capex
Source: Subsea Dataset Q2 2013
Subsea Equipment Capex (%) by Build Phase 2014-2018
0-99m 13%
100-499m 64%
500-999m 7%
1000-1499m 16%
Detailed Engineering
3%
Development Drilling
52%
Procurement And
Construction 34%
Install 11%
Subsea Manufacturing Capacity in Europe Without plant expansions, utilisation rates are expected to reach 100% by 2017, eroding excess capacity
Source: Subsea Dataset Q2 2013
17
0%
20%
40%
60%
80%
100%
120%
-50
0
50
100
150
200
250
300
350
400
450
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Demand Excess Capacity Utilisation Rate (Europe)
African Subsea Market Forecast
SECTION III
African Subsea Equipment by Country
Subsea Equipment Installations by Country
Subsea Equipment Installations (%) by Country 2014-2018
A record number of subsea units expected for installation in Africa in 2014-2018, led by activity in Angola
• Subsea unit installations in 2009-2018
• Subsea units to be installed in next 5 years
20% of global installations
• Drivers
Rising demand for oil and high oil prices
Large deepwater and ultra-deepwater oil discoveries in the last decade in West Africa
Marginal fields tied back to a single FPSO
Large fields offshore Nigeria
Incremental drilling in North Africa
• Challenges
Fiscal regime in Nigeria
Upcoming laws in emerging regions
Manufacturing capacity
Source: Subsea Dataset Q2 2013
0
50
100
150
200
250
300
350
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Angola Nigeria Ghana Egypt (Mediterranean) Equatorial Guinea Congo (Brazzaville) Libya Others
Angola 47%
Nigeria 17%
Ghana 9%
Congo (Brazzaville)
6%
Equatorial Guinea 5%
Egypt (Mediterranean)
4%
Libya 3%
Others 9%
African Subsea Capex by Operator
Subsea Equipment Capex (US$m) by Operator
Subsea Equipment Capex (%) by Operator 2014-2018
The top 6 operators will represent most of the subsea Capex anticipated for Africa in 2014-2018
• Subsea Capex expected for 2014-2018
High costs of development drilling in deep waters
• Many operators
Primarily majors in established basins
Independents in North Africa
Independents in emerging countries in West Africa
• Top 6 companies
• Much more concentrated than Europe
• Total
Egina, Kaombo 1 and 2, CLOV, Moho Nord Marine
Pazflor, Ukot
• BP: PSVM, PCC
• Eni: Cabaca, Sankofa, N’Goma
• Chevron: Lucapa, Ekoli
Source: Subsea Dataset Q2 2013
0
2,000
4,000
6,000
8,000
10,000
12,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Total BP Tullow ExxonMobil Chevron Eni Noble Others
Total 35%
BP 12%
Eni 10%
Chevron 10%
ExxonMobil 9%
Tullow 8%
Others 16%
0
50
100
150
200
250
300
350
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Booster Pump Manifold Plem Satellite Well Subsea Separation Templated Well
Subsea Equipment Installations by Type
Subsea Equipment Installations (%) by Type 2014-2018
Manifold 19% Plem
3%
Satellite Well 78%
Subsea Equipment Capex (%) by Water Depth 2014-2018
African Subsea Equipment by Type Majority of Africa subsea Capex will be geared towards deepwater developments in 2014-2018
Source: Subsea Dataset Q2 2013
Subsea Equipment Capex (%) by Build Phase 2014-2018
0-99 1%
100-499 6%
500-999 19%
1000-1499 38%
>1499 36%
Detailed Engineering
2%
Development Drilling
67%
Procurement And
Construction 18%
Install 13%
Conclusions
SECTION IV
Europe & Africa Comparison Table 2014-2018
Europe Africa
Subsea Equipment Installations x x
Global Market Share (subsea installations) x x
Subsea Capex x x
Global Market Share (subsea Capex) x x
Main Countries UK, Norway Angola, Nigeria
Ghana, Equatorial Guinea, Congo (Brazzaville) Libya, Egypt
Subsea Drivers Shallow-water marginal fields, EOR
Some standalone developments Cluster developments
Large deepwater discoveries
Equipment Type Subsea trees
Templates and compression in Norway Subsea trees
Operator Base Very diversified
IOCs, Independents, NOCs Primarily Majors in established basins Independents in underexplored areas
Challenges Field economics
Fiscal policy PIB in Nigeria
Fiscal policy and local content in emerging areas
Administration
SECTION V
Contact Points A globally recognised oil & gas consultancy with a dedicated international team of cross-sector specialists
25
Contact Points
33 energy professionals – global footprint
Office Locations
London
Aberdeen
Houston
Head Office
Regional Office Gregory Brown (Consultant)
London [email protected] +44 207 423 5032
Marine Richard (Associate Analyst) London
[email protected] +44 207 423 5046
Quentin Whitfield (Director) London
[email protected] +44 207 423 5001
Ioanna Karra (Associate Consultant) London
[email protected] +44 207 423 5026
James Hall (Director of Operations) London
[email protected] +44 207 423 5024
Steve Adams (International Sales Manager) Aberdeen
[email protected] +44 122 425 8150
Disclaimer
26
The information contained in this document is believed to be accurate, but no representation or warranty, express or implied, is made by Infield Systems Limited as to the completeness, accuracy or fairness of any information contained in it, and we do not accept any responsibility in relation to such information whether fact, opinion or conclusion that the reader may draw. The views expressed are those of the individual contributors and do not represent those of the publishers.
Some of the statements contained in this document are forward-looking statements. Forward looking statements include, but are not limited to, statements concerning estimates of recoverable hydrocarbons, expected hydrocarbon prices, expected costs, numbers of development units, statements relating to the continued advancement of the industry’s projects and other statements which are not historical facts. When used in this document, and in other published information of the Company, the words such as "could," "forecast”, “estimate," "expect," "intend," "may," "potential," "should," and similar expressions are forward-looking statements.
Although the Company believes that its expectations reflected in the forward-looking statements are reasonable, such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors could cause actual results to differ from these forward-looking statements, including the potential for the industry’s projects to experience technical or mechanical problems or changes in financial decisions, geological conditions in the reservoir may not result in a commercial level of oil and gas production, changes in product prices and other risks not anticipated by the Company. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties.
© Infield Systems Limited 2013