Ssuk - Rov Event - Sep 2013 [Web]
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Transcript of Ssuk - Rov Event - Sep 2013 [Web]
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ROV Market Prospects
Andrew Reid, 6 September 2013, Aberdeen
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www.dw1.com
LNG
offshore
onshore
downstream
power
LNG
renewables
Established 1990 Aberdeen, Canterbury, London,
New York, Singapore & Houston
Activity & Service Lines Business strategy & consulting Commercial due-diligence Market research & analysis Published market studies
Large, Diversified Client Base 1000 projects, 72 countries Leading global corporates Energy majors and their
suppliers Investment banks & PE firms Government agencies
Douglas-Westwood: Our Business
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Macro Views
ROV Market Drivers
ROV Market Outlook
Conclusions
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Global Energy Demand Is Expected To Grow.
Energy intensity reaching/reached limits in many OECD countries Developing economies will continue to drive global energy demand
GlobalOilConsumption(BP)
Source:BP2013
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Global Energy Demand
PrimaryEnergyDemand
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Asia Pacific Africa Middle East Europe S&C America N America
Growth since 2000 Asia Pacific 92%Africa 47%Middle East 81%Europe 4%S&C America 42%N America -1%
Europe & N American consumption is almost flat-lining Many others growing strongly but from a small base
Source:BP2013
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Energy Use By Type Is Changing
60% of oil is used in transportation (OECD countries) but in some it is >70%
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Macro Views
ROV Market Drivers
ROV Market Outlook
Conclusions
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Three Major Themes Driving Increased ROV Demand
Offshore Supply by Type 1970-2020
Offshore GasOffshore Oil
20mn boepd
30mn
40mn
50mn
60mn
70mn boepd
Global Oil & Gas Supply 1970-2020
100mn boepd
120mn
140mn
160mn
180mn
200mn boepd
OffshoreOnshore
Offshore Supply by Depth 1970-2020
DeepShallow
20mn boepd
30mn
40mn
50mn
60mn
70mn boepd
Growing offshore production
Growing deepwater production
Growing offshore gasproduction
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2007 2009 2011 2013 2015 2017
Deepwater Drilling (Indexed to 2007)Shallow Water Drilling (Indexed to 2007)
Drilling To Increase In Deepwater
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Subsea Hardware Market Growing
$135bn Capex forecast 2012-16 Golden Triangle to form 65% Subsea gas export lines to dominate other regions spend $35bn spend on production hardware and $39bn on SURF
Source:WorldSubseaHardwareMarket20122016(DouglasWestwood)
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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
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AfricaAsiaAustralasiaEastern Europe & FSULatin AmericaMiddle EastNorth AmericaNorwayRoWEUK
Picture:FMC
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Deepwater Capex to rise by 90%
Five-year Capex to total $223bn Golden Triangle $174bn of spend Asia (20%) is a high-growth opportunity from a small base $78bn on drilling & completion of subsea wells
Source:WorldDeepwaterMarketForecast201317DouglasWestwood
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Major Cost And Margin Challenges For IOCs
Structural costs: geology (HPHT deep &
complex) remote locations extreme conditions (deepwater,
arctic) marginal fieldsDurable costs: forex rates (e.g. Aus)Transient costs: manufacturing bottlenecks certain labour shortages elevated drillship dayrates Combined data for BG, BP, COP, CVX, ENI, OXY, PBR, RDS, STO, TOT, XOMSource: Bloomberg via Phibro Trading LLC
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Liquids Production - RHS
CAPEX ($ billion) - LHS
Brent ($/bbl) - LHS
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E&P Costs Brazil Is Struggling
2013 will be worse (Petrobras CEO February 2013) 2% production decline in 2012 to 2 mbpd. And 0% to -2% in 2013? Implicit 11% natural decline rate 17% QoQ underlying lifting cost increase (11% excluding wage increases) Why? High exploration expenses and impact of local content policies
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Macro Views
ROV Market Drivers
ROV Market Outlook
Conclusions
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Global ROV Expenditure
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AfricaAsiaAustralasiaEastern Europe & FSULatin AmericaMiddle EastNorth AmericaNorwayRoWEUKROV Expenditure
Significant growth in global ROV operations expenditure is forecast for all regions with the exception of the Middle East, and Eastern Europe & FSU.
Global expenditure is expected to rise from $1,347m in 2013 to $1,878m in 2017. Africa remains the largest regional market throughout the forecast period, with total
ROV expenditure set to increase from $324m in 2013 to $547m in 2017. The number of ROV days is expected to increase from 122,958 days in 2013 to
139,476 days in 2017.
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ROV Days by Driver
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
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RM - Repair & MaintainenceDS - Subsea DV WellsDS - E&A WellsCS - Trunkline InstallationCS - FPSO Mooring & RisersCS - Subsea ProcessingCS - TMFJCS - Umbilicals & FlowlinesCS - Subsea TreesROV Expenditure
This is driven primarily by E&A and development well drilling support requirements E&A drilling support contributes the largest proportion of future work for ROVs,
making up almost 41% of demand days over 2013-2017. Trunkline installation days remain steady during the forecast period, as large
projects in Asia, the Americas and Europe can take years to complete.
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Macro Views
ROV Market Drivers
ROV Market Outlook
Conclusions
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Conclusions
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Macro fundamentals are strong and support continued investment in the energy sector
Increased investment in offshore and deepwater oil and gas production will support continued ROV demand
Increasing costs are not sustainable and further delays and potential cancellation of projects are expected
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Thank You