Between now and 2016, close to $77 billion will be spent on worldwide subsea vessel operations, representing an increase of 63% over the previous five-year period, according to new research by energy adviser Douglas-Westwood (DW). North American spending is expected to total $13 billion, an increase of 23% from the past five years.
Subsea vessel demand is expected to total 326,500 days, a 33% increase while annual expenditure nearly double to $20.3 billion in 2016 from $11.3 billion in 2012, said DW in its World Subsea Vessel Operations Market Forecast 2012-2016.
"The move toward deepwater in underdeveloped regions, and ultra-deep in developed ones, is driving an increase in vessel demand," said report author Joseph Corrigan. "Greater competition for high-capability vessels is causing inflation in dayrates and driving up market value.
"By 2016, there will be more complex deepwater projects sanctioned, and this should benefit the vessel contractors with deepwater capability and engineering experience. Deepwater awards will suit contractors with modern vessel fleets, strong project execution skills and a solid track record in delivering deepwater projects."
Between 2006 and 2012, 169 vessels entered the market, increasing capacity by 60% to 446 vessels operated by 83 contractors," a highly fragmented and competitive supply chain," said Corrigan. "Saturation of the market is now evident for some vessel categories, but high demand continues for others."
The deepwater "golden triangle" of the Gulf of Mexico, West Africa and Brazil is expected to account for 34% of global spending over the forecast period, according to DW. Latin America is forecast to be the largest market with $14 billion to be spent during 2012-2016, which would be an increase of 94% on the previous five-year period.
"The North American market has now recovered following a dip in activity during 2011-2012 -- due to the economic crisis and the fallout from the Deepwater Horizon moratorium," Corrigan said. "North American expenditure is expected to total almost $13 billion, making it the world's second largest market. This is a 23% increase on the previous five years ($10.3 billion)."
DW's Thom Payne, who edited the report, said the "general outlook for the subsea vessels market shows long-term growth potential and a very sizable business opportunity. Despite this, the market will retain its long-term cyclicality as vessel owners overreact to the up-cycles.
"The best vessels will, however, always find a market, and niche players will continue to thrive in any downturn. As with any cyclical industry, taking a long-term view and careful timing of asset investment is therefore essential."
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