A growth cycle is underway for the global natural gas and oil industry, with the offshore looking particularly inviting, according to Schlumberger Ltd. CEO Olivier Le Peuch.


As the world’s largest oilfield services (OFS) company, Schlumberger is attuned to the needs of its exploration and production (E&P) customers, which have begun pouring into the offshore, Le Peuch said earlier this month at the J.P. Morgan Energy Power & Renewables Conference in New York City.

“The growth cycle…is upon us,” he told the audience, repeating some remarks he made in April. Market fundamentals “are very constructive for our industry as it emerges from a period of underinvestment, with spare capacity and global inventories at decade lows, while oil and gas prices remain elevated.”

The “very favorable conditions are unfolding as we speak,” Le Peuch said. “Our second quarter is shaping up solidly, further strengthening our confidence in our ambition for 2022 and beyond. Directionally, all the growth and activity attributes are in our favor, positioning us to seize this cycle like never before.”

The growth cycle is set to impact “all phases of oil and gas development, from exploration to production,” and in “all operating environments –  from high-volume onshore to deepwater offshore.” 

North American and international growth is underway, and the offshore is not being left behind.

“In fact, the return of offshore represents an exceptional opportunity for our core,” Le Peuch said. “The growth cycle is developing across the entire offshore market, and we are better positioned for this than we have ever been, because of our breadth, technology, integration ability and the addition of digital, which will maximize upside performance.”

Rising Offshore FIDs

According to the CEO, the current list of industry final investment decisions (FID) is projecting “a nearly 50% increase in offshore investment over the next four years, compared to the period from 2016 through to 2019. 

“This is already manifesting in several FIDs year-to-date and a considerable increase in the pipeline of pre-FIDs across offshore basins.”
Schlumberger has a fleet of offerings for offshore markets, from the U.S. Gulf of Mexico and beyond. “Everywhere there is an offshore operation, Schlumberger is there,” the CEO said.

An uplift in the offshore would offer a solid return for the No. 1 player. The offshore operations “currently represent an average of five times the revenue potential of onshore, from the combination of higher market penetration, broader service and product offering, and higher technology intensity,” Le Peuch said.

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“Offshore operators today are looking for every opportunity to accelerate discovery and development cycle time and increase productivity. This performance focus results in a premium for our technology, digital operations, and integration capabilities that reduce cycle time, lowers breakeven price, and enhances project returns. Altogether, the return of offshore will be a very potent driver for further growth and margin expansion in our core.”

Meanwhile, the “defining characteristics” of this surge are aligned with the energy sector’s turn toward decarbonization and digital – and as gas and oil prices surge, Le Peuch said. 

“The industry is embracing decarbonization as a critical element that will ensure the long-term resilience of the industry and deliver on the mandate to lower emissions for a sustainable future,” Le Peuch said. “In parallel, digital is also being embraced as an enabler of higher performance, value creation and as a part of the industry’s path to decarbonized operations.”

In addition, he said E&Ps are planning higher capital spending across “all geographies and operating environments.” 

It’s not all for gas and oil, though. The dislocation of supply flows from Russia has boosted investments toward more diversified and secure supplies, the CEO noted.

The mix includes short- and long-cycle projects around the world, onshore and offshore. Schlumberger has recently increased its subsea and surface production systems, processing solutions, and drilling equipment. Additionally, it has continued to build “disruptive, fit-for-basin technologies,” which are differentiated and integrated for each operating region, from subsurface to midstream.

Still, with the opportunities, there are risks centered around energy security, inflation and the potential for a slowdown in economic growth. 

However, Le Peuch said, “the need for reliable energy supply and reinvestment in our industry remain very compelling, and will ultimately extend the growth cycle, both in terms of duration and magnitude.”