Global Offshore Oil & Gas Market Report – Q1 FY25

A global round up – west to east

The consensus is that the hydrocarbon industry is mid-cycle, with a healthy oil price driving ongoing investment and growth throughout the upstream value chain. A snapshot of oil prices highlights that West Texas Intermediate (WTI) saw lows of $16.94 per barrel (April 20, 2020) during the pandemic. 

As pandemic impacts eased, WTI experienced considerable volatility, reaching a high of $116 per barrel (May 30, 2022). Ten months of relative stability followed, with prices hovering between $75 and $85 per barrel. The pattern was similar for brent crude.  

Market behaviour, alongside an analysis of International Oil Company (IOC) investor presentations and analyst forecasts, confirm global oil and gas as being at a mid-cycle point. This is according to Jamie Carrig, President of Viper Innovations Inc., based in Houston, who notes: “When oil prices are sustained at or above $80 per barrel, existing production is economic, particularly for GOM producers, as it’s a lower offshore cost per barrel region.  

“Looking at GOM specifically, the region is set to reach peak production in the next two years, driven by four large production facilities coming online, including Shell and Chevron this year. Add ten subsea tiebacks forecasting first oil within two years, you can see the market is strong in activity.”  

GOM and Brazil meet in the middle at Guyana 

Diego Baraldi, Viper Innovations’ Business Development Manager in Brazil, says Brazil remains the main hotspot of activity in South America. However, there are exciting developments further north, towards the equatorial margin. “The pace in French Guiana, Suriname and Guyana is high. Six projects are approved in Guyana, with three of them currently producing around 645,000 bpd. Exxon recently sanctioned the Whiptail project, meaning it has three projects in production. With the addition of the other sanctioned projects, Guyana will see its production jumping to 1.2 mbpd in the coming years.” 

Jamie, whose office is close to Chevron and ExxonMobil’s headquarters in Houston, adds: “Exxon is making discovery after discovery since it started surveying in 2008. The first project, Liza, an ultra-deepwater field, started production five years ago. Since then, four others have come on stream. Five FPSOs and 250 trees have either been installed or are on their way offshore.”   

Diego adds that after two decades of Petrobras domination, most of the majors have projects at production and exploration stage, and Petrobras has been busy divesting older assets: “Like we saw in the North Sea, aging assets have been divested to IOCs with expertise in enhanced recovery. Petrobras started this in 2017, with more pace in the last four years, so most onshore and shallow water parts of the portfolio are gone. This has led to a more diversified market, although one still dominated by Petrobras. There’s also been a new government in Brazil with a different view on oil and gas.”      

Licensing hold ups ease, mid-term growth expected 

A slowdown in exploration caused by licensing bottlenecks and production faltering because of slow government contracts is easing in several major markets, meaning exploration in the short term and potential new production in the short-to-medium term. Other regions are ramping up licensing and exploration activity.  

Sola is buoyed by the Nigerian government’s fast-tracking of new projects. “Licensing has slowed in a bureaucratic bottleneck, but there’s a commitment to reduce contract time by 50% and approve the operators to fast-track their investment. Now security is improved, this new environment means production is growing quickly.” 

This positive activity is region-wide: “Côte d’Ivoire activity is expanding, and 20 new wells are planned in the coming months for the block’s release following the latest licensing round. Ghana is also drilling and developing new assets.”  

Diego says the new government has a different, more positive view on oil and gas: “This means more exploration licences, and they are actively involved in discussions about the future of the extensions to provinces in Guyana and Suriname.” The government is enthusiastic about the energy transition, but Diego understands there is “room for oil and gas. The latest investment plan from Petrobras shows increased renewables and downstream development, but it also increases upstream investment.”  

Karen notes the CNOOC has been generous with its latest licensing round: “There were 19 blocks licensed for exploration in 2021 and 13 in 2022, but so far there have been no major discoveries. Exploration drilling has already begun in the blocks licenced in December.” 

Technology trends that underpin growth  

Technology is facilitating growth, extending field life with enhanced recovery techniques and finding solutions for challenging fields like stranded and deepwater fields, and high temperature and pressure reservoirs. 

Most of Nigeria’s offshore fields are 20 years old and ripe for solutions like V-LIM and V-LIFE to extend operating life. Sola has seen increased interest in upgrading infrastructure to enhance production. As no one wants to replace umbilicals, this has meant interest in Viper Innovations. “An added attraction of sophisticated IR monitoring tools is that Nigeria’s subsea architecture is complex, so it can be hard to find faults. As such, installing V-LIFE is a no-brainer. The typical Nigerian deepwater development can have a number of well slots, serviced by many umbilicals. This means a high well to topside asset ratio.” As a result, each umbilical is even more essential for smooth, uninterrupted production. 

What is happening with tiebacks to ageing fields is getting Jamie excited about the potential for Viper Innovations’ V-LIM and V-LIFE solutions: “Many of the tiebacks are new developments being tied back to aging assets that have been producing for 15 to 20 years. This is an interesting dynamic that requires an analysis of life extension potential for the aging assets, and this is where Viper Innovations’ data and asset integrity solutions play an essential role.  

“Operators need approval from GOM’s regulator, the Bureau of Safety and Environmental Enforcement’s (BSEE) Gulf of Mexico region, to tieback into older assets, particularly as some older assets may be nearing the end of their operating life. There is also a focus on upgrades and the extension of the older asset. The analyses needs integrity data and forecasts for the tieback’s operation. V-LIM can provide some of the essential data, and V-LIFE to extend the life of some of the subsea channels.” 

Paul points to new technologies to be coming to Australian waters soon in the shape of subsea compression technology that will boost production: “This is technology first seen used in the Norwegian North Sea that has the potential/ability to help extend the field’s production life. The longer the field life becomes there is more potential for possible subsea cable/umbilical failures and this is where Viper can assist the local operators here in Australia, many of which have already benefitted from the use of V-LIM/V-Life for their operations”.