Market conditions

2013 saw a slight downward revision of global growth estimates for the Offshore E&C sector. With demand for oil growing more slowly than the supply, leading to expectations of a small drop in oil prices, Oil Company spending grew more slowly than had been forecast one year ago. In spite of this, the year saw excellent levels of activity registered in almost all segments.

The subsea development segment continued to grow at a sustained rate, with a much higher number of subsea units entering into production than in 2012. The North Sea/North Atlantic area was the most active (and indeed is expected to remain so in 2014), followed by Latin America (first and foremost Brazil) and West Africa (particularly Angola and Nigeria, with the development of the Pluto, Saturn, Venus and Mars fields for BP and Usan for Total). As a result of the high levels of activity registered in the North Sea, operations in shallow waters in 2013 were much higher than they have been in the past. Deep-water discoveries however continued to be the main driver of growth in the sector, with the year seeing important discoveries such as Flemish Pass in Canada, Sigsbee in the Gulf of Mexico, as well as the Angolan Pre-Salt reservoirs in the Kwanza Basin, which could prove to have enormous potential.

The small diameter pipeline market continued to grow during 2013, driven by a large number of projects in South-East Asia (Malaysia and Vietnam), deep-water developments in the Gulf of Mexico and intense activity in the Middle East, such as the ongoing operations on the Al Wasit project located in the Persian Gulf. In Latin America and the North Sea/North Atlantic area, a drop was registered in installed kilometres, while West Africa posted similar levels to 2012, with growth forecast for 2014.

Meanwhile the large diameter pipeline registered lower levels of activity in 2013 than in the previous year. The drop in activity affected in particular a number of areas that in 2012 had been particularly active, as the result of the completion of operations on a number of major pipelay projects. Especially affected by this trend were the Asia-Pacific and the North Sea/North Atlantic areas.

Conversely, the Gulf of Mexico registered an increase in installed kilometres thanks to the large number of pipelines laid on ultra-deep water operations (e.g. Walker Ridge and Keathley Canyon).

The fixed platform installation sector recorded a marked increase in units installed, mainly in the Asia-Pacific and Gulf of Mexico areas. The former accounted for almost half of all global installations in absolute terms, with activities concentrated in particular offshore China, Malaysia and Indonesia. Another very dynamic area was the Middle East/Caspian Sea area, which by itself accounted for more than a quarter of all global installations.

Most of these were located in the United Arab Emirates and Saudi Arabia, where a number of major large-scale projects are underway, such as Umm Lulu, Satah Al Razboot (SARB), Upper Zakum, and Al Wasit. Finally, the year saw an increase in heavy lifting activities, which accounted for around a fifth of all installations.

Following the slowdown in 2012, the FPSO segment registered a recovery in terms of installations as a result of a number of new units installed in Brazil. In parallel, there was a drop in the number of orders placed for new units, due to Brazilian company OGX filing for bankruptcy. In spite of this, Brazil continues to represent a key market for the sector, accounting for almost half of global demand.

The positive phase for the FSRU (Floating Storage Regasification Unit) continued during 2013, with the FSRU Toscana commencing operations and a number of new orders placed for new units in Latin America and the Middle East.

The FLNG segment continued to register rapid growth, but the upwards trend is not without its elements of uncertainty.

While the number of projects where the use of FLNG technology is being considered is growing, decision-making is taking longer than anticipated and there have been a number of situations in which oil companies have eventually rejected FLNG in favour of the use of pipelines. A recent decision in favour of FLNG however arrived on the Browse project, in which Woodside has opted to develop a floating unit concept. Australia and Asia-Pacific are the key areas for the FLNG segment, although there are potential prospects for development in other areas, such as Mozambique, Iraq, Israel, and Brazil.