Still ‘hope’ for the subsea sector over coming years, says analyst

There is “hope” for a return of subsea projects in UK waters next year and in 2022, a market analyst has said.

Henning Bjorvik, senior oilfield service analyst at Norwegian consultancy Rystad Energy, said there was potential for 30 subsea tiebacks in UK waters in coming years. These could be commercial at oil prices of at least $30 per barrel, he added.

Global subsea activity levels this year have taken a plunge, which is reflected in orders for subsea Christmas trees – equipment that controls the flow produced by a well. These are expected to decline to 2016 levels this year, the lowest since the turn of the century, to fewer than 100.

Mr Bjorvik said the floating production, storage and offloading vessel projects which drive these orders, such as Equinor’s Rosebank development west of Shetland, had been “pushed out” and “down the pipeline” as a result of the Covid-19-driven oil price crash.

Speaking during a Subsea UK webinar, Mr Bjorvik said it was “scary to see” the global subsea sector on track to revisit the 2016 numbers after only four years.

Orders are expected to return to “more comfortable levels” by 2022, helped by “hot spots” in Brazil and Guyana, he said.

UK North Sea activity levels may also see a recovery before long, he said, adding: “There is hope for subsea tieback projects to come back in 2021 and 2022.”

Meanwhile, Rystad’s latest forecast for global oil demand suggests a drop of 11.5% in 2020.

Henning Bjorvik