With offshore exploration and appraisal making a comeback, this year could see offshore exploration spending increase by more than 20%, SLB CEO Olivier Le Peuch said.
Le Peuch recently spoke at the J.P. Morgan Energy, Power & Renewables Conference where he made a few predictions regarding the offshore oil and gas industry for this year and beyond.
“Today, offshore is the fastest-growing market globally driven by long-cycle developments, production capacity expansions, the return of exploration and appraisal in brownfields and new frontiers, and the criticality of gas as a long-term fuel for energy security,” Le Peuch said.
Since energy security became imperative, operators across the world are looking to hasten discovery to renew supply, accelerate development cycle times, and increase the productivity of their offshore assets.
“As a result, offshore, from shallow to deepwater, is experiencing a broad resurgence. There are currently more than 400 active offshore rigs, which is projected to grow low to mid-teens this year, and we anticipate further double-digit growth in 2024,” he added.
He continued by giving an outlook beyond 2024. Le Peuch said that he anticipates more than $500 billion in global FIDs across over 30 countries between 2022 to 2025, with more than $200 billion attributable to deepwater – a 90% increase compared to 2016 through 2019.
The SLB CEO noted that the resurgence stands on the shoulders of accelerating mature basin developments, large development projects scale-up in Guyana, Brazil, and the Middle East as well as a return of exploration and appraisal in frontier offshore provinces such as Namibia, Tanzania, Colombia, India, and East Mediterranean
“This year, we anticipate offshore exploration spending to increase more than 20% and see a long tail of activity with 65 lease rounds concluding globally, in addition to several countries awarding leases through open-door policies,” he explained.
SLB’s top man believes that this trend is here to stay as advances in efficiency through technology and digital have significantly improved project economics. Lower break-evens now give E&P operators the confidence to invest in long-cycle projects.
“Of the $500 billion in FIDs planned between 2022 to 2025, approximately 85% are viable at commodity prices below $50, decoupling them from short-term price volatility,” Le Peuch told attendees. “With these factors at play, we expect the offshore market to strengthen in the coming years […].”
