Market Trends of Offshore Oilfield Services Industry
Drilling Services Expected to Dominate the Market
- Offshore drilling services refer to the process by which tubing is bored through the earth's surface beneath a sea and a well is established. A pump is connected to the tube, and the petroleum under the surface is forcibly removed from underground. The most common drilling methods used to extract oil and gas beneath the sea are rotary drilling, directional drilling, managed pressure drilling (MPD), percussion drilling, and others.
- According to Baker Hughes Company, the Asia-Pacific region hosts the most offshore oil and gas rigs worldwide. As of October 2022, there were 86 offshore rigs in that region.
- Deepwater oil production is concentrated in four countries: Angola, Brazil, Nigeria, and the United States. During the past years, deepwater investments have retained a significant share of offshore investments, reflecting opportunities in the Gulf of Mexico and offshore Latin America (Brazil and Guyana).
- Mature offshore fields are also creating opportunities for the drilling services market in the offshore segment. In Norway, oil companies plan to nearly double exploration drilling offshore Norway to focus on more mature areas of the Norwegian Continental Shelf (NCS). Moreover, Angola's deepwater production is also set to ramp up as its shallow-water sector matures. Therefore, owing to the plans to increase production from mature fields, the demand for drilling services in the offshore segment is expected to be driven during the forecast period.
- In February 2022, Abu Dhabi National Oil Company (ADNOC) kicked off a bid process for an engineering, procurement, construction, and installation contract for further development at its huge Lower Zakum offshore oilfield. The development is expected to bolster offshore exploration activities and drive demand for drilling services during the forecast period.
- In 2022, Saudi Arabia and Kuwait agreed to develop the Durra offshore gas field that lies between the neutral zones of both countries. The offshore oilfield is expected to produce 1 billion cubic feet per day and 84,000 barrels per day of condensate.
- Therefore, due to the above points, drilling services are expected to dominate the market during the forecast period.
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Asia-Pacific Expected to Witness Significant Growth
- Another sizable offshore oilfield services market is in the Asia-Pacific region, where nations like India, China, Indonesia, etc. dominate the market in large part.
- China was the fifth-largest producer of crude oil globally, producing 3,994 thousand barrels per day in 2021. Since the 2015-2016 slump in oil prices, crude oil production was on the decline, owing to cuts in upstream spending.
- However, in 2019, as a result of President Xi Jinping's call to expedite domestic exploration and production activities (particularly for natural gas) and to improve national security, multiple companies, particularly CNOOC, CNPC, and Sinopec, were likely to increase their capital expenditures in the offshore regions.
- In November 2021, the Chinese national oil company CNOOC declared that it started production from Lufeng offshore oil fields in the eastern part of the South China Sea. The main production facilities include two drilling production platforms and one subsea production system.
- CNOOC also announced its plans to develop a deepwater oilfield complex in the next few years, and it aims to double its exploration workload and proven reserves by 2025.
- In October 2022, CNOOC successfully made 14 discoveries and estimated 20 oil and gas structures for the first three quarters. In the third quarter, CNOOC made five discoveries, and four oil and gas structures were estimated to be built. Six new projects were placed into production, and seven other projects were planned to progress in 2022. The development of the small and medium-sized gas fields in the Liuhua 28-2 Tectonic Belt is expected to be driven by the Liuhua 28-2 West discovery in offshore China, and the replacement of the Yancheng 13-1 gas field is anticipated to be contributed by the discovery of Yacheng 13-10.
- Further, in December 2022, the Oil and Natural Gas Corporation Ltd. proposed drilling 53 exploratory wells in Andhra Pradesh, fifty in the KG Basin's Godavari on-land PML Block, and three in the Cuddapah basin's CD-ON HP-2020/1 (OALP-Vi) Block, with an investment of INR 2,150 crore (USD 263056370.00).
- Therefore, owing to the above points, Asia-Pacific is expected to witness significant growth during the forecast period.
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