Expenditure on deepwater projects in the years after 2016 is expected to surge following a slight lull in the preceding two years, according to the latest figures from UK analyst Douglas-Westwood.

Global deepwater spending is set to rise 130% to US $260 billion over the five years from 2014 to 2018 compared to the previous 5-year period, according to the new forecast from the analyst. According to the latest in its series of ‘World Deepwater Markets Forecasts for 2014 to 2018’, Douglas Westwood forecasts that deepwater expenditure figures will be driven by projects in West Africa and the Americas – including, perhaps not surprisingly, the US Gulf of Mexico and Brazil.

“Africa and the Americas continue to dominate deepwater capital expenditure (Capex), with $213 billion set to be spent over the next five years,” said the report’s author, Balwinder Rangi.

Separating the world’s major deepwater markets, Africa, North America and Latin America, Rangi said of those three regions that Africa is set for the greatest growth: “... as East African natural gas developments begin production and become more prominent in the latter years of the forecast period. Latin America will remain the largest market and North America is expected to experience the least growth.”

Rangi also pointed out that Douglas-Westwood had identified a “temporary trough in global expenditure in 2015” primarily driven by delays to delivery of FPS units in Latin America. “African projects have also experienced delays resulting in a surge in Capex from 2016 onwards,” he said.

Report editor Steve Robertson noted that while the economic viability of deepwater field developments vary, a stable oil price of around $80/bbl over the long term has helped ensure the future of most deepwater projects. “However, despite robust oil prices, a number of flagship projects have been cancelled through surging E&P costs,” he said.

Offshore