Thursday, March 30, 2023
HomeAnalysisClarksons Research: Offshore Review & Outlook


To our FREE newsletter
Get all the latest maritime news delivered straight to your inbox.

Clarksons Research: Offshore Review & Outlook

The Clarksons Research semi-annual review and outlook of the offshore and energy markets, Offshore Review and Outlook, has been released.

While offshore oil and gas markets continue to face challenges, improved activity, utilisation and sentiment are also being reported. And as the focus on energy transition and de-carbonisation intensifies, offshore wind continues its exciting growth phase.

Summarising the report, Steve Gordon, Managing Director of Clarksons Research, commented:

After the dramatic disruption of 2020, offshore oil and gas markets are seeing slightly improved activity, utilisation and sentiment edge into the market. Our cross-segment day rate index is now up 15% during 2021, albeit only returning to the modest market improvement levels seen pre-Covid. The contrasts across offshore energy we reported previously, with positive momentum around wind, continue.
Global energy markets have continued to rebalance, with returning economic growth and easing of restrictions boosting demand (estimated at 96.8m pd by June) combining with the OPEC supply cut discipline of the past year. Reversal of the previous heavy oversupply of mid-2020 (albeit demand is still 4% below 2019) has helped oil prices improve before fluctuating around $70-75/bbl since early June. Higher prices have prompted OPEC+ agreement to begin a gradual easing of supply curbs.

Offshore oil and gas remains 17% of global energy supply (offshore wind is 0.2%). After a small decline, offshore oil output is expected to grow in 2021 by 1.1% to 24.86m bpd (28% of global oil output). Offshore gas is projected to grow by 6.2% in 2021, reaching 127bn cfd (32% of global gas production). Total capital commitments for new offshore oil and gas projects reached $48bn in Jan-July 2021, already exceeding $41bn recorded in full year 2020. Our full year projection for 2021 is $81bn, though upside potential exists if oil prices remain firm. Global E&P spending is expected to see a moderate increase of c.5% y-o-y, despite further decline in onshore shale spending. Meanwhile, offshore wind capex is projected to reach $50bn in 2021 (although just $12.5bn has been committed in 2021 to date, multiple large windfarm FIDs are projected during 2H 2021).

The drilling rig market has seen some pickup, with utilisation of floaters up 8 points since start year (to 72%), and jack-up utilisation also up, but by a more disappointing 2 points (to 77%). Whilst demand has improved marginally, it is still down on pre-Covid levels (465 rigs, were active in August versus 524 at start-March 2020), and utilisation has been helped by an increase in removals (2021 ytd: 29), some of which have been finalised during Chapter 11 restructuring. There have been “pockets” of improved rate levels in markets such as the US Gulf. Our forecasts suggest further consolidation and gradual utilisation improvements (to 85% / 83% for Floaters / Jack Ups by end 2022).

While remaining challenging, OSV markets have also improved, with demand up 12% on start-year. By start August, OSV utilisation had risen by 7 points to 65%, helped by an annualised 50% increase in removals. After a 15% drop across 2020, our overall OSV rate index gained 11% to 94.6 in August, with encouraging improvements for large PSVs but more sluggish developments for AHTS. Again our projections suggest improved utilisation: rates will hopefully follow. Emissions reduction is increasingly becoming a focus for charterers, with solutions in the near term involving batteries, but newbuildings still a little way off.

Backlogs for subsea contractors have started to improve and there is some cautious optimism around next year’s tendering levels. Supported by wind demand, MSV utilisation has improved from seasonal lows of 57% in February to 72% in August: North Sea rates are up to their best levels since 2015. MOPU sanctioning has seen a pick-up (6 FPSOs, 6 other MOPUs awarded) with Petrobras accelerating project timelines and other projects such as Limbayong (Malaysia) and Jansz/Io (Australia) making progress. Cost escalation and financing are challenges.
After record investment ($56bn) and startups (6.7GW) for offshore wind in 2020, activity was slower in 1H 2021, but underlying trends of geographic diversification, larger turbines (avg. height installed in 2021: 126m), floating farms and being “green through the supply chain” are expected to continue. We are still projecting record start ups this year (12.6 GW). There has been ordering of WTIVs (10 confirmed in 2021) and SOVs (9), as the development of the specialist “wind” fleet continues. As post-Covid planning and political focus on energy transition intensifies, (see our Energy Transition Model p150), debate around long term offshore oil and gas production is impacting access to finance and long term spending commitments.

After a challenging 2020, offshore oil and gas markets have picked up in 2021 and there is some cautious optimism slowly returning. Offshore wind, meanwhile, continues its exciting investment and development phase.

Source: Clarksons Research

Related Posts


Finance & Economy
Shipping News

TORM announces secondary public offering of Class A common shares

TORM announced the commencement of a secondary public offering of 5,000,000 of the Company’s Class A common shares by OCM Njord Holdings S.à r.l.,...

Lomar Appoints Marius Bujor As Technical Director

Lomar Shipping, the shipping subsidiary of the Libra Group, has announced the appointment of Marius Bujor as its new Technical Director. Based in the...

EXMAR Reports Improved 2022 Results

During its meeting of 28 March 2023, the Board of Directors of EXMAR reviewed the results for the year ending 31 December 2022. HIGHLIGHTS 2022 ·...

Carnival Corp Posts Smaller-Than-Expected Quarterly Loss

Cruise operator Carnival Corp on Monday reported a smaller-than-expected quarterly loss and beat estimates for revenue, helped by resilient demand for leisure travel, higher...

Eva Birgitte Bisgaard steps down as chief commercial officer at Maersk Tankers

Eva Birgitte Bisgaard is stepping down from her role as chief commercial officer at Maersk Tankers. Christian M. Ingerslev, chief executive officer of Maersk Tankers,...

Wartsila sees role for ethanol in fragmented bunker fuel landscape

Wartsila is seeing a potential role for ethanol in the shipping industry’s multi-fuel future,...

Baltic index ticks up on firm demand for larger vessels

The Baltic Exchange’s main sea freight index edged up on Wednesday on higher rates...

Baltic index drops to a near 3-week low on lower vessel demand

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk...

Baltic index falls on lower vessel demand

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk...

Global Goods Trade Softening from 2022’s Record Level

International commerce soared to a record of $32 trillion in 2022, but goods trade...

APM Terminals to double capacity in Rotterdam port

APM Terminals, a subsidiary of Danish shipping company Maersk MAERSKb.CO, plans to double its capacity at Rotterdam Port, a spokesperson for the company said...

APM Terminals announces strategic partnership in Vietnam

APM Terminals engages in a strategic partnership with Vietnamese HATECO group for a project to develop two new deep-water berths at Lach Huyen port...

Russia-Bound Containers Stuck At Antwerp Port For Over A Year

Five Russia-bound containers from India’s Jindal Stainless Ltd (JSL) JIST.NS have been stuck at the Belgian port of Antwerp for around a year, unable...

Drewry: Port Throughput Index Down 4.5% Year-on-Year

The Drewry Container Port Throughput Indices are a series of calendar adjusted volume growth/decline indices based on monthly throughput data for a sample of...

Port of Los Angeles moves 487,846 container units in February

The Port of Los Angeles processed 487,846 Twenty-Foot Equivalent Units (TEUs) in February, a 43% decrease from the previous February’s all-time record. “February declines were...