Steady Growth Predicted for Offshore Maintenance
Douglas-Westwood forecasts a steady recovery from the recent oil price downturn in the offshore maintenance market with spending expected to improve significantly between 2017 and 2021.
Ben Wilby, author of World Offshore Maintenance, Modifications & Operations Market Forecast 2017-2021 says, “Despite there being considerable price pressure on MMO providers, the key drivers of spend remain strong with numbers of global and fixed platforms, degradation of existing assets and industry regulation all contributing to 4.1 percent CAGR growth in global offshore MMO expenditure over the 2017-2021 period”
In 2017, expenditure is forecast to total nearly $81 billion for the world’s global offshore platform population of approximately 8,700 fixed and floating assets. 2014 was the peak year for MMO expenditure and saw spend of $106 billion, says Wilby, demonstrating how much costs have come down in the years in between. 2017 should however see the beginning of an improvement after a decline of 26 percent between 2014 and 2016.
There are a huge number of companies involved in the MMO sector. They range from large companies such as Petrofac, Aibel, Wood Group and Worley Parsons to niche companies that provide just one thing to the industry, such as fire protection paint.
“Modifications run through a range of things – from modifying a fixed platform for a subsea tie in to adding a new gas treatment plant onto a platform,” says Wilby. “Many are related to boosting production, but others are for upgrading facilities such as accommodation or communications. Much of this work can be classed as non-essential at a time when many fields are below or just breaking-even, and as a result are being deferred. However this work will have to be done at some point and the backlog of work to be completed is building as a result of these deferrals – which should result in a boost to expenditure near the end of the forecast.”
Asset services accounts for over a half of total expenditure, 60 percent, with modifications, 21 percent, asset integrity 14 percent and support services six percent.
Asia and North America dominate global expenditure, with 24 percent and 20 percent of spend over the forecast period. “MMO expenditure is typically driven by population of platforms and the age of these platforms. Asia and North America are the regions with the most platforms and many of these have been in place for a number of years – often beyond their initial design life,” says Wilby.
“Despite having a much smaller platform population Western Europe (primarily Norway and the U.K.) have higher platform by platform spend. There are a number of reasons for this: strict regulations, the higher costs of work, the rough sea conditions as well as the size and age of the platforms.”