Subsea Momentum Building: Record High Marks in Sight

Brazil remains the pinnacle of current and forecast subsea activity with the prolific pre-salt play now beginning to be realized.

SUGAR LAND, Texas, May 03, 2010 (BUSINESS WIRE) -- --ExxonMobil, Chevron, and Shell have a heavy concentration of mega-projects off Nigeria throughout the decade.


--Asia Pacific -- specifically Australia -- is sending shock waves through the global petroleum equipment supply chain most notably with large demand for subsea & FLNG technologies.



Quest Offshore's quarterly survey of oil companies and subsea equipment system suppliers reveals that momentum is appearing to show through with a healthy volume of subsea system awards in Q1 2010 comprising 112 subsea trees. The upside of 2010 award activity, in line with Quest Offshore's high case forecast, shows a near-return to north of 400 subsea tree awards. Quest's mean case forecast -- undoubtedly a more achievable scenario -- reveals a promising move back to 2008/2009 award levels setting the stage for a market recovery. Quest currently projects a return to record-setting subsea award volumes toward the end of 2011 or the 1H 2012.



Brazil is the overwhelming market driver in this transition year with an estimated ~50% market share during 2010. Meaningful projects across several deepwater basins are on the horizon for project sanction and tenders over the next 18-24 months, but industry consensus expects sustained momentum materializing in 2011. With respect to the short-term forecast, Quest expects Africa award activity to increase around 50% over 2009. Asia Pacific meanwhile, continues to gain ground over the next 24 months with significant contributions from Australia.



Brazil: Continues to Carry Industry Demand



Brazil remains the pinnacle of current and forecast subsea activity with the prolific pre-salt play now beginning to be realized. Aker Solutions was recently awarded the 40 pre-salt tree contract for the Iara and Guara fields and as such carry recognition as the sole supplier of subsea trees for the prolific pre-salt at this time. As more contracts are awarded, we fully expect the other major subsea players to garner their share in this burgeoning sector.



Africa 2011-2012: Significant Activity Growth Projected with Help of New Areas



Quest expects West Africa to remain a steady base-load of the region's future demand, but much excitement has been building around other areas. Angola continues to have a meaningful backlog of mega-projects operated by experienced International Oil Companies. Total has projects in blocks 17 and 32 that will translate into high-value demand within the SURF deepwater supply chain. Total is also the first operator to utilize subsea separation off Angola; this important game changing technology will significantly impact the size, scope and complexity of the future subsea EPC contracts in the region. bp has at least two more installments of their block 31 project to execute off Angola worth hundreds of millions in subsea equipment contracts. ExxonMobil, Chevron, and Shell have a heavy concentration of mega projects off Nigeria throughout the decade.



US Gulf of Mexico: On the Verge of Re-Invention with Over US$50bn Earmarked



The US Gulf of Mexico (GoM) while expected to remain flat in 2010 compared to 2009, is poised for resurgence as IOC's start dedicating serious resources to the area which will positively impact project execution activities. ExxonMobil, Shell, bp, Chevron, and "super-independent" Anadarko among others have over 15 or more major projects in the pipeline slated for execution through the decade representing field development CAPEX in excess of US$50bn. This impending wave of significant capital-intensive projects sets a promising stage for a surge of subsea awards to 2020.



Asia Pacific: Stranded Gas Fields Welcome FLNG Technology



Asia Pacific -- specifically Australia -- is sending shock waves through the global petroleum equipment supply chain most notably with large demand for subsea & FLNG technologies. It took years of negotiations on topics ranging from environmental impact to lengthy gas sales agreements, but the mega gas fields off Australia have taken off