Escalating energy requirements and declining reserves in existing wells are lending momentum to subsea exploration, fuelling the adoption of subsea equipment globally, Frost & Sullivan report reveals.
As attractive returns and higher recovery rates position subsea exploration to challenge the near-shore and onshore industry, demand for subsea equipment will continue to grow, the report read.
New analysis from Frost & Sullivan, Analysis of the Global Subsea Equipment Market, finds that the market earned revenues of $23.13 billion in 2013 and estimates this to reach $35.84 billion in 2018. The golden triangle – Brazil, West Africa and the Gulf of Mexico – will remain high-potential regions for market expansion during the forecast period.
“Technological advancements that have led to higher production and safer, cleaner processes encourage energy companies to move further offshore, thus widening the scope of the global subsea equipment market,” said Frost & Sullivan Energy and Environmental Industry Analyst Rajalingam Chinnasamy. “As the subsea factory of the future is expected to include a complete production system on the seafloor, the prospect for equipment vendors is secure.”
While development in the deep-water platform is strong, the industry is unable to maintain similar growth in terms of resource availability. The shortage of skilled labor to execute projects and crew subsea vessels and equipment will slow uptake.
In addition, high costs associated with deployment of a safe subsea project will curb equipment sales in the short and medium terms. Manufactures are also reluctant to invest in extensive R&D, which is crucial to produce solutions for use in hostile deep water environments.
“Mergers, acquisitions and partnerships will help subsea equipment suppliers leverage expertise across the board and penetrate the market successfully,” observed Chinnasamy. “Major participants must especially partner with or acquire hardware suppliers and software providers to widen their product and service portfolios.”
As deep water drilling and production increases, identifying niche areas will help vendors sustain profits and carve a space for themselves in the global subsea equipment market, Frost & Sullivan report reads.