Offshore Oil & Gas Procurement to Continue to Thrive in 2025
Global engineering, procurement and construction (EPC) contracting is not only surviving but thriving due to a steady demand for hydrocarbons, despite headwinds in the fossil fuel industry.
Energy market research firm Westwood Global Energy predicts notable contract awards hitting the scene in 2025.Looking to the immediate future, several types of projects such as those utilising subsea equipment, offshore platforms and floating production systems, along with LNG infrastructure, are lined up to steer billions into investments.
The continued dependency on hydrocarbons underscores the sector's resilience and strategic importance.
Robust offshore procurement in 2024
Last year, the offshore EPC held its ground robustly.
Contracts involving just subsea and platform work totaled an impressive US$52bn. This figure highlights an 18% increase year-on-year, a significant rise despite witnessing a 33% fall in the number of final investment decisions (FIDs).
The substantial contract sizes explain this discrepancy between fewer FIDs and higher contract values.
For instance, Brazilian oil and gas powerhouse Petrobras rolled out contracts for its P-84 and P-85 floating production, storage and offloading (FPSO) units. These contracts alone were worth more than US$8bn.
Similarly, a pivotal late EPC award was granted for Shell’s Sparta project involving a floating production semi-submersible (FPSS) unit in January 2024. Petrobras also finalised significant subsea contracts for its Buzios and Mero projects.
The Americas dominated the subsea equipment market in 2024, securing 65% of the global 250 subsea tree units. The Whiptail development offshore Guyana by ExxonMobil stood out as the year's largest subsea tree project.
The floating production systems (FPS) sector also witnessed growth, securing 11 EPC awards which collectively offer a throughput capacity of 1.57 million barrels of oil equivalent per day, including oil and gas outputs and eight million tonnes per annum of LNG capabilities.
Fixed platforms were predominantly strong in the Middle East, attributing to 58% of the total 66 contracts awarded within this domain.
2025 outlook: Managing growth amid rising costs
Westwood predicts a conservative growth of 1% in offshore oil and gas-related EPC contracts for 2025, with a projected total value amounting to US$54bn.
This modest increase mirrors the ongoing repercussions of supply chain cost inflations that have hindered several projects since 2022.
In response to these challenges, operators are optimising their field development strategies and exploring cost-efficient procurement avenues.
The EPC sector will likely lean on an expected demand surge for over 290 subsea tree units in 2025, as well as 18 floating production systems (including four FLNG units) and more than 90 fixed platforms.
The subsea umbilical, riser and flowline (SURF) market is also gearing up for a busy period with thousands of kilometres of SURF lines and pipelines slated for installation.
From a geographical perspective, Africa and the Americas are poised to lead the offshore procurement charge this year, holding 26% and 25% of the global market shares respectively.
However, the Middle East, fuelled by brownfield developments and ventures by heavyweights like Saudi Aramco and others, is not far behind, capturing a 24% share.
Forecast beyond 2025
The horizon from 2026 to 2029 looks promising with offshore EPC activities expected to average an annual spending of US$50bn.
This forecast leans on stable oil demands chiefly from OECD countries and continues robust consumption in China.
Significant forthcoming ventures include the likes of ExxonMobil in Guyana’s Stabroek block and LNG projects in the Asia-Pacific zone.
Also, emerging markets, such as Timor-Leste’s Greater Sunrise field and Shell's new gas findings in Colombia, are anticipated to offer additional prospects.
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