APAC Offshore Market Overview - June 2021 Subsea UK 2021
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Subsea UK 2021
APAC Offshore Market
Overview
Thom Payne: Head of Offshore Energy Services
June 2021
www.westwoodenergy.com
Offshore Comprehensive analysis on all major infrastructure & assets
Energy Services across the offshore energy sector…
Offshore Rigs Production Subsea Subsea Offshore Offshore Renewables
Facilities Equipment Services Marine & Power
We track the availability, We collate data on floating and We provide comprehensive data Review and track the entire fleet of Our proprietary database of Westwood track the status of
commercial terms and technical fixed production facilities’ on subsea production facilities and subsea construction and inspection over 8,000 offshore & subsea the global OWF sector
specifications of the global fleet of contracts, including floating equipment in both aging and vessels with details on vessels provides exceptional looking at all existing and
offshore drilling rigs. Enhancing LNG. We cover shipyards, orders developing fields around the specifications, contract history and insight into the global offshore future developments as well
transparency in the market, we and contracting activity, to help world, helping customers availability. Understand current a marine sector. Our insights as associated infrastructure
help contractors, owners and offshore EPC firms build viable understand global activity and the future activity levels, utilisations and include utilization, dayrates and such as cables, substations
suppliers optimise assets opportunity pipelines. impact it has on their own pricing for vessels, diving & fleet rationalisation trends. and marine services.
worldwide business. underwater robotics.
Global Offshore
Navigator
Outline
▪ Oil prices have exceeded expectations and sit at $70 – is this sustainable?
▪ Offshore O&G investment has already surpassed 2020 levels by May – how is APAC positioned?
▪ The offshore wind sector is ramping up – how much can be achieved in the next decade?
© Westwood Global Energy Group Jun 2021
1H2021 Oil Market in Review
Oil prices have exceeded expectations so far in 2021, underpinned by Saudi Arabia’s unilateral & additional
1mmbpd cut and resurgent demand across China and the US.
Key Oil Market Indicators ▪ Oil prices averaged $61/bbl for 1Q2021 and have
Various seemingly settled above $70 so far in June.
$67
▪ Chinese GDP saw a massive 18.3% YoY jump in 1Q2021
which drove crude imports to a 10% increase over the
$61
49.1
previous quarter. Crude imports have slowed since April.
47.2
46.4
45.9
12.7
16.1
42.5
▪ US demand is filling in the gap with refinery runs
42.1
$51
40.7
15.1
registering a significant uptick in April/May. Crude
40.1
14.1
13.8
13.8
$44
10.9
10.8
10.8
10.8
10.8
38.5
$43
38.1
demand at 94% BAU levels.
38.1
13.2
37.8
▪ OPEC+ quota compliance for 1Q averaged 110% driven
primarily by Saudi Arabia’s unilateral 1mmbpd cut for
$29
February & March. Quotas are now cautiously unwinding.
▪ US supply has averaged 10.8mmbpd for the past 12
months. Higher WTI is expected to drive completion
activity for the remainder of the year.
▪ We estimate 1Q21 saw a 400kbpd draw. Improving
demand and compliance with tapering of OPEC+ quotas
(in particular KSA) should see this widen on 2Q
Brent ($/bbl) OPEC+ Crude Supply US Crude Supply China Crude Imports US Refinery Runs ▪ Significant downside risks remain on the demand side
(mmbpd) (mmbpd) (MMT/M) (mmbpd) (regional breakouts) and supply side (Iran, US
1Q2020 2Q2020 3Q2020 4Q2020 1Q2021 2Q YTD resurgence).
Source: Westwood Analysis, IEA, EIA & S&P © Westwood Global Energy Group Jun 2021
2H2021 Oil Market Expectations
Equilibrium tightened in 1Q2021 but expected demand improvements and tapering of OPEC+ quotas
should ensure a drawn market for 2Q-4Q21 – the potential lifting of Iran sanctions adds significant downside
risk.
2021 Oil Market Balance and WGE Brent Assumptions OECD Oil Stockpiles
mmbpd mmbbls
9.0 105 4700
7.0
4500
100
5.0
3.0 4300
Base case
assumes current 95
1.0 levels of OPEC+
compliance
4100
-1.0
90
-3.0 3900
Liquids Demand
-5.0 Liquids Supply (Base) ‘21 ‘22-25
Liquids Supply (Low) 85
Base $60 $60 3700
Implied Stock Change (Base)
-7.0 Implied Stock Change (Low) High $70 $80
Implied Stock Change (High) Low $50 $40
-9.0 80 3500
3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021 2Q2021 3Q2021 4Q2021 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21
Source: Westwood Analysis, IEA, EIA & S&P © Westwood Global Energy Group Jun 2021
Offshore O&G Investment
Better than expected oil prices are revitalising the offshore O&G sector. Our 2021 EPC award expectation
has increased by 20%. APAC to account for 30% of EPC awards over the next five years.
Offshore O&G EPC Contract Awards 2021-25 to be Awarded EPC Spend by Region
$billions $billions
$60
Stalled/Upside
Possible $7.0 Others
Europe SouthEast Asia
Probable 2%
$50 13%
Firm $4.2 11%
$15.1
Awarded $3.9
North America
$40 $42.1 $13.5 5%
$15.6 Australasia
10%
$35.7
$14.9
$30
$30.5
$28.0
$20.7
Middle East $218bn
13% EPC Award Asia - Others
$23.8 Value
$20 $22.4 7%
$18.9
$14.6
$10
$10.1
Africa
12%
$0 Latin America
2015 2016 2017 2018 2019 2020 2021 2021 22-25 27%
(Jan) av.
Source: Westwood Analysis, SubseaLogix, PlatformLogix © Westwood Global Energy Group Jun 2021South-East Asia & Australia Focus
$51 billion of expected EPC awards with significant potential upside should clarity over major deepwater gas
prospects improve…
2021-25 Offshore EPC Spend & Opportunities (Base Case) 2021-25 Requirements
2021
FID (4Q2020) Floating
4%
6% 1 Production 26
Limbayong $500-1,000m
(Malaysia) EPC Awards Systems
35%
21% 2021
$51bn
Pre-FID
1 2 Fixed
3 Scarborough $2,000-3,000m Platforms 108
(Australia) EPC Awards
2022
Pre-FID
3 Subsea
4 34%
Block B $2,000-3,000m Trees 40
4 (Vietnam) EPC Awards
2 Floating Platforms 2021
Pre-FID
Fixed Platforms 4 Rigid
Crux $1,000-1,500m Pipelines 6,500
Pipelines (Australia) EPC Awards
(km)
SURF 2023
Pre-FID
Subsea Production 5 Flexibles
Browse
(Australia)
>$10,000m
EPC Awards
(km) 910
Source: Westwood SubseaLogix, PlatformLogix © Westwood Global Energy Group Jun 2021Asian EPCs Taking Advantage of the Upturn
The recent surge in Floating Production orders has benefitted Asian EPC contractors who have accounted
for 61% of order value since 2019 and are well placed to capitalise on future demand.
Major FPS EPC Awards expected in 2021
MODEC
2021 tba 19%
25%
HHI Cambo
4% FPSO
Shenandoah $500-1,000m
$34.8bn SHI FPSS
3% $500-1,000m
FPS Award
Others Value Keppel Offshore &
2019-21 North Platte
7% Marine
FPSS Limbayong
7%
$500-1,000m FPSO
Sembcorp Marine Integrado Parque das Baleias $500-1,000m
TechnipFMC 2% FPSO
5% MISC $1,000-1,500m
Yinson Scarborough
2% 4%
SBM Offshore FPSO
Mero 4 Buzios 8 (P79)
11% COOEC Bumi Armada $1,000-1,500m
FPSO FPSO
BW Offshore 3% 3% $1,500-2,000m $2,000-2,500m
5%
Source: Westwood Analysis, SubseaLogix, PlatformLogix © Westwood Global Energy Group Jun 2021Offshore Wind Capacity Outlook and Targets
The Offshore Wind sector is set for exponential growth over the next decade, with contribution from
mature markets alongside new entrants such as Poland, South Korea, Taiwan, Vietnam and the USA.
Global Offshore Wind Cumulative Capacity Outlook 2030 Target Achievability
GW GW 0 20 40 60 80
300
Rest of World 256.2GW
CHN
Vietnam est. by 2030
France
250 Japan
GBR
TARGET
40GW
Netherlands
South Korea 95.2GW
USA
Taiwan 2025
TARGET
30GW
200 Germany
India
IND
USA 34.2GW
UK 2020
TWN DEU
TARGET
20GW
150 Mainland China
15GW*
TARGET
12.3GW
2015
100
KOR
12GW*
TARGET
3.5GW
11.5GW
NED
2010
TARGET
50
JPN
TARGET
10GW
Operational
0 EPCI
6.2GW
TARGET
FRA
Planning
2003
2017
2000
2001
2002
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Source: Westwood WindLogix © Westwood Global Energy Group Jun 2021Evolution in Offshore Wind Projects
Offshore wind projects continue to evolve in size alongside turbine ratings. The forecast period will feature
an increasing number of +1GW wind farms with 13+MW turbines…
Avg Project Sizes by Key Region Turbine Evolution by Key Region
MW Chart is based on known/announced turbine designs selected for windfarms
16
3500 Coastal Virginia
Turbine Rated Capacity
Western Europe Western Europe Dogger Bank C
Mainland China Mainland China Sofia
La Gan Phase 2
Rest of Asia Rest of Asia Hai Long
CTG Yangjiang Qingzhou 5-7 14 USA
3000 DoggerBank A
Max Size of bubble indicative of # of DoggerBank B
Capacity turbines associated with the project Vineyard Wind
12
2500 Average
Hornsea
Capacity Fujian Changle Waihai Area A
Three
Min 10 Fujian Changle Waihai Area C
Capacity
2000
8
1500 Hornsea Two
Hornsea One Dogger Bank 6
A
1000
4
500
2
Bac Lieu Phase
0 3
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2000 2005 2010 2015 2020 2025
Online Year
Source: Westwood WindLogix © Westwood Global Energy Group Jun 2021E&P investment into Offshore Wind
Conventional E&Ps are expected to hold interests in 8.8GW of offshore wind capacity by 2030. Awards from
future solicitations alongside the confirmation of UK Round 4 awards post HRA could see further upside…
Cumulative Capacity* held by Integrated E&Ps UK Round 4 Lease Awards
GW MW
10 Offshore Wind
Mainland Limited
9 China 480
5% Rest of Asia RWE Renewables
USA 15% 1500
8 GIG/Total
39%
2030 Capacity by Region 1500
7
6 Europe
41%
56%
5 of awards have interests
associated with a
4 Integrated E&P
RWE Renewables
3 1500
BP/EnBW
1500
2
1 BP/EnBW
1500
0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
*Based on current visibility and excludes bids that have not been awarded lease site/signed Agreement for
leases.
Source: Westwood WindLogix © Westwood Global Energy Group Jun 2021Conclusions
▪ Oil prices have exceeded expectations and sit at $70 – is this sustainable?
The commencement of the US driving season is underpinning demand growth for 3Q, OPEC+ continues to keep the market
drawn but can this rally survive Iranian resurgence?
▪ Offshore O&G investment has already surpassed 2020 levels by May – how is APAC positioned?
Nearly a third of the $19bn spent YTD has been in APAC. Local EPCs are also very well positioned to capitalize on growth in the
booming FPS sector
▪ The offshore wind sector is ramping up – how much can be achieved in the next decade?
260GW by 2030 – 600% growth vs today. China appears on pace to add record levels of capacity in 2021 and beyond that new
markets such as the USA and floating technology will take centre stage.
© Westwood Global Energy Group Jun 2021London: Aberdeen: Houston: Singapore: Tileman House 38 Albyn Place 3800 Buffalo Speedway 1 Harbourfront Avenue 131-133 Upper Richmond Aberdeen Suite 350 #13-03, Keppel Bay Tower Road, Putney AB10 1YN Houston TX 77098 098632 London SW15 2TR United Kingdom USA Singapore United Kingdom Tel: +44 (0) 20 3794 5380 Tel: +44 (0)1224 502 640 Tel: +1 713 599 1100 Tel: +65 6208 8830
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