Investment in M.E. offshore projects buoyant despite lower oil prices

Seatrade Offshore Marine & Workboats Middle East 2015 - the region’s leading event for the workboat and offshore marine industries - marks its return to the Abu Dhabi National Exhibition Centre (ADNEC) on 5-7 October.
The biennual three-day exhibition and conference returns to the UAE, providing a platform for
industry professionals to discuss the latest techniques to address the increasingly multifaceted production projects taking place in a variety of remote and shallow water locations and the broad range of complex construction projects.

“Large international technology-led companies, with advanced drilling and offshore services are demanding more sophisticated fleets to compete for their lucrative contracts. However the nature of the world energy markets is changing and that could impact the number of projects available,” said Vanessa Stephens, Managing Director, Middle East & Indian Subcontinent.

The opening keynote session will focus specifically on the evaluation of the Gulf region’s dynamic but complex offshore marine industry, in particular the correlation between the low oil price and its effect on exploration and production (E&P) project spending.

Currently Abu Dhabi National Oil Company ADNOC, is investing US$ 25 billion in offshore oil fields to achieve a part of the UAE energy strategy of increasing its output to 3.5 million barrels per day by 2018, up from the UAE’s current production of 2.8 million barrels per day. Indeed in an effort to improve productivity and efficiency, ADNOC is understood to be considering the construction of more offshore oil islands.

“Research by Barclay’s indicates that international oil companies (IOCs) in the Middle East would increase their E&P 2015 budget spend by over 14%, bucking the worldwide international trend, as those in Saudi Arabia and the UAE would be more willing to accept lower sales prices, because in part, production costs are between $10 and $20 per barrel, compared with much higher shale oil production costs in the US,” commented Stephens.

However in the meantime the worldwide international trend is forecast by Barclays to decline 9% this year, although some other areas have increased E&P spending including Latin America and Russia, which according to Citigroup energy analysts are up 13% and 11% respectively.
In 2013 E&P spending worldwide hit a record of $644 billion, a 7% increase over the previous year’s $604 billion. Due to falling oil revenues E&P global capital expenditures are now expected to drop to $571 billion in 2015, according to Cowen and Co.’s annual study of 476 oil and gas companies’ E&P capex budgets.