Jarand Rystad, managing partner of Rystad Energy, observed that several high profile projects are expected to gain pace this year, such as the Mad Dog Phase 2, Libra, Zohr, Coral FLNG and Khazzan/Makarem.
“We expect offshore projects to see increasing sanctioning going forward in 2017 and furthermore into 2018,” Rystad told delegates at the Offshore Marine Forum of the Sea Asia 2017 conference held on Thursday in Singapore.
He added that offshore exploration and production activities may even pick up to levels seen in 2010.
On the number of jack-up rigs worldwide for 2017, Rystad said there are currently around 450 rigs with utilisation level at just 50%. This number will rise to around 480 rigs with utilisation inching up to 52% in 2018 and further increase to 600 rigs with utilisation at around 64% by 2020.
“The offshore market may regain competitiveness from 2018,” Rystad said, but he warned that the lingering excess capacity of offshore assets will continue to be the stumbling block to the sector’s sustainable recovery.
He proposed that the industry would need a creative start-up business that is able to profitably amalgamate all the secondhand or aging assets at prices attractive enough for owners and the banks. “This business needs to be very creative and is worth attempting but it will be very difficult,” Rystad said.
Another hurdle to a firm recovery for offshore is the US shale production, which has possibly permanently limit any huge rise in oil prices from around $50 per barrel today.
Rystad warned that oil prices could fall further due to shale production, but ultimately the decision lies with OPEC on how they will decide on controlling production and hence prices.