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Middle East offshore spending to climb to $33bn this year

Halliburton Halliburton rigs in the North Sea
The $33bn that is likely to be spent on offshore upstream investment in the Middle East this year will almost double the $17bn spend in 2021 as energy demand recovers in key regions, supply chains are stretched and disrupted, and energy security becomes a growing concern.

The dramatic turnround is highlighted in a recent report from Oslo analyst Rystad Energy. The three oilfield service majors – SLB, Baker Hughes, and Halliburton – notched up ‘sparkling results’ for the first three months of the year, a performance that is likely to continue through at least the rest of this year and probably beyond.

First-quarter upstream revenues for SBL and Halliburton came close to levels not seen in the corresponding period for four years, Rystad said, while Baker Hughes’ numbers rose to their highest level in eight years.

The Middle East is likely to exceed all other regions this year in terms of offshore upstream investment, the analysts predicted. Demand for oilfield services in the region is pushing prices up along the supply chain due to capacity constraints, with a 30% year-on-year increase in jack-up rig demand.

Baker Hughes’ oilfield service and equipment revenue rose by 23% in the Middle East and Asia, according to the Rystad analysis. Meanwhile Halliburton’s revenue growth was driven by expansion in Saudi Arabia where all product line activity rose, supported by well construction services and increased project management activity. SLB posted double-digit growth from drilling, intervention, and evaluation activity in Saudi, UAE, Qatar and Oman.

Rystad noted that the three oilfield service companies are continuing to expand their activity in the low-carbon energy sector. SLB’s new energy division reported increased activity in the carbon capture and storage market, with involvement in more than 30 projects globally.

Baker Hughes signed a MoU with Fortescue Future Industries to examine opportunities to scale up and adopt energy technologies based on green hydrogen, green ammonia, and geothermal sources. The company also entered into an agreement with HIF, an eFuels specialist, to examine and develop a technology to capture carbon dioxide directly from the atmosphere.

Halliburton is already active in the geothermal market but strengthened this business by entering into a joint venture on emissions management with Siguler Guff, a private markets investment firm. Early in April, after the first quarter closed, Halliburton established three new clean energy companies within its Halliburton Labs offshoot, Rystad said.