Westwood’s Offshore Data Cycle

With a rapidly changing market, staying ahead of the curve with the latest offshore data is critical. At Westwood, we don’t believe you should have to wait on 14- or 30-day update cycles to understand market activity that’s happening right now.

That’s why Westwood’s #Offshore solutions deliver daily data updates to our users via our online applications #SubseaLogix and #PlatformLogix (and #RigLogix). Our analyst team ran a total of 543 data updates across offshore field FIDs, contract awards and installation dates over just a 66-day period, with those updates having a significant impact on our offshore EPC spend forecast for 2020, which also updates on a daily basis. Watch our data cycle summary video with some key narrative points below.

The past few months have seen unprecedented volatility in the O&G industry, culminating in Brent Spot prices averaging $18/bbl in April (according to the EIA), the lowest since 1993. Between 1^st March and 6^thMay 2020, E&Ps have cut 2020 capex plans by an average of between 25-35% resulting in a flurry of FID delays, deferrals and even cancellations. These changes have seen $46bn of planned offshore EPC contract value in 2020 eroded within 66 calendar days. At Westwood, our Offshore Analyst team monitors the market making daily adjustments to our SubseaLogix & PlatformLogix market intelligence products to ensure our subscribers stay ahead of the curve by getting access to the most up-to date dataset in the industry. Some of the key announcements that have shaped the market in the past 66 days include:

• ExxonMobil’s announcement on the 7^th of April of its decision to delay the final investment decision of the Rovuma project, eroding c.$700m in 2020’s subsea EPC contract value. Exxon stated it now plans to work with partners to optimise the development plan and explore opportunities as a result of current market condition.

• Aker Energy’s decision to indefinitely postpone its deepwater Pecan project (Ghana) which was announced on the 31^st of March 2020. The operator also terminated the LOI that was issued to Yinson Holding for the supply, operate and maintain the floating production facility for the field as a result of the Covid-19 pandemic. The EPC contract value lost for the initial phase of the Pecan project for both subsea equipment and production facility is estimated at $1.2bn -$1.5bn.

• Despite getting regulatory approval to proceed with the development of Scarborough LNG project, Woodside Petroleum has announced it was delaying field FID till 2021 as of the 26^th of March due to adjustment to its 2020 Capex plans. The EPC contract award value for subsea production equipment, production platform and export pipeline are estimated at $2.5bn – $3bn. This accounted for a significant downward revision to offshore EPC market potentials for 2020.

• On the 17^th of April, Shell stated it was delaying the sanctioning of its Whale project in the US GoM until 2021, citing supply chain constraints and uncertain economic conditions. The projected was initially planned to reach FID in the first half of 2020. This announcement negatively impacted 2020 subsea EPC contract award value by over $500m.

• Other notable changes to EPC contract award dates that were initially planned for 2020 as announced by E&Ps include Siccar Point’s Cambo development (UK), Shell’s Crux field (Australia) ENI’s Structure A and Structure E development (Egypt), as well as Saudi Aramco’s Zuluf project (Saudi Arabia)