2024 saw growing production, mixed trends in offshore oil and gas says Clarksons Research
Clarksons Research have released their latest annual review of offshore markets, including full year 2024 data points.
Reviewing the data, Steve Gordon, Managing Director of Clarksons Research, issues the following comments:
Offshore oil and gas markets saw mixed trends in 2024, with the Clarksons Offshore Index (tracking rig, OSV and subsea dayrates) rising to a record level of 122 points in July-24 (2017: 45, 2008: 114, 2013: 101), before falling by five per cent from this level by year end (standing at 116 points at end-2024). This trend may continue into the early months of 2025, and the short and medium term outlook has become more uncertain.
Slightly reduced project investment in 2024, following three stronger years, with US$81 billion of CAPEX for offshore oil and gas projects reaching FID last year (down 28 per cent on the 10-year trend); an uptick is projected to US$123 billion for 2025.
Offshore production is still growing overall; 2024 saw 25.2 million bpd of oil (flat y-o-y amidst OPEC+ cuts, 27 per cent of global oil output) and 132.3bn cfd of gas (up 3.7 per cent y-o-y, 32 per cent of global gas supply). The energy security focus is likely to remain supportive in the short and medium term (offshore oil and gas provides 16 per cent of global energy supply), albeit energy transition trends will impact over the longer term.
Rig, OSV and subsea market conditions have eased in recent months though remain positive historically; dayrates in various markets surpassed prior records set in 2008 in H1 2024, but rates have since softened somewhat.
Activity remains robust in Brazil and West Africa; Middle East still a supportive area overall, though jackup/OSV markets have faced challenges from Aramco’s revised investment plans alongside the release of some rigs and vessels.
Underlying supply-side constraints remain supportive of vessel markets, with newbuilding activity still limited (albeit some orders were placed in 2024). Ageing fleet dynamics are also at play.
Energy prices continued to support offshore project investment in 2024, with oil prices averaging US$80/bbl (~US$76 in early 2025), slightly down on 2023, as weaker consumption trends in China weighed on gains in oil demand.
US$81 billlion of offshore oil and gas project CAPEX reached FID in 2024. Investment in FPSO-developed oil fields in Brazil (US$14 billion), Guyana (US$13 billion) West Africa (US$12 billion) and Suriname (US$11 billion) accounted for the majority of CAPEX committed, while investment in offshore gas continued amidst a persisting focus on security of energy supply.
Trends across the major offshore oil and gas fleet segments:
Rig: Rig markets faced a mixed 2024. The sector weathered uncertainty surrounding "white space" in the floater backlog and Saudi jackup redeliveries relatively well through the majority of the year (with rates rising in the year to July), though increased availability moving into 2025 weighed upon dayrates in the latter months of the year. Indeed, rates fell ~five per cent on average across H2 2024, with particular weakness seen in the SEA high-spec jack-up market (where assessments dropped ~32 per cent across July-December as various units redelivered by Aramco began competing for tenders). Deployment remained resilient through 2024 (JU: +9 units, FL: flat) despite uncertainty, while utilisation ticked up to 91 per cent by the end of the year. Underlying supply constraints should remain supportive; the orderbook is small (10 JUs/15 FLs) and there is little interest in newbuilding, recent NOC charter-backed enquiries aside.
OSV: The OSV sector faced seasonal pressures in the latter half of 2024, following record markets earlier in the year. The number of active units (AHTS >4,000 BHP, PSV >1,000 dwt) rose to 2,570 by start-July, before softening to 2,437 by the end of 2024 (still ~500 units above 2020 levels). OSV utilisation was slightly higher across the year. Meanwhile, our OSV Rate Index rose to a record level of 201 points at end-July, though has since softened four per cent. Generally strong markets drove an uptick in ordering last year, particularly in the large PSV sector (37 orders, the most since 2014); however, speculative contracting seems to have slowed in recent months.
Subsea: A strong year overall; our MSV Rate Index rose to a peak of 122 points in 2024, representing a record level (though rates have since softened given typical seasonal trends). The backlog of leading EPC contractors is today at record highs (US$48 billion, 2014: US$36 billion) and given the strong demand prospects, MSV newbuild orders picked up last year (20 orders placed).
MOPU: Continued strong activity in 2024, with 11 awards of US$15.1 billion recorded. 16 awards are currently projected in total in 2025, including 10 FPSOs and 4 FLNGs.
Further context can be found in the Briefing on Offshore Intelligence Network.
