The current “tailwind” in the energy industry is likely to propel 100 new offshore projects to be sanctioned this year, according to Rystad Energy.
Rystad’s latest oilfield service report puts the level of investment at £73.5billion at an average cost of around £735million per project.
By contrast, just 60 projects were sanctioned in 2017 at an average capital expenditure of £1.3billion.
Around 30 of these projects are expected to be in Europe, including Shell’s North Sea Penguins redevelopment.
Others will be spread out in Asia, Africa and the Americas.
According to Rystad, the prices offshore suppliers are charging have fallen lower than for onshore, at an average reduction of nearly 30% compared to 2014.
The main driver behind it is a drop in day rates by contractors of around 50-70%.
Audun Martinsen, vice president of Oilfield Service Research said: “The offshore suppliers have created their own comeback.
“Their constant search for cost reductions and streamlining of operations has enabled them to cut offshore project costs by almost 50% compared to the heights of the last cycle.
“Not only are the suppliers charging less for their services, they have also improved the efficiencies of their operations, thus shortening lead times from project sanctioning to first oil.
“As an example, the time required to drill and complete a well has fallen by 30% in the North Sea, the Gulf of Mexico and Brazil over the past four years.
“Offshore projects can now compete with some of the best acreages in the Permian basin in terms of breakeven prices. With rising inflation in the US shale, offshore appears geared to out-compete shale this year and next.”
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