Subsea splurge: global spending to exceed $42 billion by 2027

The subsea market segment, which includes players involved in production and processing systems such as subsea umbilical risers and flowlines (SURF), trees, wellheads, manifolds and other components, is poised to experience a significant influx of capital. Driven by rising operator expenditure on equipment and installation services, Rystad Energy projects a 10% annual compound growth rate (CAGR) from 2024 to 2027, with total spending anticipated to exceed US $42 billion by the end of this period.

Investment activity has been particularly robust in regions such as South America and Europe, where major projects are making significant progress and attracting new investment. Brazil, notably, remains a focal point due to its vast pre-salt reserves, driving strong demand for subsea equipment and SURF. Anticipated expenditure in Brazil is set to surge 18% from the previous year, to $6 billion in 2024. Meanwhile, in Europe, Norway is experiencing a resurgence in activity, fueled by favorable market conditions and technological advancements such as Subsea Hydraulic Power Unit which is cost-efficient and replaces 100 tons of deck equipment, and SWIFT™, a remotely operated tubing hanger tool which enables umbilical-less operations, reducing the need for heavy topside equipment.

Cumulative spending is expected to reach $32 billion by the end of 2024, representing a 6.5% increase from the previous year. This growth is driven by strong activity across services, equipment and SURF, largely fueled by significant investment in deep and ultra-deepwater projects. The subsea sector is also expanding beyond traditional oil and gas applications. The push for carbon capture and storage (CCS) is creating new opportunities for suppliers and spurring research and development in this emerging market. Consequently, suppliers are leading the way in developing more efficient subsea production systems, which are set to see broader adoption.

“The subsea market has rebounded robustly from the impacts of Covid-19, which caused a significant 20% drop in expenditure in 2020. By 2021, the industry began to recover, with spending increasing by 5% to reach $23 billion. Looking ahead, we anticipate steady growth in the subsea sector, fueled by advancements in deepwater exploration and carbon capture and storage (CCS). This recovery highlights the industry’s resilience and suggests a promising trajectory of consistent progress,” Sanwari Mahajan, Analyst, Supply Chain Research, Rystad Energy, said.

Deepwater developments are set to dominate the sector, accounting for 45% of the market from 2024 to 2028. Significant greenfield projects include Barracuda Revitalization in Brazil, Johan Castberg and Breidablikk in Norway and Golfinho in Mozambique. Key brownfield initiatives include Balder Future, Gullfaks South and Schiehallion in Norway and the UK.

Ultra-deepwater projects, driven by major floating production, storage and offloading (FPSO) initiatives in Brazil and Guyana, are projected to capture 35% of the market. South America is expected to lead globally with 500 subsea tree installations over the next five years. Upcoming ultra-deepwater greenfield projects (beyond 1,500 meters) include Yellowtail, Tilapia and Redtail in Guyana, alongside Buzios VIII, Buzios IX, Sepia and Atapu in Brazil. Notable brownfield projects are Trion in Mexico, Egina in Nigeria, and Argos (Mad Dog Phase 2) in the US.

The subsea sector has made notable strides since 2022 amid more sanctioning activity for deepwater and ultra-deepwater developments. In that year alone, deepwater projects saw expenditures of $12 billion, with Europe contributing 28% of this total. Between 2020 and 2023, Norway led globally by installing 200 subsea trees out of a total of 600 placed in deep water (ranging from 125 to 1,500 meters). During the same period, Norway also installed 1,400 kilometers of SURF in deep water, surpassing Brazil’s 1,200 kilometers.

In 2024, ExxonMobil's expanded operations are expected to significantly boost subsea tree installations. Following Equinor, which installed 17% of the total subsea trees this year, ExxonMobil is projected to contribute 12%, with a primary focus on Guyana. This increase is driven by major projects such as Yellowtail, Redtail and Payara, underscoring Guyana’s growing prominence in the subsea sector amid heightened sanctions and a shift towards more sustainable and efficient operations.

In the SURF sector, global installations are anticipated to reach 3,500 kilometers in 2024. Brazil is expected to account for 22% of this total, while the US and Angola are projected to contribute 15% and 10%, respectively. The installation rate is anticipated to grow at a compound annual growth rate (CAGR) of 15% from 2024 to 2028, with Brazil, Norway, the US, the UK and Angola being the major markets.

Looking ahead to the suppliers and operators poised to shape the market in the coming years, TechnipFMC is expected to supply around 400 subsea trees between 2024 and 2029. Of this total, 35% is estimated for ExxonMobil’s developments in Guyana and 22% for Petrobras in Brazil. Simultaneously, OneSubsea is anticipated to supply close to 270 trees within the same period, with around 40% projected for Brazil. Aker Solutions (now OneSubsea) is expected to supply 150 trees, with 80% earmarked for Norway.

Petrobras remains a dominant operator, particularly in South America, where it has heavily invested in pre-salt developments. In Europe, Equinor and Aker BP are notable for their extensive subsea portfolios, with significant tieback projects on the Norwegian Continental Shelf underscoring their strategic importance. In the US, Shell and BP lead with substantial investments in deepwater and ultra-deepwater exploration and production. TotalEnergies holds a strong position in Africa, especially in Angola and Nigeria.