Global energy project delays, stemming from tight supply chains, delivered a big blow to subsea tree awards in the first half of the year.
Research from Westwood Global Energy Group found a 42% decline in units awarded in 1H 2022, compared with the company’s outlook at the start of 2022.
That is despite an 8% year on year increase in recorded subsea tree awards, according to the research firm’s global subsea tracker.
Westwood put the drop down the inflationary pressures currently hampering the supply chain, which are leading to delays in granting contracts.
Subsea trees are placed at the wellhead of a field to monitor and control hydrocarbon flows and are a good gauge of offshore activity.
In June, only the CLOV phase 3, offshore Angola, subsea tree contract was announced, which involves up to five subsea trees.
This brings the total unit award count for 1H 2022 to 123, a 42% decline compared to Westwood’s January 2022 outlook.
Rising raw material costs have prompted some operators to remodel project economics, prompting delays.
Inflation taking its toll
Among the delayed schemes is Equinor’s (OSLO: EQNR) Rosebank field, West of Shetland.
A final investment decision for the 300 million barrel project had been expected in May, but the Norwegian operator has pushed back sanction date until next year.
There had been speculation that Equinor planned to shelve the project following the announcement of the energy profits levy, something the company dismissed.
Another project hit by postponements include TotalEnergies’ (LON: TTE) Cameia-Golfinho, offshore Angola, whilst Aker Energy’s Pecan project off Ghana has been dropped indefinitely due to concerns about possible future sanctions against Lukoil – the Russia firm has a 38% stake in the field.
Subsea tree contract awards Westwood has tipped as ones to watch later this year include Shell’s Gato do Mato, BW Energy’s Maromba Phase 1, both off Brazil, as well as Woodside Energy’s Trion off Mexico.
Despite the impact of project delays, the research body’s full-year 2022-2026 subsea tree demand outlook remains unchanged at approximately 1,540 units.
Shell’s (LON: SHEL) Linnorm field offshore Norway has been excluded from the forecast though, as the oil giant is now “re-evaluating alternative development plans” after it decided against a standalone development for the gas field.