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O shore ExxonMobil in March said its capital spending for 2014 will be 6% less than last year Chevron last December said it will cut 2014 capital spending 5% Petrobras in January said capital spending between 2014/18 will total $221 billion, down 9% from spending estimates announced last year Statoil in February cut its 2014/16 capital spending plan by 8% from earlier estimates. Total in February said it will lower capital spending to $26 billion in 2014, down 7% from $28 billion in 2013. While most of these cutbacks are directed at downstream spending, ultimately some of the cuts will migrate to planned upstream investment. There simply will be less money to go around.Deepwater DrillingThe pace of activity in the deepwater drilling sector is one of the best predictors of future equipment demand in the ß oating production sector. The higher the pace of activity in the drill sector, the better the outlook for future ß oating production project starts. According to Rigzone, drillship utilization in April was 84.8%, semisubmersible rigs 85.7%. This includes utilization of drillships/semis in the competitive inventory. These Þ gures are historically strong and there has been little change in utilization over the past year. But the less-than- positive message that many drillers recently have been giving about anticipated market conditions in deepwater drilling sug- gests a softening in the drill market is taking place Ð which is not good news for near term deepwater projects starts. Overall OutlookGlobal oil demand keeps growing, a large number of deep- water discoveries are ready to move to development, oil spot prices have remained above $100 and a rapidly growing ß eet of deepwater drill rigs are searching for oil. These are all positive indicators for future production ß oater orders. But growth in unconventional oil supply is pressuring future crude prices, energy companies are cutting back on capital ex- penditures, drillers are reporting market softening and shale/ tight oil and gas opportunities are attracting investment re- sources that otherwise might be used for deepwater projects. These are clearly negative indicators for production ß oater orders. Time will tell how these positive and negative drivers combine to impact future orders in the sector. But it appears that a dampening impact is already being felt. Since the be-ginning of this year there have been orders for six production ß oaters Ð 4 FPSOs, an FLNG and a production barge. This is roughly in line with the average ordering pace over the past ten years Ð but in terms of increment to inventory the ordering pace has declined.Projected US Natural Gas Production From Shale and Tight Rock Formations (Trillions of cubic feet/year) Source: EIA The AuthorIMA provides market analysis and strategic planning advice in the marine and offshore sectors. Over 40 years we have performed more than 350 business consulting assign- ments for 170+ clients in 40+ countries. We have assisted numerous shipbuilders, ship repair yards and manufacturers in forming a a plan of action to penetrate the offshore market. Assignments included advice on acquiring an FPSO contractor, forming an alli- ance to bid for large FPSO contracts, satisfying local content requirements, etc. Tel: 1 202 333 8501 e: imaassoc@msn.com www.imastudies.comMay 201412 MTRMTR #4 (1-17).indd 12MTR #4 (1-17).indd 125/12/2014 12:31:05 PM5/12/2014 12:31:05 PM
