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Out to sea

There is still potential for offshore upstream around the world. Our series of articles investigates the challenges and opportunities in depth.

OFFSHORE upstream is now a game of two halves. Production continues apace in many regions, founded on investment made at $100 oil, while offshore licensing rounds have generally been met with lukewarm responses.

Despite some bright spots, there is no disguising the dramatic downturn. Baker Hughes’ international rotary rig count shows a sharp decline in active offshore rigs from 334 in November 2014, when oil prices were starting to slide, to 211 in March this year. That collapse accompanies a sharp drop in expenditure, which isn’t going to recover soon. In a recent report, consultancy Douglas Westwood forecast subsea hardware spending will total $94.3bn in 2016-20 – a 19% fall from the 2011-15 period.

National oil companies (NOCs) with deep pockets are backing exploration in the Middle East. In Asia, energy-hungry India is pushing to open up its waters. Meanwhile, the UK and Norway had been keen to keep exploration momentum alive despite the maturity of North Sea acreage – though interest is waning there too. The Caspian remains an offshore hotspot, driven in part by Europe’s desire to find alternatives to Russian gas imports.

Gas is now as much of an exploration driver as oil. East Africa’s Rovuma basin is one of the world’s most active frontier plays due to its huge gas reserves. Likewise, big gas finds in the East Mediterranean basin have piqued interest there, though political difficulties are hampering development in Israel and around Cyprus. A fast-track plan to exploit Eni’s massive Zohr find off Egypt is just one of the region’s bright spots.

The oil and gas riches of Brazil’s pre-salt will keep the majors in the area, despite the country’s political chaos, but in general, investment in Latin America’s once buoyant offshore sector is weakening. Guyana and Uruguay have attracted interest from the majors, but activity in the bigger markets such as Mexico and Colombia is suffering as NOC finances come under pressure.

Offshore potential is still there. Maximising it, however, will ultimately be down to the oil price.


Click on the links below for our in-depth regional coverage.

Eastern Mediterranean

Eastern Europe

North Sea



Latin America

Trinidad and Tobago

Gulf of Mexico

Middle East


Hot spots

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