$54 billion in engineering, procurement and construction contracting opportunities on offshore oil & gas agenda for 2025

Despite the challenges hitting the fossil fuel industry, demand for hydrocarbons remains steady, as confirmed by the global engineering, procurement, and construction (EPC) contracting activity across the offshore oil and gas landscape. The batch of new projects, which are expected to reach the EPC stage this year, will lead to awards worth billions of dollars for jobs related to subsea equipment, offshore platforms, floating production units, and liquefied natural gas (LNG) equipment and facilities, based on the research conducted by Westwood Global Energy, an energy market research and consultancy firm.  

The global appetite for energy is growing daily, even as different aspects and combinations of the energy trilemma continue to drive policies at the government level, with some trying to balance the energy security, affordability, and sustainability scales while others pick one or two to tackle as part of their primary focus either on energy security or the transition to greener sources.

This often leads to pitting the fossil fuels lobby and the renewables club against each other by making participants pick one or the other to push toward development, even though energy experts argue that the energy mix will need all power sources to meet the growing demand and keep the lights on for the foreseeable future.

Westwood’s Mark Adeosun, Research Director – SubseaLogix & PlatformLogix, has outlined that the EPC contracting activities related to offshore oil and gas field development and carbon sequestration projects remained resilient in 2024, with the EPC award value for associated subsea equipment and offshore platforms totaling approximately $52 billion, an 18% uptick year-on-year (YoY) despite a 33% drop in the annual number of final investment decisions (FIDs) recorded.

Adeosun points out that the difference between the FID count and EPC award value trend between 2023 and 2024 stems from the award of large ticket items such as Petrobras’ FPSOs P-84 and P-85 units with an EPC value of over $8 billion, alongside the belated EPC award confirmation for Shell’s Sparta, which had the field FID announced in December 2023 but the EPC award to Seatrium for the floating production semi-submersible (FPSS) unit did not get confirmed until January 2024.

In addition, Westwood points out that major subsea umbilical riser and flowline (SURF) contract awards by Petrobras across its Buzios-9, Buzios-10, and Buzios-11 projects, as well as the Mero-3 HISEP project, supported the rise in EPC award value, although these projects already had their FIDs announced in prior years.

Regarding floating production system (FPS) units, including FLNGs, Westwood recorded 11 EPC awards, with a total throughput capacity of 1.57 mmboepd, with 1.3 mmbpd oil and 1.8 bcfd of gas, and 8 mmpta of LNG capacity, encompassing seven newbuilds, three conversions, and only one upgrade contract for an existing unit.

Adeosun underlines that the Middle East dominated the fixed platforms market, accounting for 58% of the 66 fixed platforms, covering topsides and jackets, EPC awards recorded in 2024. Saudi Aramco suspended the expansion of its maximum sustainable capacity (MSC) from 12 mmbpd to 13 mmbpd in January 2024.

While this led to the cancellation of several contract release and purchase orders (CRPOs), Westwood emphasizes that the Saudi NOC still accounted for approximately 38% of fixed platform EPC contracts awarded globally in 2024.

Overall, Westwood recorded over 250 subsea tree unit awards in 2024, with the Americas accounting for approximately 65%. ExxonMobil’s Whiptail development offshore Guyana represented the most significant single project in 2024 based on subsea tree demand.

Westwood predicts that the 2025 offshore oil and gas-related EPC contract award value will experience a marginal 1% YoY boost, totaling $54 billion, underpinned by 53 greenfield and brownfield field FIDs, given the high supply chain cost, which has plagued the industry since 2022 and led to several project delays as exploration and production (E&P) companies continue to optimize their field development concepts and revise project timelines.

Moreover, Adeosun explains that the softening of near-term Chinese oil demand has been driving a bearish sentiment across the global oil market, with OPEC+ agreeing in December 2024 to extend its voluntary output cuts into 2025. This indicates the oil market’s potential to soften further in 2025, derailing the sanctioning of projects with high breakeven costs and operators opting to re-tender rather than sanction projects.

Westwood still anticipates contracting activities in 2025 will be driven by the demand for over 290 subsea tree units, 18 floating production units (including four FLNG units) – with a total throughput capacity of 1.9 mmboepd, 959 kbpd of oil and 3.2 bcfd of gas, and 15.1 mmpta of LNG capacity – over 90 fixed platforms, approximately 3,650 kilometers of SURF and approximately 2,660 km of line pipes.

The FPS market accounted for 44% or $23 billion of offshore EPC contract awards in 2024 because of Petrobras’ P-84 and P-85 units, TotalEnergies’ GranMorgu FPSO in Suriname, and ExxonMobil’s FPSO Jaguar in Guyana.

However, Adeosun anticipates the FPS market to account for only 33% of offshore EPC contract awards in 2025 because eight of the 18 units expected to be sanctioned will be contracts to upgrade and redeploy existing units, as operators continue to explore ways to reduce upfront field development cost.

On Westwood’s list of major FPS contracts expected in 2025 are a few operated by Eni, which is expected to be the most active player in offshore E&P, with its Baleine Phase-3 development off the Ivory Coast, the Geng North project offshore Indonesia and its Coral Norte development offshore Mozambique.

Furthermore, other major FPS projects scheduled to be sanctioned in 2025 include Shell’s Gato do Mato project in Brazil, Petrobras’ Barracuda-Caratinga replacement FPSO also in Brazil, UTM Offshore’s Yoho FLNG unit in Nigeria, Petronas’ Kelidang cluster offshore Brunei, and Nisga’a Nation’s Ksi Lisims LNG project off the coast of Canada. Westwood claims that the sanctioning timeline of all these projects has been historically revised.

While contemplating the regional deviations in the EPC opportunities, Westwood spotlighted that Africa and the Americas will drive offshore EPC contracting activity in 2025, accounting for 26% and 25% respectively, with the Middle East accounting for 24% of forecast EPC award value.

Key awards to watch in Africa include Eni’s Coral Norte offshore Mozambique and its Baleine Ph.3 project offshore Ivory Coast, ExxonMobil’s Owowo project, and Erha North-Ph.3 development, as well as TotalEnergies’ Preowei field offshore and infill drilling activities at Chevron’s Agbami development offshore Nigeria.

Moving from Africa to the Americas, brings other such projects to mind such as Shell’s Gato do Mato in Brazil, Repsol’s Polok & Chinwol project in Mexico, Pemex’s Zama project in the same region, Navitas Petroleum’s Sea Lion project in the Falkland Islands, as well as Petrobras’ continued investment in the pre-salt basin, will present EPC contracting opportunities.

Regarding the U.S. Gulf of Mexico (GoM), Westwood anticipates that the region will continue to thrive on subsea infill drilling and fast-track developments over the near term. However, no FPS unit is expected to be sanctioned this year in the U.S, GoM in 2025. However, subsea tie-back projects to existing facilities such as Beacon Offshore’s Shenandoah Ph.2, Murphy Oil’s Longclaw, and Kosmos Energy’s Tiberius are all slated to progress forward.

Within the Middle East region, TPAO’s Sakarya Ph.3 has been pinpointed by Westwood as a key subsea project to watch, with the operator also planning to sanction a floating production unit for the project in 2025. Within the areas offshore Saudi Arabia, Saudi Aramco’s brownfield development across the Abu Safah, Berri, Safaniya, Marjan, and Zuluf fields is expected to continue to support contract awards across several CRPOs.

Additionally, Westwood forecasts that QatarEnergy’s North Field Compression Ph.2 project and Bul Hanine redevelopment project will drive contracting activities offshore Qatar. The firm’s research highlights that ADNOC’s Lower Zakum Long Term Development Ph. 1, the Umm Shaif-Long Term Development Ph. 2, and Eni’s Abu Dhabi Offshore 2 project will represent key offshore EPC contracting opportunities offshore the UAE in 2025.

Westwood believes that continued investment in Petrobras’ pre-salt basin, ExxonMobil’s Starbroek block in Guyana, the East Mediterranean, deepwater Namibia, the East African Ruvuma-Rufiji gas basin, and long-delayed gas projects in the Asia Pacific region, such as Inpex’s Abadi project in Indonesia, and Woodside Energy’s Browse development in Australia will represent “significant” EPC contracting opportunities.

Adeosun notes that Woodside’s projected EPC contracting activities over the 2026-29 period are underpinned by “a relatively robust hydrocarbon demand” from OECD countries and “a relatively stable oil demand” from China, which should support oil prices to average over $70 per barrel and “a softening of supply chain inflationary pressures,” which will be favorable for project economics.

If these scenarios hold, the annual oil and gas-related EPC award value is forecasted to average $50 billion over the 2026-29 period. Westwood, however, claims that potential upside remains, with projects such as the Greater Sunrise development offshore Timor-Leste offering promise as the JV partners continue negotiations with the Australian and Timor-Leste governments to progress a new PSC, petroleum mining code and fiscal regime.

Aside from this project, Adeosun has deemed as promising the recent exploratory success offshore Colombia, such as Shell’s Glaucus and Petrobras’ Sirius gas discoveries, which are not included in Westwood’s offshore EPC contracting opportunity over the forecast.