Fast growth in offshore wind, delayed oil and gas developments in western Europe, postponed final investment decisions and reduced investment in offshore oil and gas projects will see expenditure in the two markets reach parity as soon as 2021.
According to analysis from Rystad Energy, capital expenditure on offshore wind will surpass upstream oil and gas spending in Europe in 2022.
Offshore wind capex in Europe exceeded US$10Bn in 2015 and has since hovered in the range of US$10Bn to US$15Bn per year. Annual capex levels are expected to rise from around US$11.1Bn in 2019 to around US$13.8Bn in 2020, US$18.2Bn in 2021 and more than US$22Bn in 2022.
Rystad Energy said abundant oil supply and reduced demand have taken their toll on the oil price, and annual capex dedicated to upstream offshore oil and gas in Europe is expected to decline from more than US$25Bn in 2019 to less than US$17Bn in 2022.
“Offshore wind development in Europe is expected to flourish as countries strive to reach their ambitious 2030 targets. Large investments will be required,” said Rystad Energy project manager for offshore wind Alexander Flotre.
“Commissioning activity will increase and projects expected to be operational in 2023-2025 are already driving up capital expenditure in 2020. This trend will continue.”
From an installed base of 21.9 GW in 2019, European offshore wind capacity is expected to increase to more than 53 GW by 2025, an annual growth rate of 16%. Ambitious plans for 2030 will require new tender rounds in the coming years.
“Many service companies have already transitioned to concentrating more on offshore wind,” Mr Flotre said. “For these players, growth in the offshore wind market provides a well-timed cushion that softens the blow of declining investments in the traditional oilfield services sector.”
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