Record-high number of subsea trees awarded via integrated contracts.
After hitting rock bottom in 2016, the subsea equipment market has gradually recovered, reaching over 300 awards of subsea trees in both 2018 and 2019 – three times more than in 2016. Integrated subsea contracts took center stage in 2019 and had a breakout year with 20 such contracts signed, representing a record-high of over 150 subsea trees awarded under such deals. Integrated contracts – where service providers partner with each other to provide the full subsea scope, covering both subsea production systems (SPS) and subsea umbilicals, risers, and flowlines (SURF) – have become increasingly popular in the last four years since they were introduced. Thus far, three main players have established themselves in this market and have secured major contracts: TechnipFMC, Subsea Integration Alliance (OneSubsea and Subsea 7), and Baker Hughes together with McDerott.
Looking ahead, the subsea market looks promising, fuelled by an increase in sanctioning activity for deepwater projects. Rystad Energy forecasts that operators will increase their spending on subsea equipment and installation services by a healthy 8% annual growth rate during the next five years. It will therefore be interesting to monitor whether the higher operator budgets for this segment and the rising popularity of integrated contracts will result in any price inflation within the subsea market.