Offshore oil and gas markets have seen some mixed trends over the last six months, though a 7% drop in our Clarksons Offshore Index still leaves it on a par with 2008. Extracted from our forthcoming Offshore Review & Outlook, this week’s Analysis profiles the short-term more cautious attitude to investment from oil companies, but also areas where there is continued strength in offshore activity.

The outlook for the MOPU sector is positive. Throughout 2024, there was a steady stream of MOPU contracting, facilitated by the firm energy price environment (2024 Brent crude avg: $80/bbl, 21% above the 10-year trend).

• Offshore markets continue to have a relative soft tone to them as Q1 2025 ends. Signs of stability in rates are evident in some OSV and subsea markets, but in others softness continues, and rates in both rig sectors seem set for further downward movement.

Since mid-2024, offshore dayrate trends have become more mixed, and new project final investment decisions have slowed. A factor here is a more conservative attitude by oil companies, given current high levels of complexity in global oil markets. Oil markets look well supplied, given a lacklustre demand side along with output growth, but geopolitical risks add complexity to the outlook.

Since mid-2024, jack-up market conditions have softened due to contract suspensions by Aramco and Pemex. While dayrates have weakened, jack-up deployment has been less affected as owners reduced their rate ideas to secure work. Overall, though the near-term outlook remains muted, fundamentals remain supportive for future improvements. This month’s Analysis takes a closer look.

The Coral North project, offshore Mozambique, will see the deployment of a second FLNG nearly identical to its predecessor, Coral Sul. FID for the Coral Norte FLNG is due imminently. Combined, the two FLNG units will significantly boost Mozambican hydrocarbon production and provide 7 mtpa of capacity to the nation’s gas export volumes. This month’s Analysis takes a closer look...

The outlook for the MOPU sector appears positive, with a steady stream of MOPU contracting seen throughout 2024, facilitated by the firm energy price environment (2024 Brent crude avg: $80/bbl, 21% above the 10-year trend).

The PSV market has seen a period of strengthening over the past few years, recovering from significant weakening during the post-2014 downturn. PSV utilisation has recovered in a vessel-age dependent manner, with younger vessels seeing a more minor drop in utilisation and a faster rise back to pre-downturn levels, whilst older vessel utilisation lags behind, limited by unreactivatable assets.

Offshore markets remain in a situation where rates are softening from previous record highs in mid-2024. However, utilisation levels, on the whole, have only reduced by a lesser degree, with owners trading reduced rates for contract coverage (this is particularly noticeable for jack-up rigs).

Offshore oil & gas markets saw mixed trends in 2024, with the Clarksons Offshore Index (tracking rig, OSV and subsea dayrates) rising to a record level of 122 points in July-24 (2017: 45, 2008: 114, 2013: 101), before easing by 5% from this level by year end (116 points at end-2024). Meanwhile, project investment remained relatively positive amidst a continued focus on energy security.

Rig market conditions were mixed in 2024, with sentiment weakening in 2H following earlier gains, on the back of Aramco suspensions and growing ‘gaps’ in the floater backlog. Despite supportive supply-side fundamentals, further demand-side softening in 2H 24 has led to some market weakness. This month’s Analysis reviews the mixed market conditions in the rig sector heading into 2025.

Offshore oil and gas project investment eased in 2024 amid some project delays and setbacks. An estimated $80.9bn of CAPEX was committed, down -37% y-o-y, though still representing a positive total. See our latest Offshore Energy Project Tracker for further data.

Offshore markets have experienced continued softening over the last few months, albeit from the multi-year highs seen throughout 2024. Sentiment has weakened within the rig market alongside several regional OSV markets, particularly the North Sea, West Africa and the Mediterranean.

The OSV market held firm throughout most of 2024, but earnings softened in Q4 as several regions experienced seasonally weaker demand. Our OSV Rate Index rose 20% in 2024 to reach 194 points, surpassing the previous 2008 peak, before slipping from mid-year highs. Whilst supply-side constraints are likely to continue to persist, increasing uncertainties cloud the future outlook.

2024 was another positive year for the MOPU sector with numerous large, high-value contract awards being supported by the firm energy price environment. Looking ahead, the sector appears set to build on 2024 with 16 and 17 MOPU newbuilding/conversion contracts expected to be awarded in 2025 and 2026 respectively, many of which are high-CAPEX FPSOs and FLNGs.

A summary of the key offshore market trends and statistics in 2024.

The OSV market in South East Asia has shown strong recovery from post-2014 downturn lows in recent years. Increasing IOC and NOC activity, particularly off Malaysia, plus gradual supply-side rebalancing, has driven market tightening and an upward trajectory for dayrates. For the time being, even as some Atlantic markets have softened, South East Asian OSV markets have remained firm.

Offshore markets have experienced continued softening recently, albeit from very strong levels earlier in 2024. Sentiment has generally weakened within the rig market and some regional OSV markets (notably the North Sea, West Africa and the Mediterranean).

Rig newbuild ordering has been muted since the post-2014 downturn and through 2015-21 pressured fundamentals led to very limited ordering. As markets have improved since, other factors have inhibited rig ordering, not least a surge in newbuild pricing. Nevertheless, the first newbuild rig order since 2020 was placed in Oct-24, for a high-spec jack-up. What can be learnt from this?