The subsea systems market is projected to grow at a CAGR of 3.46% to reach US$15.588 billion by 2027, from US$12.282 billion in 2020.
Subsea systems provide perfect options for high oil recovery in mature offshore wells while being cost-effective and maintaining offshore basin stability. Subsea processing systems include equipment for petroleum processing at the seabed such as subsea pumping, separating, injection, and compression. Through good field management, subsea processing increases the volume of oil and gas produced from offshore wells. Therefore, the rise of the oil and gas industry will generate demand for subsea systems which will positively contribute to the market share in the upcoming years.
Furthermore, as oil prices have recovered during the crisis, along with the increasing investment trends in the offshore sector, it is likely to be one of the primary drivers for the offshore oil and gas services and equipment industry, and therefore the subsea systems market, throughout the projection period.
The rising demand for subsea systems in the oil and gas industry
Growing deepwater drilling operations, as well as increased investments in oil and gas sectors in emerging nations, are important drivers that are expanding the market size. Sluggish global oil costs are a major limiting factor impeding market expansion. The liberalization of the oil and gas sector provides considerable development potential for the subsea systems market.
Additionally, because of increased worldwide consumption of petrochemical goods, significant increases in demand for electricity and fuel, and the deterioration of traditional onshore oil and gas deposits, the global oil and gas industry is turning its attention to the offshore oil and gas industry. This growing offshore oil and gas industry is critical to the high development prospects of the global subsea systems market. The global subsea control systems market is also being driven by an increase in the number of exploration activities taking place in non-traditional oil and gas exploration zones such as Latin America and Africa, as well as technological advancements that allow for the development of precise and highly effective subsea production systems. According to the US Energy Information Administration's ("EIA") short-term energy forecast, 99.0 million b/d of liquid fuels and petroleum were utilized globally in January 2022, a rise of 6.6 million b/d from January 2021. According to the EIA, global consumption of petroleum and liquid fuels would rise by 1.9 million b/d in 2023.
Furthermore, technological developments have resulted in the quick identification of new deposits, increasing prospects. The growing requirement to replace old oil and gas reserves with new deepwater reserves is likely to open new prospects for subsea control equipment market participants. For instance, Interventek, an Aberdeen-based subsea well intervention technology expert, announced the commercial introduction of a new API 17G certified, in-riser subsea landing string system in October 2021. The Revolution-7 landing string is a sophisticated, 7-inch nominal, 10,000psi rated system that includes Interventek's Revolution safety valve. Interventek's PowerPlus technology is also included in the system, which is a one-of-a-kind arrangement of a regionally incorporated, gas-accumulated power source that provides valve activation in less than a second.
The increasing initiatives taken by companies to incorporate subsea systems into their operations will benefit the market size in the long run
The growing trend of innovative product launches and the market expansion strategies by the companies will surge the market in the next five years. For instance, Norwegian Innova and the US Teledyne Energy System collaborated in February 2022 to demonstrate the usage of hydrogen for local control of subsea control systems. The validation test was conducted at the Norwegian Center for Offshore Education, Tau Autonomous Center in Tau, Norway, and comprised a good intervention scenario in which the Subsea Supercharger powered an Innova subsea hydraulic pumping unit (sHPU). Furthermore, EniSpA (an Italian oil and gas firm) launched its first exploration well in Abu Dhabi's offshore territories in February 2022. The business also stated that its first exploration well, XF-002, is now being drilled in offshore Block 2 Abu Dhabi (UAE) at 115 feet of sea depth.
Additionally, Schlumberger, Aker Solutions, and Subsea 7 today announced a joint venture agreement to advance efficiency and innovation in subsea production by assisting clients in unlocking reserves and reducing cycle time in August 2022. The partnership brings together a portfolio of new technologies such as subsea compressed air, all-electric subsea production systems, and other electrified capabilities that will assist clients in meeting their decarbonization targets. Similarly, Chongqing Qianwei Technologies Group successfully constructed a subsea Christmas tree in the Yingge Sea, Hainan Province, South China, in July 2022, marking a major stride in the country's deep-water oil and gas development.
According to analysts, the South American region is anticipated to witness growth during the forecasted timeframe
Based on Geography, the subsea systems market is divided into North America, South America, Europe, the Middle East and Africa, and the Asia Pacific. Geographically, South America is predicted to be the biggest and fastest-growing subsea system market. Brazil accounts for the bulk of demand because of recent deepwater and ultra-deepwater activity and many prospective projects. Brazil is a global pioneer in the creation of deepwater and ultra-deepwater projects, according to the EIA. Brazil produced an estimated 2.94 million barrels daily of crude oil and condensate in 2020, an improvement of more than 150,000 barrels per day over 201, as per the same source. Changes in government policy, notably as deregulation of the oil and gas industry have attracted international investment in recent years.
The COVID-19 epidemic interrupted oil and gas pricing, which had a significant influence on market share. Prices fell by 25% in the first quarter of 2020, according to the Organization of the Petroleum Exporting Countries (OPEC). Furthermore, OPEC members lowered oil output by 9.7 million barrels per day between May and July 2020. As a result, market participants were forced to reduce their investments. As a result, offshore activities in deep and ultra-deep water were curtailed. Furthermore, when the wells were shut, market participants were fearful that if the wells were sealed further, they would lose their assets permanently.