The South American offshore energy market is expected to register a CAGR of more than 4% during the forecast period. During COVID-19, South America's economy was affected negatively. South America was under a strict lockdown, drastically impacting the offshore energy market. During COVID-19, oil & gas and power were the most affected industry in the region due to lower demand for oil and gas coupled with delays in offshore projects due to lack of funding. Factors such as the significant rise in investment and development of offshore oil & gas fields in the region are expected to drive the South America offshore energy market in the forecast period. However, the higher initial investment required in the offshore establishment is expected to restrain the growth of the offshore energy market.
- The oil and gas segment is expected to dominate the South American offshore energy market during the forecast period.
- Developing offshore wind energy projects in the region is likely to provide a significant growth opportunity for the offshore energy market during the forecast period.
- Brazil has dominated the offshore energy market. The Increased investment in offshore oil & gas activity is expected to drive centrifugal pumps in the country during the forecast period.
Key Market Trends
The Oil and Gas Segment is Expected to Dominate the market
- The region has witnessed significant offshore oil & gas activity in the last few years. This can be ascribed to the lower breakeven prices and competitive payback times compared to the offshore oil & gas projects worldwide, making them more resilient in the current turbulent times.
- As of 2021, Brazil is the major country in South America regarding oil & gas spending. The country's offshore pre-salt oil fields pumped around 50% of the total oil output, which increased to approximately 75% by the end of 2020. This increasing production and dependency on offshore oil & gas fields can be attributed to steadily decreasing production expenses due to improved drilling technology, growing expertise in the offshore oil & gas industry, and increased infrastructure.
- Furthermore, Argentina's state-owned oil company YPF's CAPEX in 2021 stood at around USD 2.71 billion, representing an increase of almost 74% when compared to the value in 2020 (CAPEX in 2020: USD 1.55 billion); the company is planning to further increase the CAPEX in the country's an oil & gas sector, especially in the upstream activities during the forecast period.
- Colombia is showing signs of development in the country's an oil & gas spending. In 2021, Colombia's state-owned oil company Ecopetrol set a CAPEX target of USD 5 billion, i.e., an increase of about 30% compared to the expected value (USD 3.5 billion) in 2021. This anticipated increase is because the exploration and production projects at home and abroad are ramping up.
- Moreover, around 80% of the 2022 capital outlay is expected to be pumped into exploration and production projects. In Colombia, the exploration focuses on new drilling campaigns in the onshore Piedemonte region and opportunities in Caribbean offshore blocks. Hence, upstream projects alone are expected to require investments of USD 10 million -USD 12 billion over the next three years.
- These developments are likely to boost investment in the oil and gas sector, particularly offshore fields in the region.
Brazil is Expected to Dominate the Market
- South America is home to some of the world's largest countries in terms of proven oil and gas reserves. The region also hosts one of the world's largest offshore oil & gas markets. Brazil, Venezuela, Argentina, and Colombia are the major countries in the region's oil & gas industry.
- As of 2021, Brazil is the major country in South America regarding oil & gas spending. The country's offshore pre-salt oil fields pumped around 50% of the total oil output, which increased to approximately 75% at the end of 2020.
- The increased production and dependency on offshore oil & gas fields can be attributed to steadily decreasing production expenses due to improved drilling technology, growing expertise in the offshore oil & gas industry, and increased infrastructure.
- Furthermore, the oil & gas industry has witnessed significant growth in the last couple of years and is expected to grow in the near future. This can be ascribed to a rise in investment in the oil & gas industry by Petrobras, the state-owned company, which has announced a plan to invest more than USD 68 billion in 2022-2026 to push crude oil output to 2.6 million barrels per day.
- Furthermore, the country has significant offshore wind energy potential. Brazilian industry developers have proposed more than 130 GW of offshore wind capacity in 55 projects.
- These developments are anticipated to drive the offshore energy market in the country.
South America centrifugal pump market is fragmented. Some of the key players in the market include Chevron Corporation, Repsol SA, Petrobras, Exxon Mobil Corporation, and Enel Green Power S.p.A.
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