The market for AUV & ROV is expected to grow at a CAGR of approximately 5.17% during the forecast period of 2020 - 2025. Factors, such as rising offshore oil and gas production activities, growing offshore wind power industry, and increasing oil and gas decommissioning activities, are expected to be major drivers driving the AUV & ROV market. However, global offshore investments have been in a steep decline due to the oil price collapse during mid-2014. This, in turn, has resulted in a lower number of offshore oil and gas activities in recent years and has limited the growth of the market studied.
- The oil and gas sector is expected to hold the largest share in the AUV & ROV market in 2019, owing to the demand for these vehicles across all phases of the offshore oilfield life cycle.
- The rising deepwater and ultra-deepwater discoveries are expected to open up new avenues for the market studied.
- North America is expected to dominate the market, with the majority of the demand coming from countries, such as the United States and Mexico.
Key Market Trends
Increasing Demand from Oil and Gas Sector
- The oil and gas sector is expected to maintain its dominance in the market studied over the forecast period. ROVs are widely used across all phases of the offshore oilfield life cycle. They are also used for offshore drilling support and vessel-based services, including subsea hardware installation, construction, pipeline inspection, survey and facilities inspection, maintenance, and repair.
- However, the AUV market in the oil and gas industry is in its initial stages but is experiencing growing demand. Therefore, for AUVs, the oil and gas industry is expected to be the biggest growth driver during the forecast period.
- As of 2018, the majority of deepwater or ultra-deepwater production has taken place in four countries: Brazil, the United States, Angola, and Norway. Brazil is a world leader in the development of deepwater and ultra-deepwater projects. This positive growth trend in crude oil production, from deepwater and ultra-deepwater resources in these regions, is expected to drive ROVs' demand in the coming years.
- In 2018, Brazil and the United States together accounted for more than 90% of ultra-deepwater production globally. The presence of the most experienced international oil companies in the deepwater development and largest deepwater reserves makes the United States and Brazil the most attractive countries for upstream deepwater investment.
- Moreover, production from the deepwater fields produced or under development is expected to reach 7.6 million barrel per day by 2025 and 9 million barrel per day by 2040, thus boosting the market growth studied during the forecast period.
- On the other hand, over 950,000 ton of topsides are slated for removal across the North Sea, of which more than 605,000 ton will be from UKCS. The United Kingdom is expected to spend around EUR 15.3 billion on decommissioning over the next eight years. Approximately 2,400 wells are expected to be decommissioned across the whole North Sea and West of Shetland region, by 2027. Around 914 of these wells are located across the Norwegian, Danish, and Dutch sectors.
- Therefore, with several offshore oil and gas projects, including decommissioning of offshore oil and gas assets set to start in the coming years, along with the rising investments in offshore oil and gas sector, the demand for AUV & ROVs is expected to grow significantly during the forecast period.
North America to Dominate the Market
- The offshore oil and gas projects in North America are becoming more competitive, owing to improved efficiencies and tightening of the supply chain, leading to declining offshore drilling costs. For example, before 2014, a deepwater well in the Gulf of Mexico used to cost about USD 200 million to drill. As of 2017, drilling a deepwater well in the same region costs between USD 10 - 50 million.
- As a result of higher oil prices and declining drilling cost, the offshore rig count and the offshore oil production in the United States have increased significantly, indicating growth not only in offshore drilling but also in production activity. This, in turn, is expected to be the major driver for the AUV & ROV market.
- In terms of policy support, 2017 witnessed some positive developments. The tax overhaul plan drastically increased the fiscal competitiveness of the offshore projects in the Gulf of Mexico, relative to other offshore basins. Additionally, the Trump administration announced to uplift the ban on offshore drilling off the coasts of Florida and California. The administration is considering more than 40 sites for the leasing of natural gas and oil production.
- Adding to this, the wind power sector in the United States is receiving huge support from the government on account of its policy known as 'America First,' aimed to boost domestic energy production. The offshore wind power sector is seen as the major area of development, as the large coastal area is available for leasing, where wind power plants can be built. As a result, the increasing offshore wind activities in the country is likely to increase the need for construction, operation, maintenance, and other events, which, in turn, is expected to increase the use of AUV & ROVs in the United States in the next few years.
- Canada's offshore oil industry is expected to attract rising investment interests in the coming years, on account of an aggressive push by Newfoundland and Labrador, as prices plummet in oil-rich Alberta.
- Therefore, factors such as rising offshore oil and gas investments and the governments' efforts to improve the offshore wind sector are expected to drive the demand for AUV & ROV market in the coming years.
The global AUV & ROV market is consolidated with the top 10 companies accounting for over 70% of the market share in 2018. Some of the major companies include Oceaneering International Inc., Subsea7 SA, DOF Subsea AS, and Fugro NV, and Helix Energy Solutions Group Inc.
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