ROV Operations Market Facing Near-term Challenges

Energy industry analyst and consultancy Douglas-Westwood (DW) forecast the market for the operation of work-class remotely operated vehicles (ROV) to total $14.2 billion over the period to 2019, in its seventh edition of the World ROV Operations Market Forecast.

The report's author, Antoine Paillat, commented, "This represents a 19 percent increase on the previous five-year period, however, near-term we see some difficult conditions with weaker day rates and lower levels of utilization for the work-class fleet. We expect the global ROV market to significantly contract in value terms in 2016 (-6.3 percent) and then plateau in 2017, due to the current oil price downturn."

"We will see recovery later in the decade and this results in an overall compound annual growth rate (CAGR) of 4.3 percent for ROV expenditure over the forecast period. For the fleet, we expect to see an additional 193 units over the period, increasing from 983 ROVs in 2014 to 1,176 in 2019."

Research Team Leader and Assistant Editor, Hannah Lewendon, concluded, "The team has performed a full refresh of the market model with the latest DW offshore data and revisions to methodology, and sense-checked this through extensive consultation with industry. We found that regionally there were some bright spots, such as the Middle East which sees no downturn in expenditure evident and a CAGR of 6.5 percent to 2019, although it accounts for only 10 percent of overall spend in 2015 due to the extensive use of divers in the region. Latin America is now the largest market albeit growth levels are somewhat muted at 3.3 percent CAGR as a result of slowdown in developments in Brazil."

"We see that drilling support accounts for some 54 percent of the current market followed by Construction Support at 29 percent. The remaining IRM market is the smallest but also the most resilient to downturns in oil price. Technology continues to advance, particularly in the Gulf of Mexico market where post-Macondo changes such as API Standard 53 have brought new requirements for ROV blow-out preventer intervention. This has led to a new generation of very large, heavy-duty WROV systems."