The offshore industry is learning important lessons from the challenges of the recent past. Welligence Energy Analytics estimates an average of 22% cost overruns for projects sanctioned since 2019 versus original guidance, with projects being delayed on average for a whole year. But with smarter ways of working and successful projects offering encouragement, the sector is set to tackle an uncertain macroeconomic environment and capacity constraints.
For starters, COVID restrictions and the knock-on impact on supply chains across shipyards was a major factor weighing on project delivery, particularly between 2020 and 2021.
Energy companies ExxonMobil and Eni have been shining lights. They have both consistently delivered recent standalone projects on time and below the recent industry average of 50 months, according to Welligence. That being said, guidance on costs at FID versus costs at project delivery has not been provided by either. The industry, in particular, should look at ExxonMobil’s Payara project, which is the only standalone project during the period that was delivered ahead of schedule.
Welligence highlights ExxonMobil’s Fast4ward model with SBM and Modec’s M350 solution (both standardised hulls), which has been a key factor in its cycle time success. Improved drilling efficiency has also been cited as a big factor in ExxonMobil’s Guyana campaign.
Despite a tight supply chain, delays and further cost overruns for the next wave of projects, Azule Energy appears to be bucking the trend with its Agogo FPSO project. The Angola development is expected to be operational ahead of schedule.
Operators are also pushing smarter ways to work with contractors to mitigate these cost and timeline challenges. Energy heavyweights such as Shell and TotalEnergies have adopted the iEPCI model (which involves integrating subsea production systems and SURF contracts) for recent big-ticket projects such as Gato do Mato in Brazil and Gran Morgu in Suriname.
ExxonMobil also offers more positivity on Guyana. The first three phases on Stabroek were delivered on time.
Welligence estimates that around 30 standalone offshore projects are awaiting FID. Five projects were approved in the first half of 2025.
But caution is the watchword. The upstream sector will continue to scrutinise its pre-FID inventory and push only resilient projects that deliver sub-$50/bl economics, Welligence notes.
The offshore industry is learning its lessons amid tricky economic conditions, and it will need to keep doing so if prices remain on a lower plane after recent volatility There is much promise amid the pitfalls if the industry continues to adapt, improve efficiencies and progress with confidence. To read the full report from Welligence, click here.
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