The oil market collapse caused by the Covid-19 pandemic is set to delay several oil and gas developments in Western Europe, putting capital expenditure in the offshore sector on a continued downwards trajectory through 2022. In light of the postponement of multiple final investment decisions (FIDs) on projects and lower investments in offshore oil and gas, coupled with increasing activity in the offshore wind sector, Rystad Energy expects that the two markets will reach parity as soon as next year. We anticipate that capital expenditure (capex) on offshore wind will surpass upstream O&G spending in Europe in 2022.
Capex towards offshore wind in Europe surpassed the $10 billion mark in 2015 and has since hovered in the range of $10 billion to $15 billion per year. Annual capex levels are expected to rise from around $11.1 billion in 2019 to around $13.8 billion in 2020, $18.2 billion in 2021 and more than $22 billion in 2022.
The abundant oil supply and reduced demand have taken their toll on the oil price, and consequently annual capex towards upstream offshore oil and gas in Europe is expected to decline from more than $25 billion in 2019 to less than $17 billion in 2022.