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The global offshore drilling market size was valued at USD 33.22 billion in 2022. The market is projected to grow from USD 36.52 billion in 2023 to USD 65.63 billion by 2030, exhibiting a CAGR of 8.7% during the forecast period.
Offshore drilling refers to drilling holes in the continental shelf's seabed and applies to drilling in lakes and inland seas. Some advantages of offshore drilling are increased oil production, promoted energy independence, and encouraged economic growth. Since this technology's advent, oil production has increased with the increasing demand. In addition, many countries can now scour the ocean for oil and gas, promoting self-reliance. Furthermore, nations bordering oceans can explore and grow their marine oil reserves.
COVID-19 Negatively Impacted Market Growth Due to Reduced Oil & Gas Demand
COVID-19 spread rapidly everywhere in the world in 2020. Almost every country reported infected cases. From 2020 to 2021, every country was at different stages of the pandemic. The industrial participants witnessed challenges due to lockdowns.
In 2020, the collective effects of the global COVID-19 pandemic, the noteworthy decline in oil demand, and the considerable surplus in oil supply resulted in considerably reduced demand and day rates for offshore drilling.
In 2020, measures to contain the spread of COVID-19 led to an unprecedented decline in demand for oil & gas. Simultaneously, intervention by OPEC+ in the form of historic production cuts was insufficient to offset the decline in oil & gas demand. As a result, Brent oil prices dropped from pre-COVID levels of USD 50-70 to USD 20-40 per barrel.
Governments around the world are taking related public health measures. The duration and severity of the outbreak and its impact on global oil demand, volatility in oil and natural gas prices, and the level of disruption among stakeholders in the industry led to the decline in the offshore drilling market growth.
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Increasing Trend of Unmanned Offshore Oil Platforms is Expected to Propel Market Growth
Reducing production costs through Unmanned Wellhead Platforms (UWHPs) could be the revolution the offshore oil industry desperately needs. The benefits of automation include improvements in efficiency and safety. Some of the unmanned projects are:
Growing Investment Due to Surging Oil & Gas Demand will Drive the Market Growth
Oil companies across the globe are spending vast amounts on drilling to reverse a long decline in spending on decades-old projects. In addition, rising oil prices are boosting investment and Europe's rising energy needs as the war between Ukraine and Russia drags on.
The market growth is based on oil & gas demand and production. Over the years, hydrocarbons have been used extensively in power generation, transportation, manufacturing goods, and many other essential things. However, the exponential demand for conventional fuel due to globalization, urbanization, and massive economic development will dampen the balance of supply and demand. In addition, many countries are increasing their capital expenditure (CAPEX) to meet future energy needs. Offshore hydrocarbons are a reliable energy source, attracting many investors. Hence, the rising interest in extracting untapped hydrocarbon reserves is expected to drive the market.
The rising investment in the offshore area is helping to propel the market growth. For example, as per World Investment Report in 2019, investment in new offshore locations surged to USD 93.3 billion from USD 61.5 billion in 2018. Thus, the growing investment scenario in the oil & gas sector is propelling the demand for drilling in offshore locations.
Massive Demand for Hydrocarbons for Heat and Electricity Generation to Boost Market Growth
The exponential growth in the population has increased the demand for heat and electricity. A considerable part of heat and electricity is generated by using conventional fuel. Following this trend, operators are likely to invest in unexploited reserves of hydrocarbon, which is set to boost the market. Further, the developed and emerging economies are extensively investing in infrastructure, welfare schemes, and innovation & technology, which spurs the demand for hydrocarbons. Therefore, local key players are increasing drilling activities to meet domestic demand and reduce oil & gas imports.
Furthermore, many of the world's potential hydrocarbon reserves lie under the sea. The hydrocarbon industry has developed techniques suited to offshore conditions to find oil & gas and produce them successfully. Oil production from the offshore sector is expected to grow over the forecast period, owing to increasing oil and gas investments and the growing energy demand.
Additionally, the significant growth of the international crude oil market is influencing the global upstream oil and gas sector to regularly change the frequency of production and operation, which has led to increased drilling activities. For instance, according to the U.S. Energy Information Administration (EIA), 98.8 million barrels per day (b/d) of petroleum and liquid fuels were consumed in July 2022 globally, an increase of 0.9 million b/d from July 2021. In addition, global consumption of petroleum and liquid fuels for 2022 has an average of around 99.4 million barrels per day, an increase of 2.1 million barrels per day from 2021.
Growing Environmental Concerns are Expected to Hamper Market Growth
Due to the growing concerns about environmental pollution, various governments across the globe have implemented various regulations and policies to reduce gasoline and diesel vehicle emissions. China, the United States, Germany, France, Norway, and the U.K. have established specific targets for the deployment of electric vehicles, with plans to phase out Internal Combustion Engine (ICE) vehicles. Thus, the increase in the usage of electric vehicles is expected to hamper the oil & gas demand and consequently the market. This, in turn, will adversely affect the market growth during the forecast period.
For instance, global sales of electric passenger cars passed 6.6 million in 2021, approximately more than double the previous year (3 million in 2020). In India, almost 10% of global car sales were electric cars in 2021, which is about 16.5 million. Global sales of electric cars kept growing strongly in 2022, with 2 million units sold in the first quarter.
Furthermore, the COP26 Paris agreement, where countries signed an agreement to meet net zero carbon emission till 2050, will hamper the market. Offshore drilling releases toxic pollution into the air and water. In addition, exploration and drilling on the platform, transportation by tanker, and refining of the oil onshore may release greenhouse gases, volatile organic compounds, and other air pollutants. Therefore, environmental concerns about achieving net zero carbon emission hinder the market growth.
Drillship Segment Garnered Highest Share due to Adoption in Deepwater and Ultra-Deepwater
Based on rig type, the market is classified into drillships, semisubmersibles, and jackups. Drillships segment holds the highest share. In recent years, drillships have been used in deepwater and ultra-deepwater and have become very large and no longer have a mooring system. Instead, they are equipped with state-of-the-art data processing systems. These DP systems maintain a drillship’s position within a small specified tolerance by controlling their thrusters to counteract wind, wave, and current forces. Without a mooring system, drillships may not be able to service shallow water areas due to the angle limitation of drill risers.
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Deepwater Segment to Dominate the Market owing to its Hydrocarbon Potential
Based on water depth, the market is classified into shallow water, deepwater, and ultra-deepwater. The deepwater segment garnered the highest share in the market due to significant hydrocarbon potential. Due to this, operators are focusing on deepwater production. Deepwater and ultra-deepwater contain a considerable amount of hydrocarbons. In addition, major oil & gas companies are increasingly investing in producing untapped hydrocarbon reserves.
Asia Pacific Offshore Drilling Market Size, 2022 (USD Billion)
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Asia Pacific has the largest market with a significant offshore drilling market share. It includes countries, such as China, Southeast Asia, India, and Australia, all of which have significant offshore oil & gas reserves. One of the key drivers of the Asia Pacific market is the region’s growing demand for energy. As many countries in the region experience rapid economic growth and urbanization, their energy demand is increasing. Drilling in offshore areas is one of the key ways these countries are meeting this demand. Moreover, Asia Pacific is home to several large oil & gas companies investing heavily in offshore exploration and production. They are using advanced drilling technologies to tap into previously untapped offshore reserves, driving market growth.
Latin America is expected to grow the fastest due to increasing deep drilling activities in Mexico and Brazil. For example, in December 2021, Brazilian multinational Petrobras broke the record for Brazil's deepest exploration oil well at 7,700 meters.
Market participants signing necessary contracts to explore more offshore oil and gas fields in the region will drive the market in Latin America. For example, on September 7, 2022, Reach Subsea recently signed contracts with the Brazilian government worth USD 19.8 million for offshore oil and gas exploration in Brazil.
The Middle East & Africa is a significant region in the global market. The MEA is a significant contributor to the global oil and gas supply, with offshore drilling being a crucial component of its oil and gas industry. The region heavily relies on oil and gas exports to drive economic growth, providing significant revenues and job opportunities to meet the increasing global demand for energy. There are few recent developments in the MEA. For instance, in November 2022, Saipem secured new offshore drilling agreements, two in West Africa and three in the Middle East, totaling approximately USD 800 million.
Transocean Dominated with its Focus on Solid Operational Execution and Technical Capabilities
Transocean’s primary business is contract drilling services in a single operating segment, which involves contracting its mobile offshore drilling rigs, related equipment, and work crews to drill oil and gas wells. It specializes in technically demanding regions of the global drilling business with a particular focus on ultra-deepwater and harsh environment drilling service.
An Infographic Representation of Offshore Drilling Market
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The research report highlights leading regions to offer a better understanding of the competitive landscape. Furthermore, the market research report provides insights into the latest industry trends and analyzes technologies that are being deployed at a rapid pace at a global level. It further highlights some of the growth-stimulating factors and restraints, helping the reader to gain in-depth knowledge about the industry.
CAGR of 8.7% from 2023 to 2030
Value (USD Billion)
By Rig Type, Water Depth, and Region
By Rig Type
By Water Depth
Fortune Business Insights says that the global market size was USD 33.22 billion in 2022 and is projected to reach USD 65.63 billion by 2030.
In 2022, Asia Pacific stood at USD 14.11 billion.
The market will likely grow at a CAGR of 8.7%, exhibiting substantial growth during the forecast period (2023-2030).
Transocean, Valaris PLC, China Oilfield Services Limited, Seadrill, Maersk, Diamond Offshore Drilling. Inc., and Saipem are key players in this market.
Asia Pacific dominated the market in terms of share in 2022.
The jackups segment is anticipated to dominate this market during the forecast period.
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