Translating subsea project delays and cancellations into year-on-year subsea installation activity

Axiom EMI: It will take three years before subsea tree installations recover to 2019 levels. The previously expected market rebound has been put on hold with subsea players preparing for further challenging years.

As discussed in our previous post (, we estimate that the Covid-19 pandemic and low oil price environment has eroded the subsea tree market by 15% for the years 2020 through 2024.

Short-term installation activity is less impacted, and delays are primarily attributed to Covid-19 associated disruption, driven by restrictions on movement of people, reduced headcount in yards and logistical bottlenecks. However, the contraction across the market will be more acutely felt from 2022 onward.

Our research indicates a 2020 market reduction of the magnitude of 25 trees compared to expectations at the beginning of the year. It is important to note that our pre-downturn view for 2020 was conservative. The size of the market contraction increases annually from 2021 to 2024, with subsea tree installations expected to be 35-50 trees/year fewer than previously predicted.

Our pre-Covid forecast indicated a one-year contraction in activity through 2020, primarily driven by project scheduling. Installation activity was then expected to increase in 2021, returning the market to 2019 levels and continuing the sector recovery from the last down-cycle. This recovery trend has now been put on hold for 3-4 years.

While our research indicates a relatively ‘modest’ mid-term subsea market contraction of 15% (compared to the 25-30% market reduction in other sectors), the potential for further project delays, deferments and cancelations is a reality.

For more information on the underlying data of the above analysis, please get in contact.

Source: Axiom – Subsea Market