Work-Class ROV Ops: A $1.4B Market by 2011 Since 2002, expenditures on work-class ROV operations has more than doubled. Further strong growth is expected over the next five years -- leading to a total market of some $1.46 billion per year by 2011 -- one of the findings of a new market study, "The World ROV Report 2007-11", from energy analysts Douglas-Westwood. Announcing the launch of the report, Rod Westwood, lead analyst commented: "Offshore utilization and ROV day rates have increased dramatically over the past five years and stand at an all time high. Between 2002 and 2006 alone, the work-class dayrate increase was around 30%". "We estimate that, in 2006, some $827 million was spent on the operation of work-class ROV units worldwide -- an increase of some 86% on the 2002 value. We forecast that this will increase by a further 76% to a 2011 value of $1,458 million -- a more than a tripling of the market over the ten year period." "Regionally, we expect North America and Western Europe to account for the largest proportion of ROV activity -- some 50% of the total units we expect to operate in 2007 are associated with these regions." More ROVs needed: The report is based on analyzing demand drivers: "The work-class ROV industry has seen strong growth driven by the high and sustained oil prices of recent years -- and we expect this to continue. A result has been high levels of drilling activity and increased installations of subsea wells, pipelines, control cables and other hardware. In addition, increasing underwater resources are required to service the growing numbers of underwater installations. Moreover, this is increasingly happening in great water depths beyond the economic reach of manned intervention. This all manifests itself in new drilling rigs and offshore construction vessels all of which use ROVs in subsea operations" said Westwood. The report concludes that by the end of the period, over 120 new work class ROVs will need to be built per annum to satisfy the dual demands of market growth and attrition of the existing fleet. "Based on an average cost-perunit, we forecast work-class ROV Capex will increase from its 2006 level of $186 million to $247 million by 2011 -- an increase of 33% over the period. Cumulative expenditure is expected to be a little over one billion dollars over the forecast period." Continued consolidation: This new report is built on DWL's unique knowledge of the offshore ROV industry. Westwood said: "The ROV industry has undergone an extensive period of consolidation in which DouglasWestwood has been heavily involved. In 2006, we have conducted a number of studies for major operators and manufacturers of ROV systems and associated components including the commercial due diligence behind Fugro's acquisition of Aberdeen-based operator Rovtech and Triton Systems' acquisition of ROV manufacturer Perry Slingsby". www.dw-1.com 20 MTR April 2007
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