Offshore costs outlook H2 2024: inflation is easing despite supply constraints

Major equipment awards, building backlogs, and increasing day rates continue to put pressure on operator costs across all offshore market segments. Suppliers have pricing power. But with both the supply chain and operators committed to capital discipline – and with demand in most sectors flattening out – the market should remain tight but stable in the absence of wider market shocks. Many themes are consistent across each of the subsectors, but in each, the tension between operator and the supply chain is unique. Rig, well services, subsea and facilities costs will increase, but at a slower rate than in recent years. In contrast, the installation market is still ramping up and costs will continue to rise steeply as demand pushes the market to full capacity. Regardless of the particular subsector dynamics, strong planning and supplier-operator relationships will be key differentiators in carving-out win-wins in the current market.