Supply & Demand Dynamics
The demand for umbilicals is directly affected by subsea project activities around the world. In particular, the complexity of field subsurface infrastructure and long-distance tiebacks subsea, require larger length and more sophisticated umbilicals. Demand for subsea umbilicals in the oil & gas industry is not expected to recover until 2023. Subsea Umbilical represent a quarter of the entire SURF market and translates into c.$ 1.5B in revenues.
Offshore wind farms play a large role in the demand for umbilicals and power cables and set grow significantly, in particular, offshore Europe. The demand for subsea cables from offshore wind farms is expected to dominate in the years to come and may account for more than half the total demand. According to Rystad Energy, the total length of marine wind power cables is expected to jump from 1800 km in 2019 to 4300km by 2022.
The largest oil & gas markets for umbilicals are South America & the Gulf of Mexico, representing around 30% of the global market, followed by the North Sea and the Asia Pacific. MENA is a very small market and may not always be attractive to umbilical manufacturers. Egypt, Angola and Saudi Arabia are the dominant markets in the MENA region.
The market of umbilicals is geographically connected to the end markets, with relatively good competition. Most of the manufacturers are located in Europe and the USA / South America. In parallel to that, some of those manufacturers tend to focus on a particular segment/application, leaving a less competitive environment to segments with fewer players available. As a result, buyer power is limited in those segments, in particular, when the timing of delivery is critical.
Lead times for subsea umbilical vary primarily depend on the application, material selection and capacity utilization. Generally, the lead time to manufacture subsea umbilicals varies between 9-16 months.