OTC 2026: Deepwater re-emerges as critical supply engine amid global exploration slowdown
(WO) — Deepwater development is positioned to play an increasingly important role in future global oil supply, even as exploration investment remains near historic lows, according to Ivan Cima, COO of Welligence Energy Analytics, speaking during a keynote session at OTC focused on “Trends, Players and Economics” in the deepwater sector.
Cima said global oil and gas supply could face a gap of as much as 25 MMbpd by 2040, placing renewed emphasis on large-scale, long-life deepwater developments.
“Exploration spend is near record lows,” Cima said. “2025 was one of the lowest years on record for exploration in a very long time.”
Making a strong case for deepwater. Despite the slowdown in exploration investment, Cima said deepwater remains one of the industry’s core supply growth engines. Global deepwater production currently represents just under 8% of worldwide supply, but Welligence forecasts output could rise to approximately 10 MMbpd in the early 2030s, “predicated on very key FID projects moving into first oil,” Cima said.
The company estimates the sector is targeting approximately 53 Bboe of conventional resources globally over the next 24 months, with deepwater exploration accounting for roughly half of those volumes. Cima highlighted South America and sub-Saharan Africa as major areas of activity, noting that companies, including Shell and Chevron, have been particularly active in rebuilding exploration portfolios across those regions.
Pushing the depth limit. During the Q&A session, audience members also asked about the industry’s continued push into deeper offshore environments and whether activity beyond 3,000-m water depth is becoming more common.
Cima said operators are increasingly moving toward ultra-deepwater developments, as companies pursue larger, higher-quality resources, although the trend also introduces additional technical complexity and execution challenges.
“We see this term now ‘ultra-deepwater,’ and yes, we’re absolutely seeing that shift,” Cima said. “That’s one aspect that adds to the complexity.”
The discussion underscored how advances in offshore technology and standardized development concepts are supporting increasingly complex ultra-deepwater projects.
Doing more with repeated designs. At the same time, operators are increasingly relying on standardized development concepts to improve project economics and execution timelines. Cima cited Petrobras’ use of replicant FPSOs as one example of how standardization is helping to accelerate offshore development programs.
The session also addressed greenhouse gas emissions and offshore efficiency. According to Cima, deepwater developments remain among the industry’s lowest-emission sources of production, due to the scale and efficiency of centralized offshore facilities.
“Deepwater is by far the most efficient operations in the world, in terms of emissions,” Cima said, noting that deepwater developments generate emissions intensity roughly 40% below the global industry average.
Weighing the cost of electrification. Cima pointed to the Shell-operated Ormen Lange development offshore Norway as an example of an electrified offshore project with some of the world’s lowest emissions intensity. However, he also questioned whether the high cost of electrification is always justified, compared to other potential investments in emissions reduction.
“Is the cost of electrification justified to reduce emissions?” Cima asked. “Or should the money be spent elsewhere?”
By comparison, Cima said the Gulf of America/Mexico “stands out” for achieving relatively low emissions intensity without the large-scale electrification costs associated with some North Sea developments.
Challenges remain. During the Q&A session, speakers also pointed to regulation, project execution challenges and competition for capital as key factors shaping the next phase of deepwater growth.
Cima noted that while Brazil remains one of the world’s leading deepwater basins, regulatory and environmental hurdles can still slow offshore activity and maintenance work. “The regulator is on board, but the environmental agency is making it very difficult for the industry to even replace ESPs for wells,” Cima said. “Those factors make forward motion very difficult.”
Addressing audience questions on government support and investment competitiveness, Cima also called on Welligence Head of Research Ruaraidh Montgomery, who noted that governments are increasingly improving fiscal terms as competition for offshore capital intensifies globally.
“We have a smaller pool of companies in the deepwater space,” Montgomery said. “That competition for capital is a primary driver.”
Top image shows Petrobras' P-78 FPSO. One of Petrobras' turnkey FPSOs, the P-78 FPSO began operations in the Búzios field (Santos basin) on December 31, 2025, marking the seventh unit to operate in Brazil's largest deepwater field.
