Energy Outlook: More, More, More

By Amy McLellan

All forecasts point to more of everything – fossil fuels, renewables, nuclear – but the existing fleet of deck carriers, multi-purpose vessels and heavy-lift equipment is going to be stretched to its limits. For Issue 3, 2024 of Breakbulk Magazine, industry leaders from companies including Blue Water Shipping, Swire Projects and Drewry Maritime Research assess the solutions.

(6-min read)


We are living in the interesting times that Chinese proverbs like to warn about. From multiple war zones and extreme climate events, from pandemic disease to explosive new technologies such as generative AI, the future seems more uncertain and harder to predict than ever before.

More upheaval may lie ahead. This year, more voters than ever before in history will head to the polls. At least 64 countries (plus the European Union), representing about 49 percent of the global population, will hold national elections, and the results will shape our world for years to come.

In the U.S., the possible return of Donald Trump – at the time of writing ahead in opinion polls despite facing a barrage of lawsuits – could upend parts of the Inflation Reduction Act, which has been a shot in the arm for the nation’s renewables industry.

An expected shift in the balance of power in the European Parliament could put the Green Deal strategy to make Europe climate neutral by 2050 at risk if, as polls suggest, a populist right coalition emerges this summer with a majority for the first time. In the UK, the opposition Labour Party, widely expected to dislodge the incumbent Conservatives, recently rolled back its pledge to commit £28 billion a year of additional capex to reach Net Zero.


Uncertainty: A Barrier to Investment

These shifting sands are bad news for those investing in the energy transition – not to mention the implications for a planet that is warming faster than ever. In the near-term, however, for those companies that ship, lift and build the energy infrastructure on which we all depend, it is business as usual.

“Whatever happens, there’s going to be huge demand for energy in the coming years, whether it’s renewables or oil and gas,” said Peter Molloy, senior analyst – multipurpose shipping (associate) at Drewry Maritime Research.

Indeed, all forecasts point to more of everything – fossil fuels, renewables, nuclear and storage – as population growth and higher living standards continue to drive demand. Investment is tilting towards renewable energy, with demand for all fossil fuels due to peak before 2030, according to the IEA’s World Energy Outlook.

The share of coal, oil and natural gas in global energy supply – stuck for decades around 80 percent – will edge down to 73 percent by 2030, according to the IEA, but this is nowhere near low enough to deliver on climate targets.


Oil and Gas: Still a Sure Bet

Recent years have seen a recalibration of investment plans as publicly listed oil majors have had to temper their green rhetoric with some hardheaded decisions to keep producing highly profitable oil and gas.

This isn’t just to satisfy disgruntled shareholders. As delegates made clear at COP28, held in Dubai late last year, the world, and particularly the least developed nations, can’t yet afford to go cold turkey on fossil fuels.

“Oil and gas will continue to be required to bridge the energy demand gap whilst other sources establish themselves and scale up,” said Angus Milne, manager oil and gas offshore, UK & Ireland, energy systems at DNV.

For players in the project cargo sector, this means a healthy pipeline of contracts. “In the next 12-24 months we anticipate steady growth in the oil and gas sector with approximately a thousand oil and gas projects launching in that period,” said Namir Khanbabi, general manager of Swire Projects.

A number of major projects are nearing Final Investment Decision (FID) this year, with operational start-up slated for the years 2026-2028. According to Global Data, these include upstream projects such as the deepwater Bonga Southwest/Aparo in Nigeria, the Brulpadda/Luiperd gas field in South Africa and the Elk-Antelope field onshore Papua New Guinea.

In the midstream sector, liquefied natural gas (LNG) liquefaction projects dominate as suppliers continue to bet on strong demand for LNG in the future. These span the globe, from the U.S. and Mexico to Mozambique, Nigeria and Papua New Guinea. Downstream there are 11 refinery projects targeting FID this year and a slew of petrochemicals projects in Indonesia, India and the U.S. (19 alone in Indonesia).


Refilling the Pipeline

Looking further ahead, Santosh Kumar Budankayala, senior analyst at Norway’s Rystad Energy, foresees a busy year of exploration drilling as heavyweight operators push into deeper waters in the search for new reserves.

Last year saw a 20 percent increase in the amount of acreage awarded to major players, some 112,000 square kilometers, all of which was offshore: 39 percent on the shelf, 28 percent in deepwater and the remaining 33 percent in ultra-deepwater.

Rystad Energy expects 50 more deepwater and ultra-deepwater exploratory wells this year compared to 2023, when conventional discoveries only yielded what Budankayala called a “bleak one billion barrels of oil equivalent (boe)”, down by two-thirds on the three billion boe found in 2022.

The hope is that the return to new frontiers will replicate the wildcat successes of the previous decade, such as Area 1/4 offshore Mozambique between 2010 and 2013, gas finds off the coast of Mauritania and Senegal between 2015 and 2017 and the Liza oil discovery in Guyana in 2015, which was the first in a string of finds across the Stabroek block, where following the March 2024 discovery, Bluefin, Exxon has now made 30 finds.

Production from the first three fields on Stabroek is due to hit 600,000 bpd later this year, just under a decade since that first Liza-1 well, a signal of the protracted timelines from first wildcat to first oil.

This year will see exploration drilling across South America, including Argentina where Argerich-1 marks the country’s first ultra-deepwater well. In Africa, the oil majors are targeting a number of basins off Namibia and South Africa while in Asia-Pacific, there’s high impact drilling planned in Malaysia, Vietnam and Indonesia.

Europe too is seeing activity, with drilling in the Norwegian and Barents Seas. Should all this activity yield new reserves, then the pipeline of activity for the project cargo sector will remain buoyant into the early years of the next decade.


Wind Power: Renewed Energy Offshore

Wind power will continue to generate busy order books for the project cargo industry. The Chinese wind energy market will remain the largest in the world in 2024, with the country set to install over half the world’s wind energy capacity this year, according to Wood Mackenzie.

The pipeline for future projects looks strong, with more than 60 gigawatts (GW) of offshore wind capacity to be tendered this year, with the EMEA region holding more than 50 percent of expected tenders. Project cargo specialists have built thriving businesses serving this growing market, where the loadouts are only getting bigger.

“We see big growth ahead for offshore wind,” said Brian Sørensen, global category head, wind and port service at Blue Water Shipping.

“Our biggest pipeline for wind is Europe but in terms of expansion, we’re looking at Canada, the U.S. and Asia, particularly South Korea, and further down the road, Japan.”

In the U.S., which was hit in 2023 by high-profile offtake cancellations and billions of dollars of write-offs as the industry faced headwinds from soaring inflation, interest rate hikes and supply chain problems, there’s now a renewed push to deliver.

In New Jersey, Shell and EDF are developing the 1,510-megawatt (MW) Atlantic Shores wind farm, due online in 2027-2028, while off the coast of Virginia, Dominion Energy’s huge 2,587-MW Coastal Virginia Offshore Wind project is on track for first power in the second half of 2025. Avangrid, majority owned by Iberdrola, and Ørsted are also pushing ahead with projects off the coasts of Massachusetts, Rhode Island and Connecticut.

“The U.S. has gone up a gear, and we can see real momentum there again,” said Sørensen. “However, the pipeline is still a little unstable.”


The ‘Double 100’ Opportunity

Floating wind is another fast-emerging opportunity, albeit with more unknowns. Europe has four small floating wind farms today with a combined capacity of 176 MW, but there’s a 250 MW plant tendering off northern France, with results due this year, and a number of floating wind auctions planned in the Mediterranean, UK and Norway.

China’s Wenchang deep-sea floating wind demonstration in the South China Sea is the world’s first semi-submersible ‘double hundred’ - in waters deeper than 100 meters and with an offshore distance of over 100 kilometers.

“Floating wind is going to be a big opportunity, opening up regions that were previously too deep for offshore wind like Japan, parts of Scotland and California,” said Sørensen of Blue Water Shipping. “But first we need this to mature so it can be competitive.”

Blue Water is quoting on some projects but he says many are more akin to test projects to gather more data on floating wind, which Sørensen doesn’t expect to hit its stride until 2030 and beyond.


Fleet Constraints

In a world in which both oil and gas and offshore wind are booming to meet energy demand, the existing fleet of deck carriers, multi-purpose vessels and heavy-lift equipment is going to be stretched to its limits.

“There is not enough capacity,” said Milne of DNV. “The gaps in the fleet are due to instability and uncertainty in specification of requirements, for example, turbine sizes seem to be growing without standardization, while equipment failure incidents are causing concerns on reliability of designs.”

This was echoed by Sørensen at Blue Water. “We see a real bottleneck looming in 2027/2028, both in feeder and installation vessels. Shipowners are still being cautious about making further investment in fleet capacity but we need to see action on this because there is not a lot of time to build new vessels and unplug this bottleneck.”

Khanbabi of Swire Projects put some numbers around this. “We observe about 1,000 heavy-lift/MPP vessels operating currently, and around 270 of that fleet are 20 years of age or older,” he said. “There are approximately 40 new vessels collectively under order, which probably only replaces 15 percent of the tonnage that is likely to be phased out of the existing fleet.”

Molloy of Drewry also questioned whether there’s going to be capacity to keep the energy sector’s project workload on track. “We’re going to need more deck carriers and heavy-lift vessels, and the order book is not there yet,” he said, putting the bottleneck as early as 2026. “For 2027/2028, there’s still time to react and newbuilds to be delivered.”

He pointed out that building slots are getting harder to find, with the only project carrier delivery announcement for 2026 coming from Germany’s dship Carriers. “We really need people to start ordering vessels in the next few months but what we see instead is people waiting for signals on interest rates, and also for more information about time charter,” said Molloy.

This wait-and-see game could prove costly. “Charter rates are going up, and will continue to do so as capacity tightens,” said Molloy. “The question is: have projects allowed for these increases?”


Port Space at a Premium

It’s not just vessels that are in short supply. The offshore wind industry also faces a looming choke point when it comes to port capacity.

“You need ports with very strong quays and a lot of space,” explained Sørensen of Blue Water. “There are just not that many that have 200,000 to 800,000 square meters of space, and it’s expensive space because of the bearing capacity requirements.”

Unlocking this investment is likely to require government support to keep momentum in the energy transition.

Some bottlenecks are more intractable than others, with connections to the grid proving to be a major barrier to scaling renewables. Outdated and inadequate power grids are a ‘significant stumbling block’ to the energy transition, with Edvard Christoffersen, senior analyst at Rystad Energy, suggesting the world needs US$3.1 trillion of grid infrastructure investments before 2030.

This would require an eye-watering 18 million kilometers of grid network – in itself needing nearly 30 million tonnes of copper – to keep pace with the electrification agenda. Adopting large-scale battery storage solutions and grid digitalization can address some grid intensity issues but this investment is taking time to scale.

This matters because the power grid issues are holding back other aspects of the energy transition, including renewable fuels. “Upgrades to the power infrastructure are necessary because some projects need power earlier to progress,” said Milne of DNV.

“Hard-to-abate sectors need hydrogen, ideally green hydrogen, but green hydrogen in the volumes needed requires sizable desalination plants which requires power and a good water supply.”

And that, in turn, sounds like more work for project cargo specialists.


Blue Water Shipping and Swire Projects will be exhibiting at Breakbulk Europe on 21-23 May in Rotterdam.

TOP PHOTO: Loading wind turbine components. CREDIT: Swire Projects
SECOND: Reactor transport in Kocaeli Province, Türkiye. CREDIT: Oznakliyat
THIRD: Floating wind installation, Norway. CREDIT: Mammoet