Global Offshore Capex Hits $137bn as Oil Sector Invests Heavily

What happened

Global offshore field development capital expenditure reached $137bn in 2026, up from $105.2bn in 2025, according to Westwood Global Energy Group. The increase was driven by accelerated sanctioning of floating production systems (FPS) and subsea projects, particularly deepwater developments. Major oil companies committed $66.4bn in H1 2026 alone, more than triple the prior year, with 38 offshore field final investment decisions (FIDs) approved. Key awards included Petrobras P-81 and P-87 FPSOs, Delfin FLNG in the US Gulf, and projects offshore Angola, Malaysia, and Cyprus. The FPS market saw $37.7bn in EPC awards for 2026, up from $15.6bn in 2025, reflecting growing demand for floating infrastructure in both oil and LNG projects. Subsea equipment EPC awards remained stable at approximately $17bn, with 283 subsea tree units forecast for the year. Regionally, investment became more balanced: Latin America led at $28.5bn, followed by Asia and North America at $26bn each, Africa at $23.3bn, and the Middle East at $22.8bn. The Middle East share declined from one-third of global capex in 2025, partly due to geopolitical uncertainty linked to the US-Israel-Iran conflict. Unlike 2025, when 80% of offshore capex was concentrated in the second half, 2026 showed a more even distribution between H1 and H2, indicating a sustained sanctioning environment rather than a year-end rush.

Why it matters

For Shell and other integrated oil majors, the sharp rise in offshore development spending signals a sector-wide commitment to long-cycle, capital-intensive projects despite oil price volatility and geopolitical disruption. The 90% increase in offshore FIDs and the shift toward floating production systems underscore growing operator confidence in offshore resources as a reliable long-term supply source. The 30% year-over-year increase in committed capex reflects improved project economics, particularly in deepwater and FLNG developments, which are strategic focus areas for Shell. The more balanced geographic spread of awards-across Latin America, Asia, North America, and Africa-reduces concentration risk and highlights resilient global demand for offshore capacity. The sustained investment cycle, with $70.5bn in committed capex expected in H2 2026, suggests strong visibility for oilfield services, equipment suppliers, and operators with offshore portfolios. For Shell, this environment supports its own offshore development strategy, including projects in deepwater Brazil, West Africa, and LNG infrastructure. The sector's willingness to deploy capital into multi-year projects also reflects confidence in energy security priorities and the role of offshore oil and gas in meeting global demand through the energy transition.

Bigger picture

The offshore investment surge reflects broader industry trends shaping the oil and gas sector in 2026. First, the shift toward floating production systems-whose EPC value more than doubled to $37.7bn-highlights the growing importance of deepwater and LNG infrastructure in meeting global energy demand. This trend is driven by energy security concerns, competitive deepwater project economics, and the increasing role of LNG in replacing coal and supporting gas-fired power generation. Second, the geographic diversification of capex away from the Middle East toward Latin America, Asia, and Africa signals a more resilient and balanced sanctioning environment, less vulnerable to regional disruption. The softer Middle East profile in H1 2026, influenced by geopolitical tensions, contrasts with robust activity in Brazil (Petrobras), Guyana (ExxonMobil), Namibia (TotalEnergies), and West Africa (Eni, Azule). Third, the sustained commitment to long-cycle projects despite oil price volatility suggests operators view offshore resources as strategically essential, particularly as onshore shale growth moderates and declining conventional fields require replacement. Industry peers such as Phillips 66, which reported $3.8bn in Q2 2026 net earnings (up 339% YoY), and Glencore, which saw H1 2026 adjusted EBITDA rise 86% to $10.1bn, also benefited from higher commodity prices and improved margins, reinforcing the sector's financial strength. However, the concentration of FPS awards in the second quarter and the delayed contracting of subsea packages suggest supply chain capacity remains tight, potentially supporting higher service pricing but also posing execution risks.

What to watch

Key signals for Shell and the sector include the pace of FPS and subsea EPC awards in H2 2026, with $23.5bn in additional FPS projects and major subsea packages still pending. Sanctioning decisions for high-profile developments-including ExxonMobil's Longtail (Guyana), TotalEnergies' Venus (Namibia), and Bahia Blanca LNG (Argentina)-will indicate whether the current investment cycle remains on track. Investors should also monitor oil price trends and geopolitical developments, particularly in the Middle East, where major projects such as Durra and Maydan Mahzam remain weighted toward late 2026 or beyond. The health of the subsea supply chain, including SURF and export line demand (forecast at 4,000km and 2,600km respectively), will signal whether contractors can meet the accelerated project pipeline without significant cost inflation. For Shell specifically, watch for updates on its own offshore portfolio, including deepwater projects in Brazil, West Africa, and the Gulf of Mexico, as well as its FLNG strategy. Finally, the progress of Glencore's planned ASX secondary listing in October 2026 and broader industry capital allocation trends-such as Phillips 66's shareholder returns and refinery utilisation-will provide context on how the sector balances growth investment with returns to investors amid a commodity upcycle.