Gulf of Mexico's lengthy offshore oil projects 'on hold' as LNG takes the spotlight

The maritime industry is seeing a pivot from oil-focused deepwater projects in favor of an emerging LNG landscape in the Gulf of Mexico, with production growth opportunities increasingly concentrated offshore Guyana and Brazil, experts said during the Houston Marine and Energy Insurance conference on Sept. 22.

Renewables and LNG have taken the spotlight in the Gulf, according to Underwriter Steven Weiss at Incarnation Specialty. Larger projects are moving away from heavy offshore industries to more renewables and offshore LNG, he said during a panel discussion.

Underwriters are key to assessing risks associated with insuring a marine vessel, cargo, or related operations and usually determine the premium charged within a shipowners' insurance policy.

"The challenge is there's a long ramp-up period, it may take 10 years until they drop the first spud or first anchor," Weiss said. "The Gulf of Mexico has been out on hold; it's not the scale it used to be."

However, there are still projects on the pipeline, with Beacon's Monument in line to come onstream by late 2026, followed by Murphy Oil's Longclaw, Kosmos' Tiberius, and Beacon's Shenandoah S.

Shell's Sparta, alongside BP's Kaskida, are the only two floating production units coming online in 2028 and 2029, respectively.

Liquified-natural gas projects like Venture Global's Plaquemines have rapidly come online after beginning LNG exports from the project in December 2024 during a period of growing demand.

Venture Global received permission on Sept. 18 to start up one of two remaining blocks of liquefaction trains at the facility, moving the developer closer to its goal of bringing the entire plant on stream by the end of 2025.

A wave of new US LNG capacity slated for the next few years has even pushed the Panama Canal Authority to provide additional slots for LNG transits on what will primarily be an LPG pipeline.

Energy analysts expect US LNG export capacity to roughly double between 2025 and 2029, reaching more than 180 million metric tons per year of LNG.

Offshore crude barrels compete for market share

While US President Donald Trump's call to action has been, "drill, baby, drill," it hasn't transformed the regulatory environment enough to capture interest for newer oil projects, according to Weiss.

"The structuring around large, offshore expensive [oily] projects has gone away because there are less of them," he said. "There are more opportunities outside the US in offshore Guyana and Brazil."

Crude volumes from the Gulf have been competing with new offshore production from Latin America, both of which have elevated break-evens due to the costly nature of deepwater exploration.

US tariffs and retaliatory measures have driven up costs, with tariffs against Canada and Mexico expected to limit project activity and hike up drilling costs, according to S&P Global Commodity Insight analysts.

Offshore US break-even oil prices average at $57.70/b for a typical project, with lows seen at $18.53/b and highs upwards of $80/b, according to Energy data.

Comparatively, typical offshore break-evens averaged at $55.29/b in Brazil, while offshore Guyana offered an even more competitive break-even cost of $34.09/b.

Most recently, ExxonMobil received a final investment decision for the Hammerhead development offshore Guyana on Sept. 22, marking its seventh project on the prolific Stabroek block.

Also in September, Brazil's National Petroleum Agency added 275 additional exploration and production concession blocks to its Open Acreage concession program's portfolio, including blocks within the emerging Campos and Santos offshore basins.

Offshore oil production growth is at varying levels in the US, Guyana and Brazil. But as upstream spending in the US remains cautious, operators could continue to look to Guyana and Brazil for more opportunities.