Why Long-Term Deals Are Suddenly Everywhere in Energy

Author: John Patrick Herold | Published: 2026-05-12 | Source: Site News URL: /philipherold/news/why-long-term-deals-are-suddenly-everywhere-in-energy

Core Thesis

The global energy sector is abandoning just-in-time procurement in favor of long-term contracts driven by equipment bottlenecks, stretched lead times (3–4 years for transformers, HVDC components), and surging cross-sector demand.

Key Data Points

• DOF Group secured 12-year Petrobras RSV contracts for Brazil deepwater ops
• Dolphin Drilling confirmed multi-year rig contracts with Harbour Energy (UK & India)
• Ofgem approved early construction funding to lock HVDC manufacturing slots
• FERC Order 1920 mandates 20-year transmission planning horizons
• [[interconnection-queue|SPP]] restructuring Order 1000 competitive processes after cost-overrun failures
• PJM proposed 14.9 GW addition via bilateral contracts

Structural Drivers

• Finite OEM manufacturing capacity; HVDC transformer lead times ~36 months
• Data center load surges breaking traditional transmission cost-allocation models
• Offshore vessel competition between deepwater O&G and offshore wind
• "Quiet clauses": price escalation provisions, capacity reservation tolls, supply chain risk-sharing

Watch List

1. SPP stakeholder rulings on cost-recovery for supply chain inflation
2. US state PUC/FERC authorizing ratepayer-backed early procurement pre-CPCN
3. Offshore marine supply chain absorption by deepwater O&G vs. wind