SINGAPORE –In its 2015-2019 Floating Production Systems Outlook Report, Energy Maritime Associates (EMA) accounts for 30 contract awards in 2014 and predicts 105-188 FPU units will be built over the next five years.
The 30 2014 contracts are valued at more than $18 billion and consisted of 10 FPSOs, eight FSOs, five FSRUs, four FLNGs, two MOPUs, and one production barge. Late in the year,Exmar and Golar added speculative FLNG orders. Eight of the awards went to Singaporean yards, four to Korea, and three to China.
Also in 2014, 27 units were delivered: 11 FPSOs, nine FSOs, four FSRUs, one semi, one spar, and one MOPU, with 13 of these units for Southeast Asia. Three units were delivered to Brazil, as compared to 11 in 2013.
Nine units were decommissioned: four FSOs, two FPSOs, two MOPUs, and one production semisubmersible. Three of these units, all FSOs, were scrapped, two redeployed, and the remaining four units are available for lease or sale.
Looking ahead, EMA predicts as many as 188 orders could be placed in the next five years at a capex of $157.4 billion. Depending on mitigating factors, the estimate calls for a most likely build number of 142 units at a cost of $118.5 billion. The 142 number considers that fewer oil processing units will be built because oflower oil prices. However, the total considers that there will be an increase in FLNG and FSRU orders because of financing available for small to mid-size LNG related projects. FPSOs will remain the largest category with 45% of the expected orders and 60% of the capex.
Units for Brazil and Africa will account for $48 billion of expenditure, followed by $30 billion in Australia and Southeast Asia, and $25 billion in the Gulf of Mexico and Northern Europe. Significant growth is expected toward the end of the decade in Mexico as international companies enter the market.
Looking specifically at Petrobras, the company had planned to award at least 14 new FPS contracts over the next three years. However, this is unlikely given the company’s corruption scandals and financial issues. Most respondents predict short delays for the contracts already placed, with longer delays for contracts to be tendered in 2015 and 2016.
After a pause in 2015, contracting activity is expected to increase in 2016, to levels exceeding 2014. This is the view in our EMA’s 2019 forecast as well as from respondents to its annual survey. A rebound in orders also was seen after the last two downturns in 2004/5 and 2009/10.
According to EMA’s Managing Director David Boggs, “There is broad consensus that 2015 will be a slow year, with few new floating production systems awarded. A big question is when Petrobras will begin placing orders again. Currently, most contractors have a reasonable orderbook, but this is starting to decline as oil companies defer awards, while waiting for development costs and oil prices to bottom. Although there may not be much project activity in 2015, we expect a great deal of corporate restructuring, including M&A and asset sales. Assuming oil prices begin to recover in the second half of 2015, we expect a surge of new orders in 2016.”