FPSO contracting fuels market recovery

Feb. 21, 2020
The floating production market has rebounded quite well, led by a steady flow of new FPSO orders over the past few years.

The floating production market has rebounded quite well, led by a steady flow of new FPSO orders over the past few years. Owners placed six new orders in 2017, 11 in 2018, and 13 in 2019 which marked the highest annual count in seven years, according to David Boggs, managing director of Energy Maritime Associates. Boggs shared his insight and forecast for the floating production market in a special webcast presentation hosted by Offshore in January.

This rebound has FPSO contracting back on its long-term trend of about one new order per month. EMA’s research shows that the FPSO has been the most widely used floating production unit (FPU) type, growing from 19 to 201 units since 1990. This is due to its inherent versatility for deployment and redeployment in various metocean conditions and for fields with diverse characteristics. That said, a redeployment is not straightforward, as many FPSOs are fit-for-purpose. Boggs believes that at least 50% of the 45 idle FPUs (25 FPSOs) will be scrapped and about 15 units have good prospects for redeployment.

Meanwhile, there has been renewed interest in semisubmersible production platforms, driven by smaller, simpler, and standardized designs that lower cost and cycle time, with two units ordered per year over the past two years (see page 36 for a historical perspective and examination of select projects in the US GoM that are anchored by semisubmersible production platforms).

Looking ahead, EMA is tracking 211 projects in the planning pipeline, led by Petrobras with 19 and Total with 14. The firm’s mid-case five-year forecast calls for 125 new FPU orders worth about $100 billion; FPSOs are expected to remain the largest segment with 40% of the new orders and 75% of the forecast capex. Regionally, Brazil leads the way with over $28 billion of FPSOs, followed by Africa, Southeast Asia, and Australia.