Energy Maritime Associates (EMA) will be participating at OTC 2017 from 30 April - 3 May in Houston, Texas.
EMA is thrilled to be part of the Singapore Pavilion and will share its insights on the floating production market from its latest Floating Production Systems Report Series.
Below are some highlights from EMA's annual 2018-2022 FPS Outlook Report:
- Orders Resume. After almost two years without an order, 10 FPSOs have been awarded since Q4 2016.
- Return of the mega-projects. ENI awarded the $5.4 billion EPCIC Coral South FLNG contract to Samsung, TechnipFMC, and JGC. Statoil sanctioned the $2.6 billion Johan Castberg FPSO. Sembcorp will construct the hull and SBM will provide the internal turret.
- Record number of FSRUs ordered. Driven by yard discounts and new entrants, 11 FSRUs were awarded, including five on speculation.
What does the future hold?
- Up to 173 Orders. Between 80-173 Floating Production Systems are expected over the next five years with a mid-case forecast of $94 billion to be spent on 124 units. The outlook has been adjusted slightly from last year, with a handful more FPSOs expected in the mid and high-case scenarios. FPSOs remain the largest segment with over 40% of orders and 2/3rds of capital expenditure. Close to $50 billion is expected to be spent on FPS projects in Brazil and Africa, driven by large, deepwater FPSOs as well as a few mid-size FLNG developments.
- There are now 10 speculative FSRUs on order, in addition to one available unit. Additional FSRUs will begin coming off contract and it remains to be seen how easily they can find new employment.
- Rise of the Redeployment – Three idle units were awarded new contracts this year (OSX-1 FPSO, Aoka Mizu FPSO, Maersk Inspirer MOPU). We expect this trend to continue, with redeployed units, particularly FPSOs, accounting for up to 25% of future awards. 46 Floating Production Systems are currently available – 21 FPSOs, 9 Production Semis, 6 FSOs, 5 MOPUs, 2 Spars, 1 FLNG, 1 FSRU, and 1 Production Barge. This is down five from last year due to redeployments and scrapping of many FPSOs including Armada Intrepid, Opportunity, and Marlim Sul. The number of idle units is expected to remain high, with another 39 units likely to come available within the next two years.
According to EMA’s Managing Director, David Boggs, “The floating production market experienced a gradual recovery in 2017, with total spending reaching levels last seen in 2014. After a two year pause, Petrobras resumed ordering production units and is expected to account for about a quarter of FPSO awards over at least the next five years. Confidence in deepwater developments returned as seen by sanction of projects including the Coral South FLNG, Johan Castberg FPSO, and SBM’s Fast4Ward speculative FPSO hull. Three idle units received new contracts, providing cost-effective solutions for challenged projects. At today’s oil price, there are an increasing number of viable offshore projects as a result of revised development plans, lower supply chain costs, and flexible commercial terms. The next few years provide a unique window of opportunity to sanction offshore developments and take advantage of record low drilling rates and adequate industry capacity.”