2021-2025 Floating Production Outlook Report Released
In its newly-released 2021-2025 Floating Production Systems Outlook Report, Energy Maritime Associates (EMA) analyzed the activity in 2020 and how the Covid-19 pandemic and subsequent crash in oil prices has affected the Floating Production Market.
This much-anticipated Outlook Report forecasts the development for all types of Floating Production Systems including FPSO, FLNG, FSRU, TLP, Spar, Semi, and FSO.
Highlights:
Award activity has slowed. Only 6 new Floating Production units have been awarded year to date, down from 17 awards in 2019. These new awards are for 3 FPSOs and 3 FSRUs. One award, an FPSO for Aker Energy’s Pecan development in Ghana, was canceled at the onset of the pandemic.
Activity shows signs of recovery. Petrobras and its partners awarded the Mero 3 FPSO to MISC in August. Petrobras is in discussion with SBM for the sixth Buzios FPSO. This indicates that after a pause and reset, the market is beginning to move again.
Units removed from service. 15 units were taken offline, three were immediately sent for recycling and 12 are still available. These units could be redeployed, but based on their ages will most likely head for recycling.
A large number of units are stacked. 53 units are currently idle, with a number having been stacked over five years. We estimate that at least half will be recycled.
New units on order are trending toward FSOs for LNG and storage. There are 62 units on order, comprised of 48 FPS, 11 FSO and 3 MOPUs. Activity is increasing in Europe for major life extension projects. Activity is also increasing in Korean shipyards particularly focused on LNG projects. China is the dominant player for newbuild and conversions, including all projects headed for Brazil.
Impacts of Covid-19:
Only one project has been canceled (Pecan FPSO in Ghana), but many have been delayed on average 6-12 months. The factors driving delays are level of completion, the location of the project (and the impact of Covid in that country), and financing (mainly impacting cashflow due to the oil price crash).
Contractor resources are shrinking, but project complexity is growing. While Modec and SBM are the dominant FPSO players in the Brazilian market, there have been new entrants with awards to Yinson (Marlim 2) and MISC (Mero 3). Future Forecast – tracking 200 projects in the planning pipeline
Projects are becoming stuck in the appraisal and planning phase because they are not economically viable under the current schemes. This presents an opportunity for future acquisition and divestiture where companies can potentially swap assets and focus on regions or hub. It also opens opportunities for smaller independents to take over projects that larger companies are unable to develop economically.
Fig 1. Chart of projects in the planning pipeline
Market drivers:
Drill to fill projects. We see a large trend of “drill to fill” areas where operators are trying to maintain production through current assets. New wells can potentially be tied back to existing units with minimal cost and shorter payback. There will still be demand for new floaters for very large fields and for areas without existing hubs, particularly in South America and both sides of the Gulf of Mexico.
EMA provides accurate and dependable quarterly reports for the Floating Production Sector.
Clients tell us that our reports are the best source for information about upcoming developments.
Covid-19 and Oil Price Crash Continues to Affect New Awards; Delays Projects in Progress.
In its newly-released 2021-2025 Floating Production Systems Outlook Report, Energy Maritime Associates (EMA) analyzed the activity in 2020 and how the Covid-19 pandemic and subsequent crash in oil prices has affected the Floating Production Market.
