Q3 Report Out Now: Oil Price Crash Affects FPS Awards
In our latest quarterly Floating Production Systems Report, Energy Maritime Associates (EMA) reviewed the market for Floating Production Systems, including FPSOs, FLNGs, FSRUs, TLPs, Spars, Semis, FSOs, and MOPUs. 2020 was off to a strong start with seven awards in the first two months of the year: 3 FPSOs, 1 FSRU, 1 FSO, 1 LNG FSO, and 1 MOPU. However, this came to a grinding halt in March as oil prices crashed. One of the earlier awards was rescinded in March when Aker Energy cancelled the LOI for its Pecan development in Ghana to reduce costs. Cancellation of a contract is a relatively rare event in the FPS sector and we do not anticipate any further contract cancellations.
In the last three months, there has only been one order: MOL’s $340 million FSRU contract in May at Daewoo for use as an LNG import terminal in Wilhelmshaven, Germany.
Likely awards in the next year
While low oil prices have delayed sanction of many projects, some continue to make progress toward FID. EMA has identified 11 projects that are likely to be sanctioned within the next 12 months. A few could be awarded in 2020 if oil prices continue to rise, but most will be in 1H 2021.
Floating Production Units Under Construction
There are currently 23 FPSOs, seven Production Semisubmersibles and three FLNG units on order. These production units are being executed by 14 different contractors. Half are juggling multiple projects, with the other half are working on a single project.
Fig 1. Order backlog by Field Operators
COVID-19 Impact on Shipyards
The global pandemic has disrupted supply-chains and workforces have been impacted by government restrictions, including social distancing. As COVID-19 sweeps across the globe, its impact has varied by country. Some projects remain on schedule, while others are facing delays of more than a year. The impact on an individual project varies, even within the same country, or yard depending on the stage of construction, contractor, and field operator.
Fig 2. Units on Order by Yard Location
China
China has become the dominant location for all types of FPSOs, accounting for two thirds of FPSOs on order. This includes nine newbuilt hulls as well as six conversions from oil tankers.
After being the center of the initial outbreak and implementing severe restrictions for two months, work has largely resumed to pre-pandemic levels. According to SBM, which is executing FPSO projects in multiple yards across China: “the construction yards in China reopened and are running near normal capacity following a period at the beginning of this year when the yards were closed due to the Chinese New Year and COVID-19.”
Singapore
In Singapore, activity is underway for eight units: four FPSOs, two Semis, and two FLNGs. In April, the Singapore government implemented various “circuit breakers” which had severe impact on the shipyard sector. The workforces at both Keppel and Sembcorp Marine dropped from over 20,000 to less than 1,000 for the six weeks between mid-April and June 2. Ramp up of the shipyard workforces will depend on government approvals.
The hull of the Energean Power FPSO arrived in April for topside integration just as the restrictions were put in place. According to Energean “The forward work program on the FPSO is contingent on the evolution of the global pandemic and decisions of the Singapore authorities."
About Energy Maritime Associates
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In the latest quarterly Floating Production Systems Report, Energy Maritime Associates (EMA) reviewed the market for Floating Production Systems, including FPSOs, FLNGs, FSRUs, TLPs, Spars, Semis, FSOs, and MOPUs. 2020 was off to a strong start with seven awards in the first two months of the year: 3 FPSOs, 1 FSRU, 1 FSO, 1 LNG FSO, and 1 MOPU. However, this came to a grinding halt in March as oil prices plummeted.
