Floating Production: Brighter Times Ahead
Despite an estimated $10 billion of expected orders failing to materialise as the global economy derailed in 2008 and 2009, the floating production sector is expected to recover in 2010 and over the period 2009 to 2013 a total of $46 billion is forecast to be spent on floating production systems installed worldwide. These are amongst the forecasts in a new report launched last week by energy analysts Douglas-Westwood.
Announcing the results of the study, Douglas-Westwood management stated that, “the study stated that the turbulent nature of energy and financial markets that developed in the second half of 2008 has persisted into 2009 and has had a dramatic impact on the FPS sector. E&P companies are reining in expenditure and delaying projects as they respond to lower commodity prices, constrained cash flows and to challenges faced in the global credit market. While the situation has improved somewhat in recent months. the current economic climate remains difficult. The oilfield equipment and services sector is inherently a capital and asset-intensive industry and its reliance on debt markets, to fuel expansion, has meant that many companies are feeling the effects of global financial constraints.”
“The impact on this sector has been massive and to see $10.4 billion of anticipated orders this time last year for 2008/9 not materialise is unprecedented. However, we are convinced that the long-term fundamentals for the sector are strong: the need to exploit reserves in deep waters, marginal fields and remote locations will undoubtedly increase as the offshore industry matures and floating production systems are a key enabling technology in these areas.”
“We forecast that a total of 121 floating production systems will be installed worldwide over the 2009-2013 period. FPSOs will account for the largest proportion of these installations (94 vessels), along with 12 TLPs, 11 FPSSs and four spars. With this level of demand, global capex in the FPS sector is forecast at $45.8 billion. Of this overall market value, the world’s three major deepwater regions – Africa, North America and Latin America – account for 59% of forecast global FPS capex.
“Our analysis of the leading operators in the FPS sector suggests that Brazil’s national oil company, Petrobras, was the biggest spender on FPS systems over the 2004-2008 period. Petrobras is also expected to continue this lead over the forecast period, although ‘super-majors’ such as Total, Chevron, Shell and BP are all expected to commit to significant FPS expenditure over the coming five years. The sector’s top ten operators by expenditure account for 55% of the installations and 68% of the capex forecast worldwide for the 2009-2013 period.”