FPSO Market set for Growth
Drewry Shipping Consultants, the world's leading maritime consultants, has released its latest special report entitled: “Floating Production Storage and Offloading (Offtake) unit (FPSO)”. Drewry analyses the origins of the industry in the 1970s and how it has progressed to present day, as well as predicting a future of growth. Drewry's positive outlook for the FPSOs market stems from extensive research, which identifies high oil prices and strong demand for oil as the key triggers for 'marginal oilfields' now becoming more attractive financially.
Significant highlights recognised within Drewry's FPSOs special report include:
- Marginal oilfields becoming attractive financially
- Increasing oil and gas exploration and development work
- World offshore oil production forecast to increase by 43% by 2008
- World offshore gas production set to soar by 83% by 2008
- Demand for newbuild FPSOs increasing
- 2005 will see the world's first newbuilding LPG FPSO
“The FPSOs market has come a long way since its inception in the 1970s. Offshore technology was still in its infancy and the tanker market was struggling due to escalating oil costs caused by the Middle East conflict, which also shut the Suez Canal. Away from the volatile region however, oil exploration was already gaining momentum,” said Nigel Gardiner, managing director at Drewry. “Now we are seeing high oil prices and strong demand for oil boosting marginal oilfields as they become more attractive financially. A large number of these oilfields will utilise or have a demand for FPSOs - both newbuilds and conversions. Brazil and West Africa are leading the way with China, Australia, India, Indonesia, Malaysia and even the Falkland Islands expected to follow as possible future homes for FPSOs.”
The so-called 'big four' deepwater regions are Angola, Nigeria, Brazil and the US Gulf of Mexico, with the first three seeing plenty of activity, followed by Mexico, Australia and Egypt. According to Drewry, the drivers of this increased activity are world offshore oil production and offshore gas production, forecast to soar by a staggering 43% and 83% by 2008 respectively.
Overall, Asia/Pacific countries are expected by Drewry to lead the charge for oil and gas exploration and production, with Malaysia set to be the front runner. In this region alone the total offshore expenditure forecast is for growth amounting to 63% by 2008, totalling $29.9 million.
Drewry's report goes further by predicting some world firsts in 2005 - a contract being awarded for the first LNG carrier conversion into an FSRU (Floating Storage Regasification Unit) as well as the introduction of a newbuilding LPG FPSO. Drewry also states that an order for the first CNG vessel is not far off, with several designs now in the offing.
In the early years, FPSOs (or floaters as they are also known as) were mainly conversions according to Drewry. It wasn't until the 1980s that first generation purpose-built units were delivered. Since this slow start in the growth of the number of floaters in the second half of the 1970s to the mid 1990s there has since been a considerable increase in activity. Drewry cites a report from 2003 that showed a total 104 floaters were either in service or under construction. As of January 2005 this figure had risen to around 132, including firm projects for which an FPSO has been earmarked plus a couple of speculative orders and prospects. Interestingly, only about ten floaters, compared with more than 16 FSUs (Floating Storage and offloading Unit), have been scrapped since they first entered the offshore world.
Drewry predicts that this expansion programme is set to continue with at least two projects per year involving the use of FPSOs forecast to be approved until the end of this decade. One classification society has even stated that the total figure of operational FPSOs could reach 200 by 2008, but Drewry warns that this is optimistic. There are, however, more than 100 projects on the drawing board worldwide and even more under discussion.
Of all the projects under negotiation, some 25% will involve floaters of some kind and around 65% of these will be conversions from existing tanker tonnage or upgrades of existing FPSOs. For longer-term and larger projects, newbuildings are expected to focus more strongly as technology continues its relentless progression and the number of hulls available for conversion dwindle.
According to Drewry, the future for FPSOs is looking much more bullish than even a few years ago. The main advantages are offering a 'fast track', all-in-one package in a single unit, which can be moved to different waters if necessary.
The recently published “Floating Production Storage and Offloading (Offtake) unit (FPSO)” special report by Drewry Shipping Consultants Ltd is available for purchase. Individual copies of the report are priced, including postage to any part of the world.
